1992 (5) TMI 16

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....t of provision for interest payable on arrears of commission to the commission agents for purchase of sugarcane for the assessment years 1969-70 and 1970-71 ? 2. Whether, on the facts and in the circumstances of the case, 'drainage system' came within the description of building and hence entitled to depreciation allowance ? 3. Whether, on the facts and in the circumstances of the case, depreciation was allowable on overhead water tanks by treating the same as 'plant' ? 4. Whether the Tribunal was right in holding that the capital employed would include not only the assessee's capital but also include capital borrowed by the assessee for the purpose of relief under section 80J of the Income-tax Act, 1961 ?" At the instance of th....

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....f cess and the assessee was obliged to pay interest on the said arrears. A question arose as to Whether this was allowable as a deduction or not. The Supreme Court held that the payment of interest under the Cess Act was not penalty and was allowable as a deduction. The ratio of the said decision is clearly applicable to the present case and, therefore, the Income-tax Appellate Tribunal was right in allowing the said deduction. As regards questions Nos. 2 and 3, the assessee had claimed that "drainage system" and overhead tanks formed part of the building and depreciation was to be allowed on the same under section 32 of the Act. This claim was not accepted by the Income-tax Officer. An appeal was filed before the Appellate Assistant Com....

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....building and/or in the alternative by treating them as part of the plant. The Tribunal no doubt held that it was part of the plant but, in order to decide the controversy, the Tribunal should have referred the question as to whether overhead tanks could be treated as plant or building. We, therefore, reframe question No. 3 as follows : "Whether, on the facts and in the circumstances of the case, depreciation was allowable on overhead water tanks by treating the same as plant or as a building?" There was some divergence of opinion amongst different High Courts as to whether drains in a factory premises constituted building or not. This controversy has been recently set at rest with the decision of the Supreme Court in the case of CIT v....