MOHAMMAD RAFIQ, J. - (1.) THIS reference has been received from Income -tax Appellate Tribunal, Jaipur (for short, 'Tribunal') under s. 256(1) of the IT Act, 1961, on following question : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that approach roads constructed by the assessee within the factory premises should be treated part of the building and depreciation allowed accordingly."
(2.) FACTUAL matrix of case in which aforesaid question arises, is that assessee constructed approach road to factory and claimed expenditure incurred thereon as revenue expenditure. Alternatively, it was claimed that depreciation should be allowed thereon. ITO held that expenditure incurred on construction of approach road to factory was not a revenue expenditure. CIT(A) concurred with decision of ITO and held that approach road could not be said to be a part of factory owned by assessee and no depreciation was admissible thereon. Before the Tribunal, assessee did not press claim as revenue expenditure, however, alternative ground for seeking depreciation thereon was pressed. It was argued before the Tribunal that approach road was constructed within factory premises and, therefore, it should be treated as part of building for the purpose of depreciation. The Tribunal relied upon certain judicial pronouncements and for reasons discussed in para 10 of its order, allowed claim of assessee and directed that costs of construction of roads should be treated as part of building for the purpose of depreciation to be allowed. A legal question, however, arose whether depreciation is allowable on approach road as part of the factory building. It was in the backdrop of these facts that question indicated above was referred by the Tribunal to this Court for its answer.
(3.) WE have heard Shri Anuroop Singhi, learned counsel for Revenue. None has, however, appeared for assessee despite service of notice. Shri Anuroop Singhi has argued that AO was fully justified in recording a finding that expenditure incurred by assessee on construction of road was not revenue expenditure and he therefore rightly disallowed depreciation on such expenditure incurred on construction of road. It was argued that approach road cannot be taken as part of building or factory, and no depreciation can be therefore allowed thereon.;