Ita/249/2009 Of The Commissioner Of Income Tax, Cochin v. M/S. Harrisons Universal Flowers Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN FRIDAY, THE 23RD DAY OF SEPTEMBER 2016/1ST ASWINA, 1938 ITA.No. 249 of 2009 -------------------- ITA 92/COCH/2001 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCHDATED 28-01-2004 ASST. YEAR 1996-97. .... APPELLANT(S)/APPELLANT::----------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS. SRI.P.K.R.MENONE, SR. COUNSEL SRI.JOSE JOSEPH, SC RESPONDENT(S)/RESPONDENT:: -------------------------- M/S.HARRISONS UNIVERSAL FLOWERS LTD., WILLINGDON ISLAND, COCHIN-3. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23-09-2016 ALONG WITH I.T.A.315/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: msv/ I.T.A.No. 249 of 2009 --------------------- APPENDIX PETITIONER(S)' ANNEXURES:------------------------- ANNEX ACOPY OF ORDER U/S.143(1) (a) DT.28.10.1997 FOR THEASST. YEAR 1996-97.ASST. YEAR 1996-97. ANNEX BCOPY OF THE ORDER DTD.22.1.2001 OF THE COMMISSIONER OFINCOME TAX (APPEALS).INCOME TAX (APPEALS). ANNEX CCERTIFIED COPY OF THE ORDER DTD.28.1.2004 OF THEINCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITANO.92/COCH/2001 & 93/COCH/2001.INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITANO.92/COCH/2001 & 93/COCH/2001. RESPONDENT(S)' ANNEXURE ----------------------- NIL //TRUE COPY// msv/ P.S.TO JUDGE THOTTATHIL B.RADHAKRISHNAN &ANU SIVARAMAN, JJ. ----------------------------------------------- I.T.A.Nos. 249 and 315 of 2009 -----------------------------------------------Dated this the 23[rd] September, 2016 JUDGEMENT Thottathil B.Radhakrishnan, J. These appeals by the Revenue are against the decision of theIncome Tax Appellate Tribunal dismissing the Revenue's appeal andthereby confirming the decision of the Commissioner of Income Tax(Appeals), whereby it was held that the assessee, who is engaged inthe production and marketing of cut flowers, is eligible for depreciationclaimed on mother plants. The substance of the contention of theRevenue is that disallowance claimed on the mother plant cannot beclaimed as depreciation and as a consequence, the Tribunal was notright in holding that the disallowance of depreciation claimed on themother plants do not come under the purview of prima facieadjustment under Section 143(1)(a) of the Income Tax Act, 1961,hereinafter referred to as the 'Act', for short. 2. We heard the learned Senior Counsel for the Revenue. There isno appearance on behalf of the respondent assessee, in spite ofservice of notice. 3. The Commissioner of Appeals as well as the Tribunalproceeded to apply the decision of the Calcutta Bench of the Tribunal ITA.249 & 315/09 in the case of General Fibre Dealers Pvt. Ltd. [ITA Nos.1626 and539(Cal)/89], wherein it was held that tea bushes constitute plant andmachinery for a plantation company producing tea and as such, theassessee is eligible for depreciation. 4. The learned Senior Counsel appearing for the Department pointed out that the decision in General Fibre Dealers Pvt. Ltd.(supra) is of no avail for reasons more than one. He argued that theTribunal as well as the Commissioner of Appeals failed to note that thedefinition of the term 'plant' in Section 43(3) of the Act was amendedwith effect from 1.4.1962 as per the insertion made through theFinance Act, 1995, whereby tea bushes or livestocks were excludedfrom the definition of the term 'plant' in that sub-section. He alsopointed out that the statement of objects and reasons of the 1995Finance Bill clearly shows that the said amendment was being made tooverride certain judicial pronouncements in so far as tea bushes areconcerned and also to exclude livestocks from the ambit of thedefinition of the term 'plant'. pointed out that the decision in General Fibre Dealers Pvt. Ltd.(supra) is of no avail for reasons more than one. He argued that theTribunal as well as the Commissioner of Appeals failed to note that thedefinition of the term 'plant' in Section 43(3) of the Act was amendedwith effect from 1.4.1962 as per the insertion made through theFinance Act, 1995, whereby tea bushes or livestocks were excludedfrom the definition of the term 'plant' in that sub-section. He alsopointed out that the statement of objects and reasons of the 1995Finance Bill clearly shows that the said amendment was being made tooverride certain judicial pronouncements in so far as tea bushes areconcerned and also to exclude livestocks from the ambit of thedefinition of the term 'plant'. 5. The eligibility to reckon depreciation is referable to Section 32of the Act. A perusal of the different limbs of Section 32 of the Actwould clearly show that the term 'plant' in that Section, wherever itoccurs therein, is apparently referable only to non living objects andnot living things, be they belonging to animal life or plant life. In so far ITA.249 & 315/09 as tea is concerned, the Act itself makes reference to the Tea Act andregistration with the Tea Board. There are consequences that followedin the matter of application of the Income Tax Rules, 1962, 'Rules', forshort, in relation to establishments which incidentally grow tea. In anyview of the matter, except where the Act or Rules make clear eligibilityfor exemption with reference to any particular type of things, no livingorganism, whether from the animal world or the plant world, could bebrought into the term 'plant', even utilising the terminology of Section43(3) of the Act which is an inclusive definition. We also recall forourselves the clear distinctions to be maintained in the legislativedomain and the field occupied by the provisions relating to differentsubjects in the three Lists in Seventh Schedule to the Constitution ofIndia are concerned. The process of propagation by obtaining cut-plants from a mother plant which is nothing but vegetative propagationin terms of botanical terminology cannot be treated as an activity forthe purpose of treating that procedure to be of such a nature to entitlean assessee to claim depreciation for the mother plant. The generationof cut flowers utilising the cut-plants is the progressive result ofvegetative propagation not amounting to destruction or conversion ofthe mother plant; which continues to remain intact for the purpose ofgenerating more tissues which would grow out to be utilised ascut-plants for commercial activity. The ratio of the decisions relating to ITA.249 & 315/09 tea does not apply to the case of an assessee who claims deduction ofthe nature that has been sought for in the case in hand. 6. All that the Tribunal has done was to merely follow thedecisions of the Calcutta Bench even without noticing the amendmentto the Act. In the light of the aforesaid, we vacate the interim ordersand remit the matters for reconsideration by the Appellate Tribunal inaccordance with law. Since the assessee does not appear before thisCourt, let a fresh notice be issued to the assessee from the Tribunal.Further consideration by the Tribunal shall be done de novo noticingwhat is stated above, however, not tapering down any findingrendered in this judgment which has resulted in this order of remand. The income tax appeals are ordered accordingly. THOTTATHIL B.RADHAKRISHNAN JUDGE ANU SIVARAMAN JUDGE vgs29/9