HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Punjab, Jammu & Kashmir & Himachal Pradesh, Patiala v. Alps Theatre, Patiala
Civil Appeal No. 26 of 1966
[1967] 3 SCR 181 ·
Indian Income-tax Act, 1922: sections 10(2)(iv), 10(2)(v), 10(2)(vi), 10(2)(vi-a), 10(2)(vii) and 34(1)(b) · Indian Income-tax Rules, 1922: Rule 8 and depreciation schedule
Sources & disclosures includedDownload original judgment / order
3-judge bench · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
01 · Facts of the case
Alps Theatre exhibited films. In reopening under section 34(1)(b), the Income-tax Officer found that depreciation had originally been allowed on Rs.85,091 shown as building cost, including Rs.12,000 for land. He recomputed depreciation after excluding land. The first appellate authority upheld that treatment, but the Tribunal treated building as necessarily including its site and allowed depreciation on both. The Punjab High Court answered the reference for the assessee, considering the building a unit that should not be split.
Source: Reassessment facts and reference: SCR pp.181-183 / PDF pp.1-3
02 · Discussion by the Hon’ble Court
The Court read building consistently across section 10(2)'s insurance, repairs and depreciation clauses. Destruction or repair of a site was not contemplated, showing that building meant the structure rather than land. Depreciation addressed wear, deterioration or obsolescence, which did not apply to land in that sense. Rule 8 varied rates according to structural quality; including land would implausibly make land depreciate faster beneath lower-class buildings. Allowing land depreciation would also distort the business's true income. A municipal-rating exemption decision using building to include its site arose in a different context and was distinguished.
Source: Meaning of building, depreciation and Rule 8: SCR pp.183-185 / PDF pp.3-5
03 · Judicial decision
The Court allowed Revenue's appeal, set aside the High Court judgment and answered the reference in the negative against the assessee: the land cost was not depreciable with the building. No costs were ordered.
04 · Outcome / in whose favour
In favour of Revenue. The cinema site's Rs.12,000 cost was excluded from the historical depreciable building base. The Court did not decide a present block-of-assets allocation or valuation method.
Source: Outcome: SCR p.185 / PDF p.5
05 · AKHB REVIEW POINT
AKHB analysis: segregate land and structure cost in acquisition documents and valuation workings before computing depreciation. Test each asset component against the governing schedule and functional character rather than relying only on a composite purchase description. For current years, verify applicable block rules and treatment of inseparable rights independently.
Source: AKHB analysis based on the structure/site distinction
Source & verification
Download original judgment / order · Open cited source rendition
Full 5-page SCR report read; editorial headnote on PDF p.1 was separated from the unnumbered judicial text beginning on PDF p.1.
- Exact source bytes and 5-page count match catalogue asset 1967_3_181_185.
- The report identifies the recomputation order dated 22 February 1959 but does not print the assessment year; none is inferred.
- The catalogue's retrospective 1967INSC64 identifier is not printed in the report and is not independently certified here.
Statutory scope
This decision interprets the 1922 Act and Rule 8 schedule. It does not certify the current depreciation block, land allocation or reassessment provisions.
Later treatment
Source checked 2026-10-10. Later treatment and present statutory applicability have not been comprehensively checked; no current citator clearance is represented.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Coverage, AI disclosure & professional disclaimer
Selected Supreme Court income-tax decisions and procedural orders checked against their identified sources. This collection is not exhaustive. The research catalogue has 2,569 indexed PDF assets, including alternate copies and incidental matches; that is not a count of unique or reviewed judgments. Historical and unreported coverage remains open.
AI-assisted research checked against the identified source. Extraction, interpretation or omission errors remain possible. Source review does not mean independent approval by a practising professional. Verify every material statement against the complete original judgment.
General research information only; not legal or tax advice, a certified judgment or a substitute for the full order. Applicability depends on facts, assessment year, statutory version and jurisdiction. Subsequent treatment is unverified unless a note expressly identifies the sources checked. Downloading does not create a professional engagement. Obtain case-specific advice before reliance.
The official 1961–2025 structural correspondence does not establish that a precedent applies under the new Act. Verify the enacted wording, commencement and transitional provisions separately.