ORDER :

1. The question of law that falls for our consideration is as to whether ‘natural pond’ which as per the assessee is specially designed for rearing prawns would be treated as ‘plant’ within Section 32 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the purposes of allowing depreciation thereon.

2. We may mention at the outset that one Division Bench of the High Court of Kerala in the case of the same assessee had on earlier occasion decided the aforesaid question in the negative holding that it is not a plant. However, another Division Bench by the impugned judgment dated 14.10.2014, even after noticing the earlier judgment, has not agreed with the earlier opinion and has rendered contrary decision. We are, therefore, at this stage constrained to remark that the Division Bench which has given the impugned judgment dated 14.10.2004 should have referred the matter to a larger Bench as otherwise it was bound by the earlier judgment of the coordinate Bench. However, since appeals are filed against both the judgments and the validity of the judgment rendered in the first case is also questioned by the assessee, we have to necessarily decide these appeals on merits, rather than remanding the case back to the High Court to be considered by a larger Bench.

3. Facts in brief are that the assessee is a company doing business of “Aqua Culture.” It grows prawns in specially designed ponds. In the income tax returns filed by the assessee, the assessee had claimed depreciation in respect of these ponds by raising a plea that these prawn ponds are tools to the business of the assessee and, therefore, they constitute ‘plant’ within the meaning of Section 32 of the Act. The Assessing Officer disallowed the claim of the assessee. The two Benches of the High Court, as mentioned above, have taken a contrary view.

4. It is not in dispute that if these ponds are ‘plants’ then they are eligible for depreciation at the rates applicable to plant and machinery and case would be covered by the provisions of Section 32 of the Act. It is not even necessary to deal with this aspect in detail with reference to the various judgments, inasmuch as judgment of this Court in Commissioner of Income Tax, Karnataka vs. Karnataka Power Corporation, 2002 (9) SCC 571, clinches the issue. Therein the Court has taken into consideration the earlier judgments on which some reliance was placed by the learned counsel for the Revenue and are suitably dealt with. The relevant portion of the said judgment reads as under:

“5. It was the case of the assessee that it was entitled to investment allowance as applicable to a plant in respect of its power generating station building. In a note filed before the Commissioner (Appeals) it stated that it had included for the purpose the value of its Potential Transformer Foundation. Cable Duct System, Outdoor Yard Structures and Tail Race Channel. It explained that the process of generation started from letting in water from the reservoir into the pen-stocks and ducts which were the water conductor system into the turbines. Once electricity had been produced by generation, it had to be conducted, as it was not possible to store the same, and the process of generation continued until the electricity was led to the transmission tower. The water that was used for rotation of the turbines had to be removed and this was done through the Tail Race Channel. For stepping up the electricity, transformers were used in the outdoor yard. The conduction of the electricity was through conductors held in ducts, called the Cable Duct System, which were specifically designed for the purpose. The case of the assessee, therefore, was that all these were part of the special engineering works that were an essential part of a generating plant and, therefore, it was entitled to have the same treated as a plant for the purposes of investment allowance. The Commissioner accepted the correctness of the assessee’s case. He held that it wa