| Case ID |
eb0a642c-4ae2-4f1f-9dea-172c47ec44ef |
| Body |
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| Case Number |
IT REFERENCE No. 38 OF 1976 |
| Decision Date |
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| Hearing Date |
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| Decision |
The court held that the cold storage building qualifies as a factory building entitled to depreciation at the rate of 10 percent. The definition of a factory under the Factories Act, 1948, indicates that the manufacturing process is essential for a structure to be classified as a factory. The court determined that the processes undertaken in the cold storage, which involve preserving goods, fall within the definition of manufacturing. Furthermore, the thermocole insulation was also recognized as part of the plant, thus eligible for depreciation at 15 percent under section 43(3) of the Income-tax Act. |
| Summary |
In the case concerning the Commissioner of Income Tax vs. Yamuna Cold Storage, the Punjab and Haryana High Court addressed the crucial question of whether a cold storage facility qualifies as a factory building under the Income-tax Act, 1961. The case arose when the Income Tax Officer initially allowed a 10 percent depreciation on the cold storage building, which was later contested. The Appellate Authority reduced the depreciation to 5 percent, categorizing the building as a godown. However, upon appeal to the Tribunal, the original decision was restored, leading to a reference for judicial interpretation. The court highlighted that the definition of 'factory building' is not explicitly defined in the Income-tax Act but can be guided by the interpretation under the Factories Act, 1948. The court concluded that the operation of a cold storage facility involves a manufacturing process, thereby justifying its classification as a factory. This landmark decision underscores the importance of recognizing modern storage facilities as integral to the manufacturing sector, thereby affirming their eligibility for tax benefits. This case is significant for businesses operating in the cold storage sector and provides clarity on the depreciation claims for similar entities. Keywords: cold storage, factory building, depreciation, Income-tax Act, manufacturing process. |
| Court |
Punjab and Haryana High Court
|
| Entities Involved |
Yamuna Cold Storage
|
| Judges |
S.P. Goyal, J.,
J.V. Gupta, JJ.
|
| Lawyers |
D.N. Awasthy,
B.K. Jhingan
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Yamuna Cold Storage
|
| Citations |
1981 SLD 1658,
(1981) 129 ITR 728
|
| Other Citations |
CIT v. Kanodia Cold Storage [1975] 100 ITR 155 (All.),
Aggarwal Cold Storage & General Mills v. ITO [1970] Tax XXX(6)-10
|
| Laws Involved |
Income-tax Act, 1961,
Factories Act, 1948
|
| Sections |
32(1),
43(3)
|