Court ruling favors assessee on depreciation for road construction but upholds decision on capital items inclusion.

The court ruled in favor of the assessee on the issue of granting depreciation on the construction of roads as part of the factory building, citing precedent. However, the court upheld the Tribunal's decision against the assessee on the inclusion of specific items in capital for relief/deduction under sections 84/80J, based on the Income-tax Rules. The court also favored the assessee on the inclusion of items in capital for relief under section 80J, following relevant precedents and rules. The judgment provided detailed analyses and decisions on these issues, resulting in a mixed outcome for the assessee.

---

---

Issues:
1. Depreciation on construction of roads as part of factory building.
2. Depreciation on roads as 'plant'.
3. Inclusion of specific items in capital for relief/deduction under sections 84/80J.
4. Inclusion of items in capital for relief under section 80J for specific assessment years.

Analysis:

Issue 1: Depreciation on construction of roads
The court referred to a previous decision in CIT v. Colour-Chem Ltd. [1977] 106 ITR 323, which established that depreciation could be granted on the cost of construction of roads as part of the factory building. The court answered this question in the affirmative and in favor of the assessee based on the precedent.

Issue 2: Depreciation on roads as 'plant'
Since the answer to question 1 was affirmative, the court did not find it necessary to address question 2 regarding depreciation on roads as 'plant'. Therefore, no specific analysis or decision was provided for this issue in the judgment.

Issue 3: Inclusion of items in capital for relief/deduction
Regarding the inclusion of specific items in capital for relief/deduction under sections 84/80J, the Tribunal's decision went against the assessee. The Tribunal held that certain items could not be included in the computation of capital based on rule 19 of the Income-tax Rules, 1962, applicable during the assessment year in question. However, the court refrained from answering question 3 as the reference was deemed incompetent, following the Supreme Court's ruling in CIT v. V. Damodaran [1980] 121 ITR 572. Consequently, the decision of the Tribunal stood against the assessee.

Issue 4: Inclusion of items in capital for relief under section 80J
The court referred to the decision in CIT v. Advani Oerlikon Pvt. Ltd. [1986] 161 ITR 449, which directly considered Section 80J of the Income-tax Act, 1961, and rule 19A of the Income-tax Rules, 1962. Based on this precedent, the court answered question 4 in the affirmative and in favor of the assessee. The judgment highlighted that previous decisions of the High Court and other courts were followed to arrive at this conclusion.

In conclusion, the court provided detailed analyses and decisions on the issues related to depreciation, inclusion of items in capital for relief/deduction, and the application of relevant rules and precedents to determine the outcomes for the respective questions raised before the court.

---