- (1.) BY this reference application, the following questions of law are referred to for our opinion : "1. Whether, on the facts and in the circumstances of the case, and also on a proper interpretation of Appendix I of r. 5 of the IT Rules, the Tribunal was justified in law in holding that the canteen was a part of the factory and it was entitled to depreciation at higher rate ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in invoking the Explanation under S. 32A(4) of the IT Act, 1961, and remitting the matter back to the AO for fresh consideration in terms of Expln. 2 to S. 32A(4) of the IT Act, 1961 ?"
(2.) NONE appears for the assessee. The learned counsel appearing for the Revenue fairly admits that issue is covered by the decision of Madras High Court in the case of CIT vs. Engine Valves Ltd. (1980) 19 CTR (Mad) 274 : (1980) 126 ITR 347 (Mad) : TC 27R.152. That decision was challenged in the Supreme Court and Supreme Court has rejected the SLP filed by the Revenue against the decision of Madras High Court. The decision of the Madras High Court has been subsequently followed by the Karnataka High Court in the case of CIT vs. Motor Industries Co. Ltd. (1986) 54 CTR (Kar) 312 : (1986) 158 ITR 734 (Kar) : TC 27R.159, where they referred the decision of Madras High Court and the fact that against the decision of the Madras High Court, Special Leave Petition has been preferred by the Revenue and that has been rejected by the Supreme Court on 23rd March, 1994. No contrary decision is brought to our notice on this issue. Therefore, when the canteen is within the factory premises, the Tribunal was justified in allowing the depreciation of higher rate.
(3.) NEXT question relates to the issue that whether the Tribunal was justified invoking the Expln. to sub-s. (4) of S. 32A of the IT Act, 1961, and remitting the matter back to the AO for fresh consideration in terms of Expln. to sub-s. (4) of S. 32A of the IT Act, 1961. Before the Tribunal, the learned counsel for the assessee submitted that if reserve created was short, the ITO should have allowed the opportunity to the assessee in writing to create further reserve and make up the deficiency as provided in Explanation to sub-s. (4) of S. 32A. But, that has not been allowed. Instead of allowing the opportunity, part of the investment allowance disallowed.;