Aerators used for prawn farming can’t be treated as equipment for pollution control; not eligible for 100% dep.: HC

Case Details: Industrial Incubators (P.) Ltd. v. DCIT - [2021] 133 taxmann.com 269 (Orissa)

Judiciary and Counsel Details

• • Dr. S. Muralidhar, CJ. and A K. Mohapatra, J.
  • B. Panda, Sr. Adv. for the Appellant. 
  • S.S. Mohapatra, Sr. Standing Counsel (IT) for the Respondent.

Facts of the Case

Assessee was in the business of prawn cultivation. Income-tax Returns (ITR) filed by the assessee were picked up for scrutiny by the Assessing Officer (AO). During the assessment, AO noticed that assessee had claimed 100 per cent depreciation on aerators.
The assessee claimed that said aerators were water pollution control equipment used to provide healthy growth of prawns. However, AO denied the benefit of 100 per cent depreciation on aerators and reduced it to 25 per cent. The Commissioner and Tribunal upheld the order of AO. Aggrieved-assessee filed the instant appeal before the High Court.

High Court Held

The Orissa High Court also upheld the findings of AO. It was noted that when the notice was issued to the suppliers of aerators, the suppliers were unable to clarify whether the Aerators were “technically fit to be treated water pollution control equipment” as defined under the IT Rules, 1962.

The AO also made a reference to the Central Pollution Control Board (CPCB) whether the technical devices used in the form of Aerators used by the Aquaculture farms could be considered as water pollution control equipment. The CPCB inter alia pointed out that Aerators are used for any purpose other than treatment of wastewater/sewage effluent/trade effluent. Thus, it may not be considered as a part of pollution control equipment and, accordingly, not eligible for tax benefits and concession.

The District Fisheries Officer was also issued a summons, and in his response, he disclosed that the effluent discharged from the prawn culture farm was harmful to the nearby areas. It was pointed out that Aerators “should be considered as aquaculture equipment and not the pollution control” equipment. Therefore, the claim of 100% depreciation on aerators wasn’t justified.

Case Review

• • ITAT, Cuttack in IT Appeal Nos. 168 and 169/CTK/2001, dated 3-1-2001 (para 15) affirmed.
  • Asstt. CIT v. Victory Aqua Farm Ltd. [2015] 61 taxmann.com 166/234 Taxman 598/379 ITR 335 (SC)(para 12) distinguished.

List of Cases Referred to

• • Asstt. CIT v. Victory Aqua Farm Ltd. [2015] 61 taxmann.com 166/234 Taxman 598/379 ITR 335 (SC)(para 10)