ORDER
VIMAL GANDHI, J.M. :
This appeal, by the assessee, for the asst. yr. 1989-90, is directed against the order of CIT(A)-I, New Delhi upholding the assessment order allowing depreciation at the rate of 33.33% instead of 100% claimed by the assessee under first proviso to s. 32(1)(ii) of the IT Act. Another ground relating to claim of investment allowance permissible under s. 32A(4) has been raised in the memo and it is contended that the assessee ought to have been allowed an opportunity to create requisite amount of investment allowance reserve to claim investment allowance in respect of cost of plant acquired and used for purposes of business. The latter ground is not arising out of the order of the CIT(A) and was not argued during the course of hearing of the appeal. It is, therefore, not considered. We would only consider the assessor’s claim under first provision to s. 32(1)(ii) of the IT Act.
2. The facts of the case briefly stated are that the appellant-company, during the previous year, acquired and used for its business purposes of construction, wooden shuttering sheets plants and supporting material. The cost of the individual item of above material, being less than Rs. 5,000, the assessee claimed 100 per cent depreciation under first proviso to s.32(1)(ii) of the Act. It was claimed that each item of shuttering sheet/plant is physically distinct unit and functionally a plant, being one of the tools of business of civil construction work, and would not lose its identity when used in a group arranged in different dimensions and patterns, according to the need of the construction of the constructional work. The Assessing Officer treated the shuttering material as plant and machinery used by the assessee in construction business. He went by functional use of shuttering, which, in his view, was basically used for roofs and ceilins. In his view, a number of units were required to be used together depending upon the size of the area to be covered. As each unit costing less than Rs. 5,000 could not be used singly, the assessee was not entitled to depreciation at the rate of 100% under the above mentioned proviso. The learned AO, for her conclusion, relied upon the decision of Hon’ble Madras High Court in the case of Mysore Dasaprakash vs. CIT (1989) 75 CTR (Mad) 120. The assessee impugned the above order in appeal before the CIT(A) but remained unsuccessful. Hence, this appeal.
3. We have heard the learned submissions of both the parties at great length. Shri O. S. Bajpai, the learned counsel for the assessee, vehemently challenged the finding of the learned Revenue authority that all the sheets, and planks and other building material were to be used in a group and single use of a unit was not possible. He submitted that even if a single plank or sheet or two planks and sheets can be used in construction work depending upon the area to be constructed. He accordingly submitted that the conclusion of the Assessing Officer relating to functional use of sheets and planks was erroneous. Shri Bajpai further distinguished the decision of Hon’ble Madras High Court in the case of Mysore Dasaprakash (supra) and submitted that the said decision was not applicable to the facts of the case. In the said decision, their Lordships were concerned with electricity supply system which consisted of rooms constructed, electricity switch boards distribution boards, verandah lights, etc., all these items were held to be part of one integrated electricity supply system. The above observations could not be applied to planks and other shuttering material in the case of a contractor. Shri Bajpai relied upon the decision of Tribunal, Delhi in the case of Ansal Construction Co. vs. IAC (1990) 36 TTJ (Del) 24. The above case related to claim of depreciation on items of shuttering and scaffolding. The Bench held that each item should be considered as separate plant and machinery for the purpose of first proviso to s. 32(1)(ii) of the IT Act. Shri Bajpai submitted that the above decision be applied in this case.
4. Shri Suman Gupta, the learned Departmental Representative, strongly relied upon the order of the Assessing Office. He argued that the functional use of shuttering was more important. Single item of shuttering material cannot be treated as plant and machinery to be eligible for 100% depreciation under the proviso. Shri Gupta relied upon Tribunal ‘A’ Bench, Madras in the case of ITO vs. First Leasing Co. of India Ltd. (1987) 20 ITD 449 (Mad).
5. We have given careful thought to the rival submissions of the parties. The dispute before us is fully covered in favor of assessee as per the decision of Tribunal ‘B’ Bench, Delhi in the case of Ansal Construction Co. (supra). In the said decision, the Bench almost in similar circumstances held that shuttering sheets are required to be arranged in different shapes and sizes. The number of sheets required to be used would depend upon the area intended to be covered. But from the above, it cannot be said that for construction any particular minimum number of sheets or scaffoldings were necessary. Thus individual item of shuttering and scaffoldings was plant and as the cost of individual item was less than Rs. 750 (now the limit raised to Rs. 5000), the assessee was entitled to depreciation at 100 per cent. The facts as already noted, being identical, we entirely agree with the reasoning given by the Bench and hold that each shuttering and plank can be put to separate use. The number of items to be used depend upon the size of construction to be carried. It is, therefore, not possible to hold that all shuttering and plank would together constitute a single plant or machinery. Each item is to be treated as a separate plant. There is no dispute that the cost of each of the item of shuttering taken separately is less than Rs. 5,000. It, therefore, follows that assessee is entitled to depreciation on cost of each item under first proviso to s. 32(1)(ii) of the IT Act.
6. The learned Departmental Representative placed strong reliance on the case of First Leasing Co. of India Ltd. (supra). In the said case, the assessee had claimed depreciation under proviso to s. 32(1)(ii) as cost of each bottle was less than Rs. 750. The Bench negatived the claim of the assessee with the following remarks :
“The question is what is the plant that is being put to use by the assessee for the purpose of its business. The plant in this case is ‘bottles’ and not each single bottle individually. The assessee is a leasing company and during the year, it purchased and leased out to Spencer & Co. 30,20,000 bottles. In the very nature of the assessor’s business, it cannot be handled each bottle separately and it had to purchase them in bulk and lease them in bulk. There is no dispute in this case that all the bottles are purchased in bulk and quantity of each purchase was more than Rs. 750. There is also no dispute that the value of each quantity leased out is also more than Rs. 750. In the circumstances we are of the considered opinion that it is not correct to ignore the actual method of operation of the plant, viz., bottles in this case and artificially consider that each bottle constituted a separate plant, with which the assessee is carrying on its business.”
6.1 It is thus clear from the aforesaid observations that in the case before the Bench all the bottles were leased out in bulk and were leased out as plant. They were purchased for more than Rs. 750. The case in hand is distinguishable. It cannot be said here that cost of item of shuttering material is more than the amount provided under proviso to s. 32(1)(ii) of the IT Act. We have also held that each plank or other items of shuttering can be singly used. Therefore, the decision cited by the Revenue has no application. For the aforesaid reason, we direct the Assessing Officer to allow depreciation to the assessee under proviso to s. 32(1)(ii) of the IT Act.
7. In the result, the assessor’s appeal is allowed in terms stated above.