1999 PLP 2478 (PTD)

Depreciation

Plant

Stallions and mares are not plant

Not entitled to depreciation

Income Tax Act, 1961, Ss. 32 &

43. In view of the amendment in section 43(3) of the Income Tax Act, 1961, by the Finance Act of 1995, with effect from April 1, 1962, that the tea bushes and livestock are not included in the definition of plant, stallions and mares are not "plant" and are not entitled to depreciation. Held also, that tax deducted at source outside India from foreign dividend and interest income, was not part of the total income and, thus, not assessable in the hands of the assessee. CIT v. Yawar Rashid (1996) 218 ITR 699 (MP) fol. V.K. Tankha for the Commissioner. B. L. Nema for the Assessees. This is an income-tax reference at the instance of the Revenue under section 256(1) of the Income Tax Act, 1961, 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 right in law in holding that tax deducted at source outside India from foreign dividend and interest income, was not part of the total income and, thus, not assessable in the hands of the assessee under the Income Tax Act, 1961? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the stallions and mares are plant within the meaning of section 43(3) of the Income Tax Act, 1961, for the purpose of depreciation under section 32 of the Act?" The assessment years are 1983-84 and 1984-85. The assessees are co-heirs of the estate of the late Rashid Jaffar Khan, each having a 14/48ths share therein. The said estate had foreign income of dividend and interest. The assessee earned income in the U.K. out of which income-tax was deducted in the U.K. The Assessing Officer include, d the gross amount of they, said income in the total income of the assessees. The assessees filed appeals before the Commissioner of Income-tax (Appeals) with the objection that the net amount and not the gross amount should have been included in their respective total income. The appeal was accepted by the Compassioner of Income-tax (Appeals). Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue filed appeals before the Tribunal and the Tribunal upheld the stand of the assessees that only the net income and not the gross income was includible in their income. The Revenue moved the Tribunal for referring the question to the High Court and accordingly question No.1 has been referred by the Tribunal for answer by this Court. Question No. 1 has already been answered by us in the case of CIT v. Yawai Rashid (1996) 218 ITR 699 against the Revenue and in favour of the assessee. For the reasons mentioned in the aforesaid order, question No.l is answered against the Revenue and in favour of assessees. So far as question No.2 whether the mares are plant within the meaning of section 43 (3) of the Income-tax Act for the purpose of depreciation under section 32 is concerned, suffice it to say that the question does not survive in view of the amendment in section 43(3) of the Act by the Finance Act of 1995, with effect from April 1, 1962, that the tea bushes and livestock are not included in the definition of "plant". In this view of the matter, this question is answered in favour of the Revenue and against the assessees. M.B.A./2083/FC ??????????????????????????????????????????????????????????????????? Reference answered