TULZAPURKAR,J. - (1.) TWO questions have been referred to this Court under S. 66(1) of the Indian IT Act, 1922, for our determination and these are as follows : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the roadways inside the factory premises of the assessee company come in the category of 'building' and as such are entitled to depreciation under S. 10(2)(vi) of the Indian IT Act, 1922 ? (2) If the answer to question No. 1 is in the negative, whether, on the facts and in the circumstances of the case, the roadways in the factory premises would be entitled to depreciation as 'plant' under S. 10(2)(vi) of the Act ?"
(2.) THE short facts leading to these questions may be stated : The questions relate to the asst. year 1961 62, the corresponding accounting period being the one ended on 31st March, 1961. The assessee is a public limited company carrying on business in the manufacture and sale of pigments, pigment emulsion, distempers and other chemicals, dyes, etc. In the assessment proceedings for the asst. year 1961 62, the company claimed depreciation allowance on the roadways inside the factory premises of the company. It appears that the factory is situate on land admeasuring 25 acres and the company had spent a sum of Rs. 1,85,649 on the layout of the roads inside the factory premises linking the various factory buildings. The cost of the roads was included in the figures relating to buildings, and depreciation was claimed at the rate of 2 1/2per cent on the cost of the roads at the same rate as applicable to buildings. The assessee company claimed depreciation allowance on the ground that the roads were of concrete and were necessary for transport of raw materials and finished products. The ITO rejected the claim for depreciation holding that the roadways could not be considered as part of the buildings. The AAC agreed with this view. In the further appeal that was carried to the Tribunal an alternative contention was also raised that if the roadways did not form part of the factory buildings they should be regarded as "plant" for the purposes of allowing depreciation. The Tribunal upheld the contention that the roadways formed part of the factory buildings, but did not accept the alternative contention that they constituted plant. The Judicial Member and the Accountant Member passed separate orders each setting out his own reasons for coming to the same conclusion that the roadways did not constitute plant but could be regarded as building for the purposes of granting depreciation allowance. At the instance of the CIT, Bombay City, the first question mentioned above has been referred to us for our decision, while the second has been referred at the instance of the assessee. Mr. Hajarnavis, for the Revenue, has contended before us that ther roads or roadways, in respect of the cost whereof depreciation allowance was sought by the assessee company, would be "roads" and could not be regarded as "buildings" or any construction forming part of a building ; there was neither any structure nor super structure on the land on which the roads had been laid by the assessee company during the year under consideration. He pointed out that depreciation allowance is claimable by an assessee only in respect of specified assets mentioned in S. 10(2)(vi) and that provision runs as follows : "10. (2) Such profits or gains shall be computed after making the following allowances, namely :...... (vi) in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent (where the assets are ships other than ships ordinarily plying on inland waters) to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed."
(3.) ACCORDING to Mr. Hajarnavis, in the first place, the assets must be those indicated in sub cl. (vi), namely, buildings, machinery, plant or furniture and, secondly, the expression "such" that precedes the assets specified must, in view of sub cl. (iv) of S. 10(2), mean buildings, machinery, plant or furniture used for the purpose of business. He pointed out that roads or roadways that have been laid out inside the factory premises of the assessee are not one of the specified assets and the attempt of the assessee to claim depreciation thereon by suggesting that the roads or roadways constitute "buildings" cannot succeed, for, the normal concept of a building or buildings is referable to something that is constructed as a structure or superstructure on land and, therefore, no depreciation allowance can be allowed in respect of the roadways that have been laid out by the assessee company in its factory premises. He further pointed out that the expression "building" has not been defined in the Act and, therefore, the ordinary dictionary meaning of the expression will have to be taken into account and, according to the Shorter Oxford Dictionary, the expression "building" means "that which is built ; a structure", and ordinarily any structure in its popular sense would mean a structure which has walls and a roof and in this sense the roadways constructed by the assessee company cannot be regarded as failing in the category of building or buildings specified in sub cl. (vi) of S. 10(2). He also relied upon a decision of the Supreme Court in the case of CIT vs. Alps Theatre (1967) 65 ITR 377 (SC). He pointed out that in that case the expression "building" occurring in S. 10(2)(vi) of the Act came up for consideration and it was held that the word "building" in the said relevant provisions meant structures and did not include the site. In that case depreciation under S. 10(2)(vi) of the Act was claimed on the cost of land on which the building had been erected but the Supreme Court took the view that depreciation allowance could be allowed only on the cost of super structure and not on the cost of the site on which the super structure had been erected. He, therefore, contended that in this case also the roads or roadways which had been laid out by the assessee company should be held as not falling in the category of building or buildings mentioned in sub cl. (vi) of S. 10(2) of the Act and depreciation allowance should be disallowed.;