JUDGMENT

K. RAMASWAMY, J.:- The assessee claimed depreciation on the written down value of roads constructed by it as forming part of the cost of the factory building and also claimed development rebate on industrial transport use for transporting raw materials and finished goods within the factory premises. The I.T.O. disallowed the claims. The assessee went in appeal. The A.A.C. dismissed the appeal. On a further appeal the Tribunal following its earlier order for assessment year 1962-63 in the case of the assessee, allowed the aforesaid two claims with regard to depreciation on the roads as well as rebate on the Tractors, Trailors etc. The revenue filed an application under S. 256(1). The said application was dismissed by the Tribunal. The revenue then filed application under S. 256(2) in the High Court. The High Court accepted the application with regard to questions only and rejected it so far as the question regarding depreciation on roads is concerned. The revenue filed SLP against the order of the High Court. This Court by order dated 5-12-1980 granted special leave confined to question No. 1 only which reads as under:-

"Whether on the facts and in the circumstances of the case, the appellate Tribunal was justified in law in holding that depreciation is admissible on the W.D.V. of the cost of construction of roads in the factory premises on the footing that they constitute building?"

CIVIL APPEAL NO. 1194 OF 1977

C.I.T., Bombay, Appellant v. M/ s. Electro Metallurgical Works Pvt. Ltd., Respondent.

2. The Appellate Assistant Commissioner directed the I.T.O. to allow depreciation on roads inside the factory compound at appropriate rates. It was claimed before the A..A .C. that roads within the factory compound constituted plant and the I.T.O. should be allowed depreciation as admissible for buildings. It was not clear from the order of the A.A.C. whether depreciation was to be granted on roads at the rates applicable to plant and machinery or at the rates applicable to building. The Tribunal while deciding the appeal filed by the revenue observed that it was not concerned with the above aspect regarding the rates. The Departments claim was that no depreciation at all should be given on roads. The Tribunal held that different benches of the Tribunal at Bombay had taken the view that depreciation on roads inside the factory compound connecting different factory buildings and connecting the factory to the outer road should be allowed either on the footing that such roads are a part of the buildings or alternatively that they constituted plant. The Tribunal thus held that A.A.C. was justified in directing the I.T.O. to grant the necessary depreciation. The appeal of the revenue was dismissed. The revenue filed a petition under S. 256(1). The question number one related to calculating the reliefs under S. 80-1 without taking into consideration the development rebate. The second question related to allowing of depreciation on roads inside the factory at appropriate rates. The Tribunal with regard to second question held that the Bombay High Court itself in the case of Colour Chem Ltd. (1977 (106) ITR 323) had taken the view that depreciation should be granted on the roads. The Tribunal in these circumstances did not consider it worthwhile to refer the second question. As regards the first question also with which we are not concerned the Tribunal did not consider it worthwhile for referring the same to the High Court. The revenue then filed a petition under S. 256(2) in the High Court. In this petition in paragraph 7 it has been stated as under:-

"So far as question No. 2 is concerned, the department has since decided not to pursue the matter further. In the prayer clause also the direction to the Tribunal to state the case and refer the question of law was made in respect of question No. 1 only."

The High Court by order dated June 17, 1976 issued notice as regards question No. 1 only and dismissed the application so far as question