AI Drafter 
TaxTMI 
TaxTMI 
2001 (10) TMI 265
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....nbsp; - 100% Layer Division: Motors Rs. 13,850 - 100% Fans in farms Rs. 3,21,952 - 100% Nuzvid Division: Cages Rs. 9,33,804 - 100% Fogers Rs. 56,169 - 100% ....
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....eparate and independent plant. Further more as the cost of each cage is less than 5,000, it is entitled to 100 per cent depreciation under the first proviso to section 32(1)(ii)... Thus each cage is an independent, self-contained unit and there is no co-relation whatsoever with the other cages which are installed in the shed. Each cage houses 3 birds and the same does not effect the other cages. The operation of one cage are unrelated, unaffected and unhampered by other cages.'..." In support of the above propositions, the assessee relied on certain decisions before the Commissioner, which are referred to towards the end of para 5.1 of his order. The Commissioner also called for the bills for the purchase of the cages, and as a typical example, one of the bills extracted by him in para 5.2 of his order reads as under-- ------------------------------------------------------------------------ "(I) Famous Metal Works To &nb....
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....bsp; (Proprietor)..." ------------------------------------------------------------------------ There are other similar bills relating to purchase of cages aggregating to Rs.9,33,803.00, which have been considered by the CIT. In the light of the above bills, the CIT concluded as under-- "5.3 Thus the assessee's argument that the cost of each cage is less than Rs.5,000 and therefore the entire cost is allowable as an expenditure under section 32(1)(ii) cannot be entertained The various decisions relied on by the assessee are not relevant and are distinguishable on facts. As held by Karnataka High Court in the case of Pathange Poultry Farms v. CIT 210 ITR 668 (Kar.), cages purchased for poultry farming are not entitled for 100 per cent depreciation, when these were not used as independent units, but were only utilised for fabrication of bigger compartments with common facilities of lighting, feeding, watering, etc. and this decision is applicable on all fours to the facts of the present case. Therefore, the assessee is not entitled for 100 per cent depreciation on these items." The CIT further noticed that the Assessing Officer granted 100 per cent depreciation on, wh....
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....00 per cent depreciation. It is firstly made out that the decision of Hon'ble Karnataka High Court in the case of Pathange Poultry Farm is distinguishable on facts. It is made out that the Hon'ble Karnataka High Court in that case proceeded on the assumption that the cages were not used as independent units, but utilised by the assessee for fabrication into a bigger component to accommodate a number of birds. It is pleaded that in the case of assessee, each cage is capable of independent usage without any association or assistance of other cages. Apart from attempting to distinguish its case from the one considered by the Hon'ble Karnataka High Court, the learned counsel for the assessee cited a number of cases where analogous issue has been considered and decided in favour of the assessee. They are the following-- (a) CIT v. Sri Krishna Bottlers (P.) Ltd. [1989] 175 ITR 154 (AP) (b) CIT v. Prem Nath Monga Bottlers (P.) Ltd [1997] 226 ITR 864 (Delhi) (c) First Leasing Co. of India Ltd. v. CIT (No. 2) [2000] 244 ITR 2382 (Mad.) (d) Patel Enterprises v. ITO [1990] 35 ITD 220 (Ahd.) (e) ITO v. Lallooji & Sons [1985] 12 ITD 371 (All.) (f) Ansal Construction Co. v. IAC....
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....tion of a mistake under section 154 of the Act, and so, even though powers under section 154 cannot be exercised when the issue is debatable, such restriction does not apply to the powers under section 263. It is also contended that when the assessment order is contrary to a direct decision of a High Court, though not of a jurisdictional High Court and there is no direct decision of any other High Court to the contrary, the CIT is within his rights in invoking the provisions of section 263, as there is no other way of safeguarding the interests of the Revenue. 6. In reply, the learned counsel for the assessee pleaded that the decision of the Gujarat High Court in the case of M.M. Khambatwala has to be regarded as erroneous in view of the subsequent decision of the Apex Court in the case of Malabar Industrial Co. Ltd. in which it has been clearly held that where two views are possible, the provisions of section 263 are precluded. 7. We are of the view that the assessee deserves to succeed. This is not a case where the Assessing Officer has not applied his mind to the issue on hand. Even though he did not discuss the issue in the assessment order, he called for the explanation ....
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.... were also held to be eligible to be depreciated at the rate of 100 per cent, even though they are only sub-instruments. In the case of Patel Enterprises, the question that arose for consideration was grant of depreciation in terms of the proviso to section 32(1)(ii) on chairs installed in a cinema theatre. The chairs in the cinema theatre are fixed to the earth and they are also inter-connected by some other arrangement. It was held that each chair being a separate unit liable to be repaired, replaced or removed without affecting the adjoining chairs, the assessee is entitled for the benefit of cent-per-cent depreciation on chairs in terms of proviso to section 32(1)(ii). This case comes closest to the issue on hand before us in the present appeal. The cages involved in the case on hand, may also be connected and integrated for the facility of watering, etc. and even though they are so inter-connected, the contention of the assessee is that each cage is a separate unit and is meant to accommodate a specified number of chicks, and so each cage is a separate unit, though they are all fabricated together as mentioned by the CIT in the impugned order. In the other decisions cited by t....
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....ustified in relying on the decision of the Hon'ble Karnataka High Court in the case of Pathange Poultry Farm, though rendered subsequent to the completion of the assessment, for the purposes of initiating action under section 263. The question however is whether the said decision of the Hon'ble Karnataka High Court in that case shuts out the other view taken by the Assessing Officer in the matter. We are of the view that the view taken by the Assessing Officer in accepting the claim of the assessee for hundred per cent depreciation cannot be regarded as impossible or illegal in the light of the ratio of the decisions cited by the learned counsel for the assessee before us. It also deserves to be noticed that the decision of another High Court cannot be equated to that of the jurisdictional High Court in its binding effect. If we go by the view taken by the Commissioner, every time a decision of another High Court (not of jurisdictional High Court) on a particular issue goes contrary to the view taken by the Assessing Officer, there would be occasions for action under section 263. This does not seem to be in consonance with the principles laid down by the Apex Court in the case of M....