Jagannatha Shetty, J.
1. The question that has been referred for the opinion of this court at the instance of the Department under s. 256(1) of the I.T. Act, 1961, reads :
'Whether on the facts and in the circumstances of the case, the ITAT is justified in law in holding that depreciation should be allowed on roads ?'
2. The facts behind the legal formulation are as follows :
3. The assessee is a turf club which has been formed to run races for the benefit of jockeys, trainees, horse owners, and to entertain others. For the assessment year 1976-77, the assessee had incurred a sum of Rs. 5,40,862 on asphalting of roads within the race course premises. The assessee claimed that it was a revenue expenditure. The assessing authority upon perusal of the bills disallowed some part of the claim on the ground that there was capital expenditure in the sum of Rs. 1,80,000. Upon appeal, the Commissioner (Appeals) upheld the assessment relating to the said capital expenditure of Rs. 1,80,000 but allowed depreciation on the said amount at the prescribed rate. The appeal preferred by the Revenue was dismissed by confirming the order of the Commissioner (Appeals).
4. In this reference, Mr K Srinivasan for the Department contended that 'building' referred to in s. 32(1)(ii) read with App. I in r. 5 should be construed as superstructure and not a site or a road, In support of the contention, counsel relied upon the decision of the Supreme Court in CIT v. Alps Theatre : 65ITR377(SC) , Wherein the word 'building' used in s. 10(2)(vi) of the 1922 Act was construed to mean only the superstructure and not the site over which the building was erected.
5. It is true that the Supreme Court in Alps Theatre's case has observed that a building cannot include the site over which it is erected. But in that case the subject-matter of controversy was whether calculating the depreciation allowable for a building, the cost of land on which the depreciation allowable for a building, the cost of land on which the building is constructed can be taken into account or not. The Supreme Court, after examining the provisions contained in s. 102(2)(vi) of the Indian I.T. Act, 1922, observed that language employed in that section showed that the word 'building' did not include the site or the land on which the building was constructed. We do not think that the ratio of that decision could be extended to the present case. The road in the instant case has been laid in the proximity of the building belonging to the assessee and it was for providing access to the race course and other buildings within the compound., Such roads, in our opinion, could properly fall within the meaning of the word 'building'. Our view finds support from the decision of the Bombay High Court in CIT v. Colour Chem Ltd. : 106ITR323(Bom) , in which the following observations may be noticed at page 327 :
'The Supreme Court decision on which Mr. Hajarnavis has relied is, in our view, clearly distinguishable on facts. In that case the depreciation was claimed not merely on the cost of erecting the building on the land but also on the cost of the land over which the construction had been put and it was in that context that the Supreme Court held that the word 'building' occurring in the relevant provision of section 10(2) of the Act meant 'structure' and did not include the site. If, in the instant case, the cost of the land over which the roads had been laid out was sought to be included in the capital expenditure, the depreciation claimed by the assesses company would have come within the ratio of the Supreme Court decision. As stated above, over the land which was in existence in the factory premises, roads or roadways were required to be laid out and for laying out such roads or roadways, cost was incurred over which depreciation has been claimed.'
6. We respectfully agree with the above view. Similar view has been taken by the Madras High Court in CIT v. Lucas-TVS Ltd. (No. 2) : 110ITR346(Mad) , wherein it was observed that the word 'building' occurring in the I.T. Act, 1961, has to be understood from the commonsense point of view and its use in the Act has to be appreciated in the context in which the provision for depreciation on building has been made, treating the same as a capital asset of an assessee. There is nothing either in principle or in the use of the word 'building' in the I.T. Act, to exclude roads which the assessee had laid in the proximity of the factory and for the purpose of providing access to the factory and the other buildings within the compound.
7. There is a string of decisions taking this line of reasoning (See (1) Hukamchand Mills Ltd. v. CIT : 114ITR870(Bom) Panyam Cements & Mineral; Industries Ltd. v. Addl. CIT : 117ITR770(AP) and (3) CIT v. Kalyani Spinning Mills Ltd. : 128ITR279(Cal) ). No case of any other High Court which has taken a different view has been brought to out notice.
8. Mr. Srinivasan, however, referred us to the Income-tax (4th Amendment) Rules, 1983, which was brought into force from April 2, 1983. In the remarks column of App. I therein, the following clarification is found :
' 'Building' includes roads, bridges, culverts, wells and tube-wells.'
9. Mr. Srinivasan contended that it is only with effect from April 2, 1983, the intention of the Government has been made clear by the inclusion of roads, bridges, culverts, wells and tube-wells within the meaning of 'building' and prior to the amendment, the 'building' ought not to be construed to include the said items.
10. We do not think that it is a correct approach to be made. If we may say so, the Government appears to have made the amendment by way of clarification in conformity with the decisions of most of the High Courts.
11. It is always proper and wise to fall in line with the consistent view taken by several High Courts.
12. In the result, for the reasons stated above, we answer the question in the affirmative and against the Revenue.
13. In the circumstances of the case, we make no order as to costs.