DIPAK KUMAR SEN, J.

( 1 ) MESSRS. Mangolia Dairy Products (India), the assessee, owns and runs a cold storage plant. In the assessment years 1968-69 and 1969-70, the relevant accounting periods being the years ending on 30th June, 1967, and 30th June, 1968, the ITO allowed depreciation on the building of the said cold storage plant at only 5% on the written down value treating the same as a godown and on the electrical machinery and equipment therein at the general rate of 10% on the written down value. Being aggrieved by the said order of the ITO, the assessee preferred an appeal. The AAC held that as machinery was installed in the building for cold storage, the same should be held to be a factory and depreciation should be allowed at a special rate of 10%. He also held that, as the electrical machinery and equipment were being used for refrigeration, depreciation should be allowed at the prescribed special rate of 15%.

( 2 ) AGAINST the order of the AAC, the revenue preferred an appeal before the Tribunal and contended that a factory building must be a building where manufacturing process was carried on with the help of plant and machinery. In the instant case, it could not be said that any manufacturing process was carried on in a cold storage plant and, therefore, the building could not be held to be a factory building. Therefore, depreciation allowed at the rate of 10% as in a factory building was erroneous. It was further contended on behalf of the revenue that the general rate of depreciation prescribed for electrical machinery and equipments was only 10% and, as, admittedly, the items involved were electrical machinery and equipment, they should have been allowed depreciation at the said general rate and not at the rate specially prescribed for refrigeration and air-conditioning machinery. Contentions to the contrary were made on behalf of the assessee.

( 3 ) THE Tribunal noted that the expression "factory" had not been defined in the I. T. Act but found that the assessee had in fact been treated as a factory under the Factories Act, 1948, and had to apply for a licence. The Tribunal noted further that in Sub-section (4) of Section 80j no distinction had been made between a cold storage plant and other industrial undertakings, which would undisputedly include factories. The Tribunal further found as a fact that the items of electrial equipment and machinery in question, namely, switch gears and motors, on which the assessee was claiming depreciation formed part of the refrigeration plant and held that the rate of depreciation applicable therefor should be the prescribed rate of 15% for refrigeration plant and not the general rate of 10%. The Tribunal, accordingly, confirmed the order of the AAC.

( 4 ) ON an application of the CIT, West Bengal-V, Calcutta, under Section 256 (1) of the I. T. Act, 1961, the Tribunal has drawn up a statement of case and has referred the following questions of law for the opinion of this court :" (1) Whether, on the facts and in the circumstances of the case and on a correct interpretation of section 80j (4) of the Income-tax Act, 1961, the Appellate Tribunal was justified in holding that the assessee's cold storage building should be treated as a factory building and not a godown and, therefore, allowed depreciation at the rate of 10% ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the depreciation on electrical machinery and equipment should be allowed at the rate of 15%, that is, the same rate as was applicable to refrigeration and air-conditioning machinery of which it was a part and not 10% which was the general rate ? "

( 5 ) TO appreciate the controversy involved in these proceedings, it is necessary to refer to the relevant statutory provisions:

( 6 ) SUB-SECTION (4) of Section 80 J of the I. T. Act, 1961, provides, inter alia, as follows :" 80j. Deduction in respect of profits and gains from newly established in

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