JUDGMENT
1. This is an income-tax reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue and the following two questions of law have been referred by the Tribunal for answer by this court :
” (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the contract awarded by Bhilai Steel Plant was not a new source of income within the meaning of the second proviso to Sub-section (2) of Section 3 of the Income-tax Act, 1961 ?
(ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in directing to allow depreciation of Poclain machinery for a period of 23 months as against 14 months ?”
2. The assessee is a registered firm and is engaged in the execution of various contract works. During the year under consideration, the firm was awarded a new contract known as “reclamation and screening of iron ore at Aridongari” by Bhilai Steel Plant by order dated January 20, 1988. For execution of this contract, the assessee purchased Poclain machinery which was delivered at Aridongari and used for the execution of the new contract. The Assessing Officer allowed depreciation on Poclain machine for a period of 14 months as against 23 months claimed by the assessee in
accordance with Section 3 of the Income-tax Act, 1961, with effect from April 1, 1989. This finding of the Assessing Officer was upheld by the Commissioner of Income-tax (Appeals). Thereafter, the assessee approached the Tribunal and the Tribunal granted a depreciation on poclain machinery for a period of 23 months. Hence, the Revenue has approached the Tribunal for referring the aforesaid two questions for answer by this court and the Tribunal has referred the same to this court for its answer.
3. We have heard learned counsel and perused the order of the Tribunal. The Tribunal has made a pragmatic approach. The Tribunal has rightly found that what has to be seen is the head of income and commonality of the purpose. Referring to the decision of the Gujarat High Court in the case of Bansidhar Pvt. Ltd. v. CIT [1981] 127 ITR 65, the Tribunal took the view that the common fund was utilised and it was in the common pool, finances were made available to the proclain business started at different dates. The test which has been laid down by the Gujarat High Court and followed by the Tribunal appears to be justified. If that is not the correct view, then if a new business is started, it would constitute a separate business and that is not the intention. Therefore, what is to be seen is that if the finances are made available from the common pool and management is by a common management, then it will appear that from a common hand, so many businesses can be started. In this view of the matter, we arc of the opinion that the view taken by the Tribunal appears to be well founded and both the questions arc answered against the Revenue and in favour of the assessee.