TMI Blog1996 (6) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the learned CIT(A) erred in directing the Assessing Officer not to deduct the capital subsidy received from the cost of assets for the purpose of allowing depreciation and investment allowance under the Income-tax Act." 4. The ld. Departmental Representative conceded that the issue is now covered in favour of the assessee by the decision of the Apex Court in the case of CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830/76 Taxman 611. We, therefore, reject this ground of the revenue. 5. Ground No. 2 relates to disallowance under section 40A(2)(b). The Assessing Officer found that the assessee-company had paid salary of Rs. 2 1,000 @ Rs. 1,750 per month to Smt. Indira Garg, who is a specified person under section 40A(2) of the Act. During the course of assessment proceedings, the Assessing Officer required the assessee to state the qualification/experience, etc., of Smt. Indira Garg in the line of assessee's business. The assessee was further required to state the exact work, which she was doing along with proof therefor. However, the assessee did not furnish any information and the assessee's reply on the above query was silent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labels, etc., to explain to the Doctors the use and benefit of the medicines produced by the company. It is pointed out therein that it was for that reason that the CIT(A) had allowed partial relief, which deserves to be maintained. 8. We have perused the orders of the authorities below, considered the arguments of the ld. Departmental Representative as also the written submission of the assessee on our records. It is not in dispute that during the course of assessment proceedings, the Assessing Officer had required the assessee to furnish justification for payment of salary of Rs. 21,000 to Smt. Indira Garg, who is admittedly a relative of one of the Directors. The assessee did not respond to the above query not brought on record any material to prove that the lady had rendered any services to the assessee-company in the year of account. It is now well-settled that if the assessee claims deduction of any expenses against his income, the onus lies on him to justify the claim. The facts on record go to indicate that the onus which lay on the assessee was not discharged by it. Her educational qualification, experience, if any, and nature of services rendered by her to the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teria, dust, etc. In the sterile room, temperature is controlled, positive air pressure is maintained and for killing bacteria, ultra violate radiation is utilised. It was the case of the assessee that without sterile room, manufacturing cannot be done. The contentions of the assessee were not acceptable to the Assessing Officer. On analysing the decisions relied upon by the assessee, he concluded that these judgments laid down the principle of law that if any building is used for the purposes of business and there are special fittings in it, the cost of those special fittings could be treated as plant and not the cost of structure. He, therefore, held that the sterile room could not be treated as a plant. He, therefore, transferred the cost of the sterile room from the cost of plant and machinery and added the same to building account for allowing depreciation and investment allowance. Feeling aggrieved, the assessee appealed but without success. 11. The CIT(A) concurred with the view of the Assessing Officer and observed, thus : "The same contentions have been raised before me also and it is observed that in the said room the assessee has installed ACs, Pressure Units and Ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied. It is further stated that the assessee cannot carry out the basic manufacturing activity without maintaining the sterile condition in the place where filling is done, hence, enclosure, whether of cement and concrete or iron and steel is of no consequence for the purpose of maintaining the sterile conditions. Reliance has also been placed on the decision in the case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44(SC) and in the case of CIT v. R.G. Ispat Ltd. [1995] 82 Taxman 488 (Raj.). The ld. Departmental Representative, on the other hand, relied on the orders of the revenue authorities. He highlighted the point that the CIT(A) has recorded a finding that construction of the room is normal as in the case of other rooms. He submitted that in view of the above findings, he is justified in holding that the room did not constitute plant, whereas other fittings installed in the room to make it sterile are treated as plant. He, therefore, argued that the orders of the revenue authorities deserve to be sustained. 13. We have perused the orders of the revenue authorities, considered the arguments of the ld. Departmental Representative as also the submissions of the assessee on our recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was impossible to work the cold storage plant without such a treatment to its walls. The Tribunal, therefore, held that tire building which was being used as freezing chamber was part of the air-conditioning plant of the cold storage. On reference, the Hon'ble High Court of Allahabad held that in common parlance word ' plant ' includes within its ambit buildings and equipments used for manufacturing purposes. It further observed that section 43(3) of the Act gives an inclusive definition of the expression ' plant ' which indicates that the Legislature intended to give to the word ' plant ' an extended meaning which went even beyond that conveyed by it in common parlance. Their Lordships further observed that it surely did not intend to exclude from its ambit things which would normally be included in it. Their Lordships accordingly held, thus : "Viewed in this light the building in question could be a part of the plant used for air-conditioning the assessee cold storage." In the case of D H Secheron Electrodes v. CIT [1981] 132 ITR 1/[1982] 9 Taxman 180 (MP) their Lordships of the jurisdictional High Court quoted with approval the following observations of the Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he building or construction or part thereof is not considered a plant. The true test is whether it is the " means of carrying on the business " or " the location " for so doing. 4. In order for a building or concrete structure to qualify for inclusion in the term " plant ", it must be established that it is impossible for the equipment to function without the particular type of structure. 5. The particular apparatus or item must be used for carrying on the assessee's business and must not be his stock-in-trade. 14. Now let us examine the assessee's case in the light of the principles of law enunciated in the above judicial pronouncements. The assessee before us is manufacturer of Intra-Venous Dextrose. For the assessment year 1988-89, the relevant previous year ended on 31-12-1987. As on 31-12-1987, it had assets, inter alia, in the form of building worth Rs. 24,00,098 and plant and machinery worth Rs. 46,38,008. Out of its assets, namely, building, the assessee claimed that sterile room formed part of the plant and machinery of the unit manufacturing Intra-Venous Dextrose, the cost of which amounted to Rs. 1,62,000. The claim of the assessee was based on the plea that the st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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