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2015 (12) TMI 122 - ITAT MUMBAI

2015 (12) TMI 122 - ITAT MUMBAI - TMI - Scope of the term "Plant" u/s 43(3) - Exclusion of Building and Furniture from the scope of plant - constitutional validity - expenses have been incurred on wall partition, fall ceiling, flooring and sliding - Held that:- The word “plant” has been defined in section 43(3) as under:

“(3) “plant” includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purpose of the business or profession [but does not include tea .....

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tion, particularly on the issue whether building or furniture and fittings constitute “plant” and to clarify the intention of the statute such amendment has been brought. Such amendment brought into the statute by the legislature has not been shown to be violative of constitutional provision. Therefore, according to clear legislative intent the assessee cannot take the benefit of higher depreciation by including building in the value of “plant”. - Decided against assessee. - ITA NO.5O4/MUM/2013( .....

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facts and circumstances of the case, it is submitted that the Hon. Commissioner of Income Tax Appeals, Mumbai erred in treating the additions made to Plant & Machinery as additions made to Building and Furniture. The Appellant submits that additions be treated as additions made to Plant & Machinery. 2. Depreciation on Additions made to Plant & Machinery allowed as per the rate of depreciation on Buildings and Furniture: On the facts and circumstances of the case, it is submitted tha .....

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larly sterile water for injections BP/IP/USP in plastic ampoules with 5 ml and 10 ml volumes. The assessee has installed BFS Machinery No.17 & 18 during the year under consideration for which it requires clean rooms, LDPE Plastic granules conveying system and electric supply. Clean rooms are required by the assessee to prevent the environmental microbial contamination in the manufacturing of sterile pharmaceutical products and, therefore, installation and commissioning work of clean rooms fo .....

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ee in the paper book filed at page 1 &2. Some of the expenses incurred with regard to new plant installed by the assessee during the year under consideration are included in the value of plant and machinery on which depreciation has been claimed as prescribed for plant and machinery . The sum total of these expenditure alongwith date and party name is found in Annexure-A, which is part of the impugned assessment order and for completeness of facts the same is reproduced below: Date Party Nam .....

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ns P Ltd. 512656 26.08.08 Aeolus Technovations P Ltd. 82743 26.08.08 Aeolus Technovations P Ltd. 395249 01.08.08 Sai Electrc 89250 01.09.08 Aeolus Technovations P Ltd. 548773 01.09.08 Aeolus Technovations P Ltd. 160957 01.09.08 Aeolus Technovations P Ltd. 724443 03.10.08 Aeolus Technovations P Ltd. 637455 03.11.08 Aeolus Technovations P Ltd. 150914 12.11.08 Aeolus Technovations P Ltd. 493996 8121168 KSEZ 05.05.08 Aeolus Technovations P Ltd. 357328 11.06.08 Sallone & Parco Engineering Co. 583 .....

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t the rate applicable to the plant and machinery has been rejected and depreciation has been allowed to the assessee as per rate prescribed for building. 2.2 In para-4, AO has discussed the same. He has observed that these cost including making Aluminium wall partition, fall ceiling, flooring, sliding, which is primarily relating to building or furniture and fittings. Therefore, the AO treated the same as incurred on building, furniture and fittings. The AO also referred to the definition of pla .....

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. 3. During the course of hearing Ld. AR did not dispute to the findings of AO according to which these expenses have been incurred on wall partition, fall ceiling, flooring and sliding. But, it is the case of Ld. AR that these work should be treated to be part of plant and machinery as without carrying out these works the assessee could not comply with the standards which are required for manufacturing pharmaceutical items produced by the assessee. Ld. AR also submitted that assessee has also i .....

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book, which is from pages 17 to 47 of the paper book, in which details of bills relating to the impugned expenditure have been filed. Thus, it was pleaded by Ld. AR that these expenditure should be considered to be incurred in relation to plant and machinery and depreciation rate applicable to plant and machinery should be allowed. 3.1 Ld. AR relied upon the decision of Ahmedabad ITAT in the case of Madhu Industries Ltd. vs. ITO, order dated 23/7/2010 in ITA No.4172/Ahd/2007. Copy of this order .....

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aced reliance on the decision of ITAT Mumbai in the case of ACIT vs. JBF Industries Ltd., ITA No.4035/Mum/2006 dated 17/12/2014, copy of this order was also placed on our record and was also given to Ld. DR. In this decision also similar proposition has been laid down. Thus, it was pleaded by Ld. AR that appropriate relief may be granted to the assessee. 4. On the other hand, Ld. DR relied upon the order passed by AO & Ld. CIT(A). 5. We have carefully considered the rival submissions in the .....

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It is a matter of fact that legislature has stepped in specifically excluding building from the definition of plant and such amendment was brought by the Finance Act 2003 w.e.f. 2004. Earlier to this, considering the wide scope of the word plant various Courts have rendered decision in favour of assessee where in building required specifically for the purpose of plant was also considered part of plant and machinery . Accordingly, it was held that the said building being integral part of the pla .....

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nd circulation of air, proper scientific feeding arrangement, proper arrangement for collection of manure and droppings, proper arrangement of medication and vaccination and to increase their productivity was considered to be plant within the meaning of unamended section 43(3). Thus, earlier to the amendment brought into statute by Finance Act 2003 w.e.f. 1/4/2004 such view was possible but in view of the amendment brought into statute by the legislature vide which building or furniture and fitt .....

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03, 260 ITR 128 (St.), the relevant portion at page 208, it is explained as under: Clarificatory amendments regarding definitions of certain terms relevant to income from profits and gains from business or profession The existing provisions contained in clause(3) of section 43 defines the expression plant in an inclusive manner and further excludes tea bushes or livestock. The coverage of the term plant has been a subject matter of litigation, particularly on the issue, whether buildings or furn .....

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