The main legal point established in the judgment is that roads within the factory compound form part of the building used for the purpose of business and are entitled to depreciation.

AJIT K. SENGUPTA, J.

( 1 ) FOR the assessment year 1968-69, the following question of law was referred to this court under Section 256 (1) of the Income-tax Act, 1961 :" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that drains, culverts and roads were not buildings or plant and as such no depreciation was admissible thereon ? "in the assessment for the assessment year 1968-69, the Income-tax Officer, following his assessment order for earlier years, rejected the claim of the assessee-company for the grant of depreciation allowance in respect of assets consisting of roads, drains, culverts, swimming pools, parks, fencing, etc. The Appellate Assistant Commissioner, following his order in respect of earlier years, directed the Income-tax Officer to go into the details and allow depreciation wherever it may be due on the lines and hi the light of the principles enunciated by him in his order for the earlier years. The matter then came up before the Appellate Tribunal. It was common ground of both the sides that the point in issue had been decided by the Appellate Tribunal in its order for the assessment years 1965-66 and 1966-67, in the case of the assessee company whereby the order of the Appellate Assistant Commissioner had been reversed and that of the Income-tax Officer has been restored. Following its earlier order, the Appellate Tribunal similarly restored the order of the Income-tax Officer on this point for the assessment year 1968-69.

( 2 ) FOR the assessment years 1965-66 and 1966-67, at the instance of the assessee, the following question was referred to this court: "whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no depreciation was admissible on drains, culverts, roads, etc. ? " by the judgment dated April 3, 1978 in I. T. Ref. No. 526 of 1975, this court remanded the matter to the Tribunal for decision with the direction to ascertain whether assets being drains, roads, culverts, etc. , are buildings or not and, if these assets are buildings, whether they were used for the purpose of the business of the assessee and whether depreciation as claimed by the assessee is admissible or not. The said decision is reported in Oil India Ltd. v. CIT, [1978] 114 ITR 323.

( 3 ) FOR the assessment year 1969-70, at the instance of the assessee, the following question was referred to this court (143 ITR 848, 850): "whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no depreciation was admissible on drains, culverts and roads for the assessment year 1969-70 ? " this court held as follows (p. 855):"the principles relating to depreciation on roads, drains and culverts will be governed by the decision given by this High Court in the case of CIT v. Kalyani Spinning Mills Ltd. , [1981] 128 ITR 279. In view of the principles laid down in the said decision, this question is answered in the negative and in favour of the assessee. "the said decision is CIT v. Oil India Ltd. , [1983] 143 ITR 848.

( 4 ) IN the case of CIT v. Kalyani Spinning Mills Ltd. , the court was concerned with the question whether depreciation is allowable in respect of the roads within the factory compound and the compound of the residential quarters of the factory employees. After considering various decisions, this court held that the roads within the factory compound form part of the building which is used for the purpose of business and as such are entitled to depreciation. In that case, the court was, however, not concerned with drains and culverts.

( 5 ) SINCE, for the assessment year 1969-70, this court held that the depreciation is admissible on drains, culverts and roads, the question in this reference also must be answered in the negative and in favour of the assessee. There will be no order as to costs.

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