Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following question of law has been referred to this court for the assessment years 1981-82 and 1982-83 : "Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim depreciation on the cost of electrification of labour quarters and if so at what rate ?"
(2.) The facts giving rise to this reference are as under : The assessee-company in the two years, viz., assessment years 1981-82 and 1982-83, owned several tea estates scattered over the Nilgiri hills. On the electrification of labour quarters/lines in the different tea estates, the assessee-company incurred an expenditure of Rs. 2,35,199 in 1981-82 and Rs. 5,25,956 in 1982-83. The expenditure which was incurred by way of electrification of the different quarters in the tea estates consisted of stationery items, wiring and fittings of electric light and fan installations.
(3.) The assessee-company claimed before the authorities for the first year, i.e., 1981-82, the expenditure incurred on 897 labour quarters and in 1982-83 on 1,324 labour quarters. For the purpose of depreciation of the electrification of each quarter, the expenditure incurred was divided by the total number of quarters for which the said expenditure was incurred and thus commuted the cost for electrification of each quarter was less than Rs. 750 and depreciation at 100 per cent. as per the first proviso to Section 32(1)(ii) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was claimed.;