TMI Blog2003 (1) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in this reference. The appellate authority and the learned Tribunal have wrongly appreciated the proposition having regard to the provisions contained in sections 32(1)(iia) and 32A(1) of the Income-tax Act, 1961. According to him, in order to avail of the benefit of sections 32(1)(iia) and 32A(1) of the 1961 Act, additional depreciation and investment allowance can be availed of only in respect of the plant, other than those excepted by clause (b) of the respective proviso, owned by the assessee and used for the purpose of manufacturing being installed in the factory. In this case on the railway siding and the locomotive, the provisions of sections 32A(1) and 32(1)(iia) of the Act cannot be applied. He also contends that in order to attract the said provisions it has to be installed. Neither the railway siding nor the locomotive is connected with the manufacturing purpose. That apart, the railway siding being situated outside the factory premises, the said two sections cannot be attracted. In order to elaborate his submission he submits that the exception is road transport vehicle as is apparent from the respective clause (b) of the proviso to sections 32(1) and 32A(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be in different manners. Therefore, the question of installation does not stand in the way. He contends that when a particular word or expression is not defined in the Act and if no internal aid is available from the statute, such expression is to be interpreted in the general sense as understood in common parlance. According to him rail and road are two different distinct transport systems. Therefore, when only road transport vehicle is excepted rail trans port vehicle cannot be included within the said exception. He also referred to Appendix I for the purpose of pointing out that railway siding and locomotive has been included as plant on which the assessee is entitled to depreciation. He also refers to clause (f) of Appendix I, which prescribes for depreciation and includes railway siding and locomotive. It is not necessary to interpret the provision independent of Appendix I. When Appendix I itself prescribes the rate of depreciation on plant and machinery specifically on railway siding and locomotive no other external aid is necessary. Therefore, according to him, the question has to be answered in the affirmative, in favour of the assessee. Mr. Bajoria contended furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court by the learned Tribunal. The question seems to be simple. This is also covered by a decision of the Karnataka High Court as is apparent from the decision cited by Mr. Bajoria. The said High Court and the Orissa High Court had occasion to deal with a similar question though in different contexts. These High Courts have proceeded on the basis of Appendix I where railway siding and locomotive have been included as plant and, therefore, it was not necessary to fall back on the expression used in the different sections. However, both the appellate authority and the learned Tribunal had observed that there is no decision on this point by the Calcutta High Court. We would have simply followed the decision of the Karnataka High Court. However, we do not find any reason to differ with the same. But because of the question raised, we feel that we should answer the question with some reasons of our own which might supplement the reasoning given by the Karnataka and the Orissa High Courts. We also draw inspiration from the said decisions in order to support our view. Section 32(1): Additional depreciation: Section 32(1) of the Act allows deduction for depreciation of plant (among ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by the assessee. However, no dispute has been raised by Mr. Mallick with regard thereto. Road transport vehicle: Meaning of: In both these two sections, clause (b) of the proviso excludes road transport vehicles. We are required to examine whether railway siding and locomotive are plants, and if so, whether those are excepted under clause (b) of the proviso. In common parlance road and rail are two different modes of transport. Even in law rail and road have been treated differently. Separate statutes have been legislated for governing the field of road transport and that of rail trans port. The definition of vehicle contained in the Road Transport Corporations Act has a limited application. Such a definition is confined to the scope and purpose of the said Act, which is related to the incorporation of a State owned Road Transport Corporation. The same is a special statute and has no general application. Therefore, the definition given therein cannot be borrowed for the purpose of the Income-tax Act. That apart "road transport service" is defined in the said Road Transport Corporations Act, 1964, to mean a service to carry passengers or goods or both by road in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade or commercial parlance test, functional test, and the premises test. It is the functional test, which would determine the nature and character. We must look at the function of the railway siding and the locomotive in order to determine its character for the purpose of these sections with which we are now dealing. If it is a setting or place to accommodate some apparatus, it would not be a plant. If it plays an important role in the carrying on of the business, then it would be a plant. It is to be found out of which it forms part, whether it forms part of a setting or premises to house or install the apparatus or it is a part of the apparatus. The ratio laid down in Anand Theatres [2000] 244 ITR 192 (SC), related to a building housing the theatre. It has to be read in that context. But then the principle laid down therein relate to the functional test as to whether the item is an apparatus or tool or part of it or is a setting premises. Therefore, this decision does not help Mr. Mallick to the extent he intended to rely upon the same. In Progressive Engineering Co.'s case [1998] 230 ITR 729 (AP) and C.S. Anand's case [1997] 225 ITR 573 (Patna), dumpers and tippers were held no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of the vehicle as we find from the Shorter Oxford Dictionary, third edition, means "a conveyance provided with wheels used for the carriage of persons or goods; a carriage, cart, wagon, sledge, etc., a receptacle in which anything is placed in order to be moved". Clause (b) to the proviso to section 32(1)(iia) and section 32A(1) excepts road transport vehicle. Therefore, vehicles other than road transport vehicles are plants. In Scientific Engineering House Private Limited. v. CIT [1986] 157 ITR 86, 96 (SC), it was held that plant includes any article or object fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. The test to be applied for such determination is: does the article fulfil the function of a plant in the assessee's trading activity? Is it a tool of his trade with which he carries on his business? If the answer is in the affirmative, it will be a plant. We may draw inspiration from the decision in CIT v. Shaan Finance (P.) Limited; First Leasing Company of India Limited [1998] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment allowance provided it satisfies the other conditions provided in the statute. Installed: Meaning of: The expression "install" does not mean affixation. The word "install" has different connotation in different context having regard to the nature and character and specified manner of use of a particular plant or machinery for effective and appropriate utilisation of operation thereof. A locomotive is installed as soon it is put on rail ready for use. A railway siding is installed as soon it is constructed and made ready for use. In Vulcan Laval Ltd.'s case [1991] 188 ITR 453 (Bom), cited by Mr. Bajoria somewhat similar view was taken. Therefore, the expression "install" will poseno difficulty on the question to answer. Used for the purpose of business: The word "business" includes the whole process of the undertaking carried on by the assessee. It begins with the initial process to achieve the end-product and ends with the realisation of the ultimate profit. Whatever means or mode is connected with such process are part of the business. The business may be of manufacturing or trading or otherwise. A business of manufacturing does not begin or end with manufacturing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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