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TMI Blog2003 (6) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per cent. treating the building to be a plant. The Income-tax Officer has disallowed the claim of the assessee which resulted in filing of appeal before the Commissioner of Income-tax (Appeals). Before the Commissioner of Income-tax (Appeals) the assessee filed a technical report of the building from the architect engineer which reads as under: "1. The mill building is designed in such a manner that it holds the entire plant and machinery. Beams and columns are erected to hold the entire load of plant and machinery on each floor. All the floors are constructed with holes for passing of the flow pipes, belts, chains, etc. The floors are constructed with specifically reinforced RCC materials as per technical requirements. The structure is made with heavy re-enforced steel and concrete to hold the weight of heavy machines installed in each floor with a load bearing capacity of one ton per sq. mtr. On the roof of the building water tanks with 40,000 litres capacity have been erected for washing and cleaning the wheat in process. 2. That almost 1/3rd part of the four storied structures is covered for erection of silos (storage bins). The twelve numbers of storage bins are specially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the materials placed on record and the various decisions of the court, the building in question can only be held to be a "plant" and the assessee is entitled for higher depreciation. On the other hand, the contention of the Revenue is that the building in question is only a building and cannot be held to be a plant and would not attract higher rate of depreciation. Section 43 defines "plant" which includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession, but does not include tea bushes or livestock. A bare reading of this section clearly indicates that the definition of "plant" is inclusive and shall include other things, which have not been mentioned in clause (3) of section 43 if it partakes of the character of plant. In CIT v. Kanodia Warehousing Corporation [1980] 121 ITR 996, the Division Bench of the Allahabad High Court has considered the meaning of "plant" and held that in order to find out if a building or structure or part thereof constitutes "plant", the functional test must be applied. It must be seen whether the subject-matter involved, that is, the building or structure or part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as part of the premises it is not plant. The fact that the building in which a business is carried on is, by its construction particularly well-suited to the business, or indeed was specially built for that business, does not make it plant. Its suitability is simply the reason why the business is carried on there. But it remains the place in which the business is carried on and is not something with which the business is carried on, except in some rare cases where it plays an essential part in the operations which take place. Hotel premises are not considered to be an apparatus or tool for running the hotel business but are merely a shelter or home or setting in which business is carried on. The same would be the position with regard to a theatre in which cinema business is carried on. Therefore, even the functional test is not satisfied. Based on this decision, it is submitted by learned counsel for the Revenue, Shri U. Bhuyan, that the premises cannot be a plant or building can in no case be a plant and therefore, the assessee cannot be entitled for higher rate of depreciation. The apex court itself had an occasion to consider this case in a later decision reported in CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carries on business it can be treated as plant. If a building is an integral part for carrying on the business of manufacture it would be a plant whereas if the structure plays no part in carrying on any of the activity relating to manufacture, it would merely constitute a place where the business is carried on and it cannot be recognised as plant. When the assessee with a definite purpose, considering the nature of business carried on by the assessee, constructs a building with specific required design keeping in view specified technical requirement, without which the assessee's business cannot be carried out, the building in question would qualify to be treated as plant. In the present case, applying the tests we have to ascertain whether the building in question is plant or not for the assessee to claim the higher rate of depreciation. The report of the architect engineer specifically mentions that the mill building is designed in such a manner that it holds the entire plant and machinery and beams and columns are erected to hold the entire load of plant and machinery on each floor. The report also states that all the floors are constructed with specifically reinforced RCC mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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