TMI Blog1983 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... . The view of the AAC was confirmed by the Tribunal on appeal at the instance of the Revenue. As regards the claim for the development rebate, the ITO was of the view that the fans and air-conditioner cannot be said to be machinery or plant directly or wholly used for the purposes of business and, therefore, disallowed the claim. The AAC confirmed the view of the ITO. However, on appeal at the instance of the assessee, the Tribunal upheld the claim of the assessee since in its opinion the items were within the expression it plant and machinery " as specified in ss. 32 and 33 of the 1961 Act. On these facts, at the instance of the Revenue, the following two questions have been referred to us for our opinion : " 1. Whether, on the facts and in the circumstances of the case, the payment of Rs. 1,03,437 made to the Textile Commissioner under the provisions of clause 21C(1)(b) of the Cotton Textile (Control) Order, 1948, was business expenditure allowable under section 28 or under section 37 of the Act ? 2. Whether the Tribunal was Tight in holding that the air-conditioner and the electric fans are plant or machinery within the meaning of section 32 and section 33 of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an decisions and summed up the legal position on the conspectus of reading of these decisions. The position has been stated succinctly in the following terms in CIT v. Elecon Engineering Co. Ltd. [1974] 96 ITR 672 (Guj) at page 698: " On reviewing these authorities, a broad consensus emerges from which the essential characteristics of plant can be clearly gleaned. The word 'Plant', in its ordinary meaning, is a word of wide import and in the context of section 32 it must be broadly construed. It includes any article or object fixed or movable, live or dead, used by a businessman for carrying on his business. It is not, necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. It would not, however, cover the stock-in-trade, that is, goods bought or made for sale by a businessman. It would also not include an article which is merely a part of the premises in which the business is carried on as distinguished from a part of the plant with which the business is carried on. An article to qualify as plant must furthermore have some degree of durability and that which is quickly consumed or worn out in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her of the-Madras High Court-have been relied upon by the Division Bench which throw light on the question with which we are confronted. The decision of the Supreme Court is in CIT v. Taj Mahal Hotel [1971] 82 ITR 44, which has been heavily relied upon by the Division Bench for purposes of finding out the exact characteristics of plant and machinery. In Taj Mahal Hotel's case, the question was about the admissibility of the development rebate on sanitary and pipeline fittings installed by the assessee-hotel company in its hotel. All the Revenue authorities including the Tribunal disallowed the claim since in their opinion the fittings did not fall within the meaning of the word "plant". On a reference, the High Court opined that the fittings in question were plant. On further appeal to the Supreme Court, the same rival contentions were reiterated on behalf of the Revenue as well as the assessee. In that context, the Supreme Court ruled by referring to the two English decisions, viz., Lyons and Co. Ltd.'s case [1944] 1 Ch 281 and Yarmouth v. France [1887] 19 QB 647. The word " plant " includes whatever apparatus or instruments as are used by a businessman in carrying on his business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he taxpayer's trade ? On applying this test, we are of the opinion that it would be difficult to agree with the learned counsel for the Revenue that they are parts of the premises. On the contrary, in our opinion, the appliances are the instruments which, on the application of the functional test, would advance the performance of the business of the assessee. They are, in our opinion, therefore, entitled to be included within the term " plant". This would require us to consider the alternative contention which has been urged on behalf of the Revenue. Alternatively it was contended that under s. 33(1)(a) of the I.T. Act, 1961, the office appliances or road transport vehicles have been excluded from the " machinery " or " plant " on which an assessee is entitled to claim development rebate. It was, therefore, urged on behalf of the Revenue that inasmuch as the electrical fans and the air-conditioners fixed in the office premises of the assessee-company do not fall within the meaning of the term " machinery " or " plant " since they would be in the nature of office appliances and, therefore, an assessee is not entitled to claim development rebate thereof. On behalf of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the Revenue, therefore, urged that with the sophistication of the working conditions in commercial places and offices, the fixtures of electrical fans and for that matter air-conditioners is a bare necessity so as to obtain optimum efficiency of the persons working in such offices or commercial places and, therefore, having regard to industrial and commercial development, if in order to have better working conditions, these fixtures are required to be provided in commercial places or offices of companies, they must be treated as office appliances. We are afraid, this is too specious a contention with which we can agree. The reason is obvious. On the logic of the learned counsel of the Revenue, if such electrical appliances merely by their use in the particular context, namely, in offices in the present case, they become office appliances, they would be on the same reasoning by their use in the factorial appliances and by their use in the residential houses would become domestic appliances. We do not find such a legislative intent in the section. The word " appliance " is qualified by the word " office " and, therefore, we must give some meaning to the word " office " and unle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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