Decided on September 10,1992



R.V. Easwar, Judicial Member - (1.) THESE two appeals one by the assessee and the other by the department relate to the assessment year 1984-85 for which the previous year ended on 31-12-1983.
(2.) We shall take up the assessee's appeal first. The appeal is against the order of the Commissioner of Income-tax passed under Section 263 of the Income-tax Act, on 27-3-1989. The assessee is a company manufacturing glass. In the assessment completed originally under Section 143(3) of the Act, The Income-tax Officer had accepted the assessee's claim for depreciation on gas cylinder @ 100 per cent. The Commissioner initiated action under Section 263 of the Act on the ground that the Income-tax Officer was wrong in allowing the assessee's claim for depreciation at 100 per cent on the item of machinery described as "LPG Gas tank cylinder". He was of the view that gas cylinders are portable articles, whereas what the assessee has installed in the factory was gas storage tank which was a permanent installation on which the special rate of depreciation at 20 per cent of the cost was allowable and-,that in so far as the Income-tax Officer had accepted the assessee's claim for depreciation @ 100 per cent, the assessment was erroneous and prejudicial to the interests of the revenue. The assessee objected to the proposal to revise the assessment under Section 263. It was pointed out that what was installed was a big container of LPG Gas and, since it was very big, it was described as a storage tank. It was further pointed out that the storage tank merely, because, it was a big tank cannot cease to be gas cylinders, because, the relevant entries in the depreciation schedule which granted depreciation at 100 per cent for LPG Gas cylinders merely refer to the shape of the tank and do not expressly specify that the tank should be "portable" cylinders or it should be of small size. It was also contended that even though the storage tank is not portable, the assessee was entitled to the claim which was rightly allowed in the assessment. After considering the assessee's objections, the CIT took the view that since the word "cylinder" had not been defined under the Income-tax Act, its meaning has to be gathered in accordance with common parlance. He was of the view that normally, gas cylinders are understood to be portable. He noticed that in the case of the assessee, the gas cylinder was actually a big storage tank containing gas and the same was a permanent concrete installation on which depreciation @ 20% only is permissible. He therefore, over-ruled the assessee's objections and directed the Income-tax Officer to withdraw the 100 per cent depreciation allowed in the assessment and further directed him that only 20 per cent depreciation should be allowed.
(3.) BEFORE the CIT, the assessee had raised an alternative argument that if 100 per cent depreciation is not allowed, the ITO should be directed to allow extra-shift depreciation and also investment allowance under Section 32A on the LPG Gas cylinder. This alternative contention was directed by the CIT to be considered by the ITO while giving effect to the order passed under Section 263 of the Act.;

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