TMI Blog2008 (6) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 (hereinafter referred to as the Act) : "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding the poultry sheds and water lines for sheds as `plant' for the purposes of depreciation allowance and investment allowance under the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing extra shift allowance on poultry sheds, fencing, water tanks and well ?" 2. Briefly stated, the facts of the case are that the assessee is a private limited company engaged in the hatchery business. The assessee claimed depreciation and investment allowance on poultry sheds by treating the same as "plant". The Assessing Officer only allowed depreciation treating the poultry shed as "building" and not as "plant". Investment allowance was not allowed. The claim of the assessee for treating the water-lines of the poultry sheds as "plant" was also rejected. The appeal filed by the assessee was rejected. Thereafter, the assessee approached the Income-tax Appellate Tribunal (ITAT). The Income-tax Appellate Tribunal came to the conclusion that the poultry sheds were in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement for meals and other amenities are provided for their comfort and convenience. To have sanitary fittings, etc., in a bath room is one of the essential amenities or conveniences which are nor-mally provided in any good hotel, in the present times. If the partitions in Jarrold's case [1963] 1 WLR 214 (CA) could be treated as having been used for the purpose of the business of the trader, it is incomprehensible how sanitary fittings can be said to have no connection with the business of the hotelier. He can reasonably expect to get more custom and earn larger profit by charging higher rates for the use of rooms if the bath rooms have sanitary fittings and similar amenities. We are unable to see how the sanitary fittings in the bath rooms in a hotel will not be `plant' within section 10(2)(vib) read with section 10(2)(5) when it is quite clear that the intention of the Legislature was to give it a wide meaning and that is why articles like books and surgical instruments were expressly included in the definition of `plant'. In decided cases, the High Courts have rightly understood the meaning of the term `plant' in a wide sense. (See CIT v. Indian Turpentine and Rosin Co. Ltd. [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt since the building with some modifications can easily be used as a shed for any other commercial purposes. One of the examples given is that it can be used as a shed to store grain. 10. A Division Bench of the Karnataka High Court considered the meaning of the word "plant" in Pathange Poultry Farm v. CIT [1994] 210 ITR 668. The Division Bench of the Karnataka High Court was considering the question as to whether each of the small cages erected in a poultry shed should be treated as separate plant or part of a larger unit. The court held that each of the cages was plant but came to the conclusion that once each of the smaller cages is combined to form the larger unit it loses its individuality and becomes a part of the bigger plant. The court further held that after each small cage merges in the larger unit it cease to perform and becomes incapable of performing any function independent of the entire unit as a plant or machine. Each of the smaller cages was, therefore, treated to be no better than the individual components of an engine. 11. The apex court again considered the question as to what meaning should be given to the word "plant" in Scientific Engineering Hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not apparatus or adjunct for running of a hotel. The court did not proceed to hold that a building in which the hotel was run was itself a plant, otherwise the court would not have gone into the question whether the sanitary fittings used in bath room was plant. (3) For a building used for a hotel, specific provision is made grant-ing additional depreciation under section 32(1)(v) of the Act. (4) Barclay, Curle and Co.'s case [1969] 1 WLR 675 ; [1970] 76 ITR 62, decided by the House of Lords pertains to a dry dock yard which itself was functioning as a plant, that is to say, structure for the plant was constructed to that dry dock can operate. It operated as an essential part in the operations which took place in getting a ship into the dock, holding it securely and then returning it to the river. The dock as a complete unit contained a large amount of equipment without which the dry dock could not perform its function. (5) Even in England, courts have repeatedly held that the meaning to the word `plant' given in various decisions is artificial and imprecise in application, that is to use the words of Lord Buckley, `it is now beyond doubt that the word `plant' is use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of additional depreciation by holding it to be a "plant" in one case where a building is specially designed and constructed with some special features to attract the customers and the building not so constructed but used for the same purpose, namely, as a hotel or theatre would be unreasonable.' This observation is, in our view, limited to buildings that are used for the purposes of hotels or cinema theatres and will not always apply otherwise. The question, basically, is a question of fact, and where it is found as a fact that a building has been so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant for the purposes of investment allowance." 16. The line of demarcation between what is a "plant" or not is a very thin one. Each case will have to be decided with reference to the particular facts of the case. It, however, needs to be noted that the definition of "plant" in section 43(3) is not an exhaustive definition. It is only inclusive in nature. Therefore, there is a wide scope for including in the definition many items. It is clear that the Legislature by including, ships, vehicles, and books in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cause of manufacture or production then the same is a plant. Applying the aforesaid tests, we hold that the poultry sheds are plant within the meaning of sec-tion 243, as it then stood. 20. As far as the second question is concerned that need not delay us for long. It is totally covered by a judgment of the apex court rendered in South India Viscose Ltd. v. CIT [1997] 227 ITR 286 (SC). The apex court in this judgement held as follows (page 295) : "On a proper construction of the provisions contained in Part I to Appendix I to the Rules relating to extra shift depreciation allowance it must be held that for the purpose of claiming the said allowance the assessee must establish that the concern had worked double shift or triple shift and if he succeeds in establishing that the concern had actually worked double shift or triple shift on particular days in the previous year, extra shift depreciation allowance would be allowable in accordance with the formula laid down in the said provision on the various items of machinery or plant except the items against which the letters N. E. S. A. are inscribed in sub-items (ii) of the Table in Part I of Appendix I as well as the ite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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