Jagannatha Shetty, J.:—
The Tribunal has referred the following question under Section 256(1) of the Income-Tax Act, 1961:
“Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that the assessee was entitled to get higher depreciation on canteen building?”
2. The reference arises out of an order of re-assessment made on the assessee, a Company, for the assessment year 1974-1975. The only fact relevant, for disposal of the reference is that the assessee claimed depreciation on canteen building on the basis that it formed part of the factory. In the original assessment that claim was allowed, but it was negatived by the Income-Tax Officer in the re-assesement proceedings. On appeal, the Commissioner of Income-Tax (Appeals) agreed with the view taken by the I.T.O The assessee then appealed to the Tribunal. The Tribunal following the decision of the Madras High Court in Commissioner Of Income-Tax, Tamil Nadu-Iii v. Engine Valves Ltd. . 126 ITR 347. allowed the appeal of the assessee.
3. The short question that arises for consideration is, whether the canteen appertaining to the factory premises should be regarded as a part of the factory building.
4. It is not disputed that the canteen building in this case is located within the factory premises. A case similar to the one before us, came up for consideration before the Madras High Court in Engine Valve Ltd.'s case. The Madras High Court has observed at p. 351 thus:
“But, whatever expression we might employ to describe the culinary, process, there is no doubt whatever that the use of fuel and other forms of energy in that part of the canteen, would have the same damaging effect on the life of the building as a regular manufacturing process would by the use of plant or machinery.”
“These considerations definitely point to the conclusion that a canter building is, in the proper sense of the term, a factory building for the purpose of depreciation allowance ………”
5. We respectfully agree with the above view taken by the Madras High Court, although we must state that all the preparations in the kitchen or canteen cannot be considered is manufacturing process. We are also told that the Special Leave Petition preferred by the Revenue against the above judgment was rejected by the Supreme Court on March 23, 1984 in S.C.L.A.P No. 6061 of 1981.
6. The canteen in every factory is meant for the welfare of the workmen and it is generally a part and parcel of the factory. It is certainly susceptible to more damage than the factory building due to the nature of the use.
7. In the result, we answer the question in the affirmative and against the revenue.