TaxTMI 
TaxTMI 
2015 (2) TMI 366
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....before the Commissioner of Income Tax (Appeals). Through his order, dated 22.03.1997, the Commissioner allowed the appeal. Assailing that order, the appellant herein i.e., Department filed I.T.A.No.224/Hyd/98 before the Hyderabad Bench of the Income Tax Appellate Tribunal. The appeal was dismissed by the Tribunal, through its order, dated 11.06.2002. Hence, this further appeal under Section 260-A of the Act. Sri S.R.Ashok, learned senior Standing counsel for the appellant submits that the matter is no longer res integra and recently a Division Bench of this Court, in Commissioner of Income Tax vs. Raghavendra Constructions held that components of shuttering material cannot be treated as independent items and the cost of the entire material acquired by an assessee must be treated as a unit. He contends that whatever may have been the justification for the Tribunal in taking the view as it did through the order under appeal, the same is not tenable in view of the judgment of this Court. On merits also, he submits that it is difficult to treat each component of shuttering material as a unit and 100% depreciation cannot be allowed for them. None appeared for the respondent. We re....
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....scribed: Provided that where the actual cost of any machinery or plant does not exceed five thousand rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession From this, it is evident that in case, the cost of an item which answers the description of plant, is less than Rs. 5,000/- depreciation is permitted to the extent of 100%. That the shuttering material answers the description of plant is beyond any pale of doubt. Almost all the High Courts and this Court in Raghavendra Constructions case (1 supra) have taken such view. The question as it appears before us is as to, what constitutes a unit thereof. It is a matter of common knowledge that shuttering and centering material comprises of steel plates or wooden planks of stipulated sizes and wooden or steel planks to provide horizontal support and steel pipes or wooden polls to provide vertical support. Once manufactured, the material is capable of being reused on quite large number of occasions and works. One does not find any instance of a person proposing to construct ....
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....the concept as under: Shuttering is normally used to support the roof when concrete is being laid on it. These are not items of consumable stores, for they are retrieved after the roof has been laid, and used again elsewhere. It is like any other tool with the help of which construction is done, say, Karni, Tasla, Kudel, or Spade. It is not, therefore, correct to hold that shuttering material is not plant or machinery. In our opinion, it is plant and machinery just as a concrete mixer or any other tool, with which the Karigars and masons work would be. The assessee is, therefore, entitled to depreciation on shuttering material and the same be allowed to it. The Punjab and Haryana High Court in Commissioner of Income Tax vs. Akal Construction and Engineering Co observed as under: Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in allowing depreciation on wooden shuttering at the special rate i.e., 100 per cent, under the first proviso to section 32(1)(ii) of the Income-Tax Act, 1961, and thus treating that each single item or constitu....
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.... passed on from the assessee to the customer. Without these bottles, the soft drink cannot be effectively transported, like the silos in Schofield v. R. and H. Hall Ltd. [1974] 49 TC 538 (CA), which are used to store grain and to empty the same, performing a trade function. As pointed out in Dixon v. Fitch's Garage Ltd. [1975] 50 TC 509 (Ch D), the bottles and the contents are "totally interdependent." So are the shells. The bottles and shells also satisfy the durability test for it is nobody's case that their life is too transitory or negligible to warrant an inference that they have no function to play in the assessee's trade. They are therefore "plant" for the purposes of the Act. The principle that a "setting" in which the trade is conducted in not attracted to the facts of the case of all. The bottles and shells have nothing to do with the building in which the trade in conducted nor with the "setting" in which it is conducted. Each bottle and each shell is an entity by itself and they cannot be broker down into pieces for considering whether they have any part to play in the business of the assessee. The bottles and shells are gross matter and, in fact, gros....
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....t of the precedents of superior Courts. The precedents can be treated as having been rendered sub silentio, if an otherwise binding precedent or a specific provision of law was not taken note of. Generally, we do not come across the instances of a judgment being treated as sub silentio, if the binding precedent is taken note of. However, if the ratio emerging from a binding precedent was treated as non-existing and the judgment was rendered contrary to what was decided in the precedent, a situation may arise, where the judgment so rendered almost resembles, the one done in sub silentio. It has already been demonstrated that the ratio in Sri Krishna Bottlers Pvt. Ltd.s case (2 supra), which is to the effect that each bottle and shell deserve to be treated as independent units and qualify for 100% depreciation was treated as non-existent at all in Raghavendra Constructions case (1 supra). Since both the judgments referred to above were rendered by Division Benches only, we are faced with the problem of choosing, since there is conflict of views. Sir John Salmond in his Treatise on Jurisprudence, opined as under: ....
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....ent represents the ratio decidendi and which, the obiter dicta. The angle from which a precedent is examined makes a substantial difference. In the process of answering the main issue or dealing with the core of the dispute, passing observations are bound to be made by the Court, here and there. Once the central issue involved in the case is identified, the view expressed by the Court on that issue deserves to be treated as the ratio decidendi. The observations in the process of reasoning, or disposal of inconsequential and subsidiary issues, fall into the category of obiter dicta. Where, the ultimate conclusions are summed up at the end of the precedent; the Court before, which it is cited, is relieved of the difficulty in this regard. It is beneficial to refer to the view of some jurists, in this context. Sir John Salmond, in his treatise on jurisprudence, aptly explained the difficulties in identifying the ratio decidendi in a precedent. He wrote as under: "While it is fairly simple to describe what is meant by the term ratio decidendi, it is far less easy to explain how to determine....
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....sp; "One of the greatest difficulties in its conception is the distinction which is constantly drawn between ratio and dictum, the essential and the inessential. In the course of the argument and decision of a case, many incidental considerations arise which are (or should be) all part of the logical process, but which necessarily have different degrees of relevance to the central issue. Judicial opinions upon such matters, whether they be merely casual, or wholly gratuitous, or (as is far more usual) of what may be called collateral relevance, are known as obiter dicta, or simply dicta, and it is extremely difficult to establish any standard of their relative weight." Even where a ratio decidendi is identified in a precedent, it is not as if it is to be imported in its entirety to the case on hand. An effort needs to be made to fit the ratio decidendi into the facts of the case under adjudication. An amount of elasticity exists in this regard, which, in turn, would depend on the variation as to facts and circumstances. Dias, an acknowledged English Jurist compared the ratio in a precedent to a pellet of clay, and observed as under: "The ratio....
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....the other. At the most, it may be an occasion for the superior Court to resolve the rule on ostensible conflict. Applying these principles, we prefer to follow the ratio in the judgment of this Court in Sri Krishna Bottlers Pvt. Ltd.s case (2 supra) than to be guided by the judgment in Raghavendra Constructions case (1 supra). A legally binding precedent has its own strength and it does not depend upon the views of the Authors of Books and other persons connected with law. However, the view expressed in an otherwise respected Treatise cannot be ignored altogether. Though it may not effect the binding nature of the precedent, it may appeal in its own way to the Courts, wherever such a precedent is cited. It hardly needs any emphasis that Kanga & Palkhivalas The Law and Practice of Income Tax is a highly respected Treatise on the subject. In the Tenth Edition of the book at page No.735, the judgment of this Court in Raghavendra Constructions case (1 supra) was referred to and the following observation was made: The High Court's held that shuttering and centering material constitutes a plant but the Andhra Pradesh High Court took a contrary view. Its reasoning is, it is submitte....