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 80J of the I.T. Act, 1961, provides, inter alia, as follows :
' 80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.--...
(4) This section applies to any industrial undertaking which fulfils all the following conditions, namely :--......
(iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of twenty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;...'
7. Appendix I, Pt. I of the I.T. Rules, 1962, contains statement of rates at which depreciation is admissible. The first item in the said Schedule relates to ' buildings ' and provides as follows :
' Class of assetRateRemarks Number on the basis of which the percentage is to be calculatedon the written down value except where otherwise indicated in the case ofocean-going steamers.
I.BUILDINGS- (1)First class substantial buildings of selected materials
2.5Double these numbers will be taken for factory buildings excluding offices, godowns, officers' and employees' quarters.
(2)Second class buildings of less substantial construction
5 (3)Third class buildings of construction inferior to that of second class buildings but not including purely temporary erections
7.5 * *** *'
Item (3) under E in the said Appendix provides as follows :--
'(3)Electrical machinery : - (a)Batteries20 (b)Other electrical machinery including electrical generators and motors (other than tramway motors)
Item (2) under R in the said Appendix provides as follows :--
'(2)Refrigeration plant, containers, etc. (other than racks) (N.E.S.A.)
15General rate prescribed for furniture and fittings shall apply to racks.'
8. The relevant provisions of the Factories Act, 1948, as in force at the relevant time, were as follows :
'2. (m) 'factory' means any premises including the precincts thereof-
(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.......'
' 2. (k) 'manufacturing process ' means any process for--
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or
(ii) pumping oil, water or sewage, or (iii) generating, transforming or transmitting power, or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding, or
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels.'
9. It appears that the Tribunal in the instant case has found as a fact that the electrical machinery and equipment concerned, namely, the switch-gear and motor of the cold storage plant, formed part of the refrigeration plant. This finding has not been challenged by the revenue and stands concluded and there is no reason why for parts of its refrigeration plant the assessee will not be entitled to a depreciation specifically provided therefor. The order of the Tribunal affirming the order of the AAC on this point does not appear to us to be in any way erroneous. Accordingly, we answer question No. 2 in the affirmative and in favour of the assessee.
10. So far as the other question is concerned it appears that there is no finding by the Tribunal that the cold storage plant of the assessee is a factory. The Tribunal has drawn inspiration from Section 80J of the I.T. Act, 1961, where a cold storage plant has been equated with other industrial undertakings. The Tribunal has also taken note of the fact that the assessee had obtained a licence under the Factories Act, 1948.
11. In our opinion, the fact that a licence is taken or applied for under the Factories Act, 1948, is not conclusive to establish that the undertaking concerned is a factory. It has to be determined if the unit concerned falls within the definition of 'factory' in the statute. The definitions of 'factory' and ' manufacturing process ' as they stood at the relevant time as noted above do not show that a cold storage plant where a manufacturing process could be said to be carried on is a plant and, therefore, such a plant cannot fall within the ambit of the expression 'factory'. This view is supported by a decision of the Madras High Court in New Taj Mahal Cafe Ltd. v. Inspector oj Factories  9 FJR 117 ; AIR 1956 Mad 600, where a question arose if the use of a refrigerator in a restaurant is one of the factors in determining whether the restaurant concerned would be deemed to be a factory under the Factories Act, 1948. The Madras High Court held as follows (p. 602 of AIR) :
' No doubt a frigidaire is worked by electric power, but every place where a frigidaire is used will not become a factory, even if the requisite number of persons are engaged in work on the premises where a refrigerator is in use. If a refrigerator was the only appliance driven by power that was used in the restaurant, what the statutory authorities had to decide was whether any manufacturing process was carried on with the aid of that refrigerator, that is, with the aid of the power that was needed to work that refrigerator. That aspect of the case does not appear to have been considered at all.
Normally, a refrigerator is used for the purpose of storage. Even in a restaurant articles are kept in the refrigerator till they are required for sale. Mere storage as such will not be part of the manufacturing process as defined by Section 2(k) of the Factories Act of 1948. It will not even amount to treating or adapting any article with a view to its sale or disposal. If, however, a refrigerator is used for treating or adapting any article with a view to its sale, then the test required by Section 2(k) would be satisfied.'
12. Our attention was drawn to a subsequent amendment of the Factories Act, 1948, whereby with effect from March, 1976, a cold storage plant has been specifically included in the units where a manufacturing process is carried on. But this amendment is not retrospective and cannot aid the assessee in the instant case.
13. For the reasons given above, we hold that the Tribunal's animation of the order of the AAC in allowing a rate of depreciation prescribed for factories in respect of the building of the cold storage plant is erroneous. The rate of depreciation which can be claimed by the assessee in respect of this building must be one under the first item of App. I, Pt. I of the I.T. Rules, 1962, quoted hereinabove and not the rate as prescribed for a factory.
14. Mr. Ajit Sengupta, learned counsel for the revenue, has drawn our attention very fairly to a decision of the Allahabad High Court in CIT v. Kanodia Cold Storage : 100ITR155(All) . In that case, depreciation was allowed in respect of a building housing a cold storage plant at the rate of 15% on the basis that the building itself was a part of the plant. This decision, in our view, has no application to the, facts and circumstances of the instant case. Here, at no stage, the assessee claimed the building to be a part of the cold storage plant. The assessee's only contention was that the building was a factory building. In the Allahabad case, it was also found as a fact that the building concerned had insulated walls which were used as a freezing chamber and on the basis of such finding it was held that though the building could not be held to be part of the machinery yet it must be held to be a part of the air-conditioning plant and, therefore, would be allowed the special rate of depreciation at 15% on its written down value. Such findings are absent in the instant case.
15. Section 80J of the I.T. Act, 1961, in our view, does not advance the matter any further. All that the section provides is that a special deduction in respect of profits and gains of certain industrial undertakings including cold storage plants would be allowed. This section cannot be applied to interpret the meaning of the expression 'factory' or to extend the definition of the expression 'factory' in the Factories Act, 1948.
16. For the reasons given above, we answer question No. 1 in the negative and in favour of the revenue. The reference is disposed of accordingly. There will be no order as to costs.
C.K. Banerji, J.
17. I agree.