TMI Blog1979 (11) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... realise hire charges from the customers for storage of potatoes. The nature of the business was that the assessee stored the potatoes of its customers in its warehouses for sorting and grading and thereafter loaded the same in the cold storage. For the year under consideration, the assessee declared a loss of Rs. 27,410. It had charged development rebate at Rs. 58,360 in respect of those warehouses. The ITO did not accept the assessee's claim in regard to the development rebate since in his opinion the warehouses of the assessee were merely godowns and did not fulfil the requirement of s. 33 of the Act. Further, in his opinion, the machinery or plant must be installed so as to claim development rebate and since it could not be said that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of sorting and grading them. Thereafter it was loaded in the cold storage. In other words, the warehouses were used by the assessee in connection with its business. The short question that falls for our consideration on these facts is as to whether these warehouses can be regarded as " plant " within the meaning of its definition as contained in s. 43(3) of the Act. According to this definition, " plant includes vehicles, books, scientific apparatus and surgical equipments used for the purposes of business or profession ". It is an inclusive definition and the very fact that even books have been included, shows that the meaning intended to be given to plant is wide. As observed in the case of Taj Mahal Hotel [1971] 82 ITR 44 (SC) at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court was whether drawings and patterns received by an assessee from a foreign company under a collaboration agreement can be said to be plant on which depreciation is allowable under s. 32 of the Act, a large number of English and Indian cases were considered and it was ultimately held : " It appears to us, therefore, that it would not be correct to limit the meaning of the word ' plant ' in section 32 to only such articles as are capable of diminution in value year after year by reason of wear and tear in the course of their application for the purposes of the assessee's business or profession. It would also take in other articles which diminish in value on account of other known factors such as obsolescence. " On this view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the counsel, s. 32 of the Act, which provides for depriciation, makes mention of building along with machinery, plant or furniture in sub-s. (1) thereof while s. 33, which makes provision for development rebate, does not mention building, but provides only for a new establishment or a machinery or plant in sub-s. (1)(a). It was submitted that this omission was indicative of the fact that a building cannot qualify for development rebate unless it is treated as " plant " and that can only be when without such building it is not possible for a taxpayer to carry on his business. On the other hand, according to counsel for the assessee, the expression " plant " should be given a wide connotation and such was the intention of the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a plant, no matter that it consisted of some structure or building which is attached to the soil. If on the other hand it is found that the structure or a building or a part thereof does not constitute a part of the apparatus employed in carrying on the activities of the business, then it cannot be regarded as a plant. In the case of Kanodia Cold Storage [1975] 100 ITR 155 (All) itself it would be seen that the subject-matter of the case, that is, the building, had insulated walls and was being used as a freezing chamber and hence it was treated as a part of the air-conditioning plant. It other words, that building played an active role in the business of the assessee and was not merely a passive spectator. It would be useful to ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the barge " although chattels and although used in connection with the business of the taxpayer company as restaurateurs, were not part of the apparatus employed in the commercial activities of those businesses, but were the structure within which the business was carried on." (p. 357) It would be seen that the test is whether the subject-matter involved, that is, a building or a structure or a part thereof, constitutes an apparatus or a tool of the trade of the taxpayer or it is merely a space where the taxpayer carries on his business. For this purpose the use which is made of the subject-matter under consideration is to be kept in view. If, as noted above, the building, structure or a part thereof is something by means of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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