TMI Blog1981 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... required for the manufacture of saccharine. As such, he had constructed a building with particular specifications and standards to install the machinery and plant. For the assessment year 1969-70, the corresponding previous year ending on 31st December, 1968, he claimed development rebate not only on the value of the machinery and plant but also on the value of the building in which the machinery was installed. The ITO disallowed the claim of development rebate with regard to this building, holding that a, building, was not includible in the definition of plant and machinery. On appeal to the AAC, the view of the ITO was confirmed. The AAC relied on the definition of the word " plant " as given in s. 43(3) of the 1961 Act and not on the dictionary meaning. On further appeal to the Tribunal, it was contended by the assessee that it was incorrect to restrict the definition of " plant to the items set out in s. 43(3) especially as it was an inclusive definition. The Tribunal, after comparing the provisions of ss. 32 and 33 of the 1961 Act, which pertain to depreciation and development rebate respectively, noted that it was apparent that development rebate was allowable only i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the dock as an entity, the one being useless without the other. In view of these facts and circumstances, they opined that the concrete structure fulfilled the function of a plant in the trader's operation. While coming to this conclusion Lord Reid observed that the dry dock was different from a factory building which housed the machinery. The dock was not a " mere setting or premises in which ships were repaired In fact, it was the " means by which the operation was performed and not a " mere shelter or home". In Kanodia Cold Storage's case [1975] 100 ITR 155 (All), the Allahabad High Court held that where a building with insulated walls was used as a freezing chamber, it was a part of the air-conditioning plant of the cold storage of the assessee and thus entitled to special depreciation on its written down value. The court observed that in common parlance the word " plant " included within its ambit buildings and equipment used for manufacturing purposes. Since the definition of "plant " in s. 43(3) was inclusive, Something which could be normally included could not be excluded. However, the finding that the particular building was a part of the air-conditioning plant of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act was an inclusive definition and included articles like books was clearly indicative of the 'intention' of the Legislature to give it a wider meaning. After referring to the definition of " plant " in Webster's Third New International Dictionary as " land, buildings, machinery, apparatus and fixtures employed in carrying on trade......", it observed (p. 49 of 82 ITR): " It is, however, unnecessary to dwell more on the dictionary meaning because, looking to the provisions of the Act, we are satisfied that the assets in question were required by the nature of the hotel business which the assessee was carrying on. They were not merely a part of the setting in which hotel business was being carried on." The Gujarat High Court in CIT v. Elecon Engineering Co. Ltd. [1974] 96 ITR 672 and in CIT v. S. L. M. Maneklal Industries Ltd. [1977] 107 ITR 133, has held drawings and patterns and workshop drawings as coming within the definition of " plant". This court in CIT v. National Air Products Ltd. [1980] 126 ITR 196, also dealt with the meaning of the expression " plant ". It held that gas cylinders were plant of a company which was carrying on the business of manufacturing ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the concrete construction or building is used as the premises or setting in which the business is carried on in contradistinction to the fulfilling of the function of a plant, the building or construction or part thereof is not considered a plant. The true test is whether it is the means of " carrying on the business " or the location for so doing. 4. In order, for a building or concrete structure, to qualify for inclusion in the term " plant ", it must be established that it is impossible for the equipment to function without the particular type of structure. 5. The particular apparatus or item must be used for carrying on the assessee's business and must not be his stock-in-trade. The matter has to be considered in the context of the particular business of the assessee, e. g., books are a lawyer's plant but a bookseller's stock-in-trade. Applying these principles to the facts and circumstances of the present case, it would appear to us that the building in question does not come within the expression "plant". It is a mere setting, albeit a convenient one, where the business of manufacturing saccharine is carried on. It has not been established that the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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