TMI Blog2003 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... lding would come within the term "plant" and in that view the assessee is entitled to depreciation at the rate applicable to plant and machinery. We therefore answer the question in favour of the assessee holding that the assessee's studio would constitute plant in the hands of the assessee and consequently be entitled to depreciation at the rates applicable to plant and machinery. - Decided in favour of assessee. - - - - - Dated:- 18-11-2003 - Judge(s) : K. S. RADHAKRISHNAN., PIUS C. KURIAKOSE. JUDGMENT The judgment of the court was delivered by K.S. Radhakrishnan J. - The Income-tax Appellate Tribunal, Cochin Bench (hereinafter called "the Tribunal") in obedience to the direction issued by this court in O.P. Nos. 17297 and 794 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... producing cinematograph films. Basically these are the issues which arise in both the appeals. The Tribunal held that part of the assessee's studio should be treated as plant entitled to higher rate of depreciation and investment allowance subject to certain conditions to be satisfied. It was also held that the assessee would be entitled to investment F allowance on studio equipment but not entitled to extra shift allowance on cinematograph equipments such as camera, etc. It was also held by the Tribunal that the assessee's mobile studio is only a transport vehicle fitted with air-conditioner and generator and the same is not eligible for investment allowance. Further it was also held that depreciation on the air-conditioner and generato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r scenes. Walls of the studio are made up of plywood, cardboard and asbestos so that they can easily be removed and replaced for the movement of trolley carriers in different scenes. The floor of the studio contains asbestos roofing. In the first floor itself at the time of visit they saw a cave made of bamboo mats. There are railings hanging from the roof and there are platforms also below the roof to enable the lightboys to move about and choose lines so that the picture comes out with proper lighting. Serpent shrines made of clay and caves made of bamboo mats and artificial cobweb have also been designed. During the visit platforms were also artificially designed in such a manner that floor was converted into a cave shrine, etc., for a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether a building is plant or not the court must apply what is called "functional test" and further held that hotel building and theatre building are plants within the meaning of section 43(3) of the Act and accordingly entitled to depreciation as applicable to plant. The apex court in Scientific Engineering House's case [1986] 157 ITR 86 considered the drawings, designs, charts, plants, processing data and other literature comprised in the documentation service as specified in clause 3 constituted a book and fell within the definition of plant under section 43(3) of the Income-tax Act, 1961. The apex court held that these documents did not perform any mechanical operations or process and that they did not militate against their being a plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is carried on. For that purpose the operations it performs have to be examined. The building and the structure can be considered to be plant provided they fulfil the conditions mentioned above. The scheme of section 32 of the Income-tax Act is to provide different rates of depreciation for building, machinery, plant or furniture, shop buildings used for hotels, aeroplanes and other items mentioned therein. The word "plant" is given an inclusive meaning under section 43(3). In this case the assessee has satisfied the functional test. Floor measuring 12,000 sq. ft. with asbestos roof, railing platforms and replaceable walls can be treated as tools with which business of the assessee is being carried on. The spot verification made by the mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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