Factory roads qualify for depreciation as "building" per court; Deferred annuity policies not a perquisite.

The court held that roads within the factory premises are eligible for depreciation allowance as "building." Regarding provisions for deferred annuity policies on directors' lives, it was determined that such provisions did not constitute a perquisite under section 40(a)(v) of the Income-tax Act, 1961. The court emphasized that directors had no present right to the sum, as it was payable only upon retirement or death, aligning with relevant legal principles. The decision favored the assessee, concluding that the annuity policies did not amount to a perquisite. No costs were awarded in this judgment.

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Issues:
1. Whether roads within the factory premises constitute 'plant' for depreciation allowance.
2. Whether provisions made for deferred annuity policies on the lives of directors fall under section 40(a)(v) of the Income-tax Act, 1961.

Analysis:

Issue 1:
The court referred to a previous judgment and held that roads within the factory premises are entitled to depreciation allowance as "building." The decision was based on the interpretation of the term "plant" in relation to factory infrastructure.

Issue 2:
Regarding the provisions made for deferred annuity policies on the lives of directors, the Income-tax Officer initially treated the sum paid as salary, falling under section 40(a)(v). However, the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal found that the provision for annuity policies was to meet the assessee's obligations for payment to directors upon retirement or death. The Tribunal emphasized that the directors had no present right to the sum, and it did not represent a present benefit to them, as it was receivable only upon the termination of their service.

The court considered the definition of "perquisite" and the Supreme Court judgment in a similar case, emphasizing that the obligation to make payments for annuity policies rested with the assessee, not the directors. It was concluded that the directors had no vested right to the sum until the contingency occurred, aligning with the principles laid down in the Supreme Court judgment.

Therefore, the court answered the second question in the affirmative and in favor of the assessee, highlighting that the provision for deferred annuity policies did not constitute a perquisite under section 40(a)(v) of the Income-tax Act, 1961.

No costs were awarded in this judgment.

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