TMI Blog1986 (1) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... Dec., 1981 negatived the claim of the assessee. Following the said decision the ITO as also the CIT(A) negatived the claim for the year under consideration. 3. The ld. counsel appearing on behalf of the assessee after submitting the compilation stated that the method was required to be considered afresh because of the changed circumstances and facts. At the earlier occasion the assessee could not place certain types of materials and evidence so as to enable the Tribunal to arrive at a conclusion acceptable to the assessee. Now that fresh evidence and material was placed before the authorities below it would be necessary to consider the claim of the assessee and not merely to reject the claim by following the earlier decision. Bringing to our notice the new facts as stated on page 6 of the compilation it was submitted that the theatre building was so designed as to conform to the various rules an requirements of the Gujarat Cinema (Regulation) Rules. The requirements of the rules were such that the cinema building has to perform the functions in the prescribed manner and then only the exhibition of cine films is permitted. Therefore, the functional use of the building was require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bition of films. Needless to state that unless the building is constructed and equipped with a type of design so as to ensure excellent sound effect, lighting effect, to and produce highest entertaining effect, the purpose for which people purchase the ticket, the business of the assessee cannot be carried on in a profitable way. Even interior and exterior get-up of the building required for the purpose of theatre will have to be in a way specifically designed so as to ensure full utilisation of the capacity. The intention of the legislature is to give wide meaning to the term of 'plant' as defined in the Act. The theatre has to be distinguished from other buildings covering open space, office accommodation and warehouses. 5.1. The case relied upon by the Revenue of Kanodia Cold Storage actually supports the case of the assessee. The case of Kanodia Warehousing Corporation apart from supporting, the case of the assessee is distinguishable on the facts because the case was concerned with warehouses utilised by the assessee of storing potatoes on behalf of customers. For the sake of clarification we would add that the claim of the assessee is not in respect of an allowance under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to hold that the decision of the Tribunal on the issue is erroneous in law and facts. The Tribunal has considered the decision of the Hon'ble Supreme Court in the case of Taj Mahal Hotel and CIT vs. Elecon Engg. Co. Ltd. (1974) 96 ITR 672 (Guj). The Tribunal has also taken pain to understand the meaning and scope of the word 'plant' and following the decision of the Hon'ble Gujarat High Court in the case of Elecon Engg. Co. Ltd. which is binding upon the Ahmedabad Benches, the Tribunal has held that a close reading of the above judgment that the theatre could not be treated as a plant and as such not entitled to higher rate of depreciation at the rate of 10 per cent: "The word 'plant' in its ordinary meaning is a word of wide import and it must be broadly construed having regard to the fact that articles like books and surgical instruments are expressly included in the definition of plant in s. 43(3) of the Act. It includes any article or object, fixed or movable, live or dead, used by a businessman of 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 busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... theatre building is plant for the purpose of higher depreciation? 7th Jan., 1986 A. KRISHNAMURTHY, V.P (As a Third Member) The following are the points of difference between the members referred for decision of the Third Member in this case: 1 Whether, on the facts of the case, the decision of the Tribunal dt. 21st Dec., 1981 in revenue appeal in assessee's own case i.e. M/s. Patel Enterprises in the asst. yr. 1974-75 (in ITA No. 220/Ahd/81) is binding on the Tribunal in the assessment year under consideration in the interest of propriety and settled law that the Tribunal should not part with its own decision in the same issue? 2. Whether, on the facts and circumstances of the case, it can be held that th theatre building is plant for the purpose of higher depreciation? 2. The short facts are: the assessee carrying on business of exhibition of films in cinema theatres, claimed depreciation in respect of theatres at rate applicable to plant at 10 per cent but the claim was rejected by the departmental authorities and so the assessee carried the matter in appeal before the Tribunal. Such a claim of the assessee for an earlier assessment year viz. 1974-75 had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpetuated. 5. On the merits of the claim, he submitted that the test to be applied on considering whether the building is plant or not is a functional test as held in the decision in the case of CIT vs. Konadia Warehouse Corporation (1980) 121 ITR 996 (All). It is pointed out that the salient features of the statutory requirements have been set out in the ld. Accountant Member's order and it shows that the theatre has to be constructed suitably to enable the business of exhibition of films being carried on properly and efficiently without infringing the statutory requirements and regulations. He also relied on the decision in CIT vs. Tarun Commercial Mills Ltd. (1984) 38 CTR (Guj) 138 : (1985) 151 ITR 75 (Guj) and the orders of the Tribunal in the case of Dhootapapeshwar Ltd. vs. ITO (1984) 8 ITD 868 ((Bom)) in the case of Hotel Srilekha (P) Ltd. vs. ITO (1983) Taxation 71(6)-152 and in the case of The 3rd ITO vs. M/s G.C.E. 50 Taxation (Sec.6)-25. The ld. departmental representative contended that in the theatre is a special type of building for carrying on the business of exhibition of films has been considered and rejected. It was submitted that the features highlighted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotel (1971) 82 ITR 44 (SC) supports the assessee's claim in this connection. In the case of Kanodia Warehouses Corporation and Kanodia Cold Storage the assessee claimed depreciation at 15 per cent in respect of factory buildings. It was found that walls of the building in respect of which the assessee claimed depreciation as part of the airconditioning machinery or plant were being used as freezing chamber containing insulation material like cork to keep it in appropriate temperature and it was difficult to work the cold storage or plant without such treatment. It was held that the assessee is entitled to depreciation in respect of building as plant. The work 'plant', it was noted, as per its inclusive definition in s. 43(3) of the Act shows that the legislature intended to give an extended meaning which went even beyond that conveyed by common parlance. In CIT vs. Kanodia Warehouse Corporation, it was observed that to ascertain whether the building or some other structure is plant or not a distinction has to be made with a view to find out whether it is something by means of which the business activities are carried on not is such that it does not play any part in carrying on tho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
