Business apparatus test: sanitary pipeline fittings in a cinema hall qualified as plant for higher depreciation.

Sanitary pipeline fittings installed in a cinema hall were held to be "plant" for depreciation purposes because the decisive test under the Income-tax Act is the true character of the asset, not merely its location in a building. The term "plant" in section 43(3) is wide, but a building does not become plant simply because it is used for business; only articles or fittings functioning as business apparatus or tools qualify. Applying the principles approved by the Supreme Court and distinguishing the later clarification in Anand Theatres, the fittings were treated as part of the business apparatus rather than the building. Depreciation at the higher rate was therefore allowed in favour of the assessee.

---

---

Issues: Whether sanitary pipeline fittings installed in a cinema hall were "plant" entitled to depreciation at the higher rate under the Income-tax Act, 1961.

Analysis: Depreciation under section 32 depends on the true character of the asset. The term "plant" in section 43(3) is of wide amplitude, but the building itself is not plant merely because it is used for a particular business. Applying the principles approved by the Supreme Court, only articles or fittings used as an apparatus or tool of the business may fall within "plant". The earlier view in Taj Mahal Hotel was considered in the later decision in Anand Theatres, which clarified the distinction between the building and special fittings or equipment used in the business premises. On the facts, the sanitary pipeline fittings were treated as business apparatus and not as part of the building.

Conclusion: The sanitary pipeline fittings were plant and the assessee was entitled to depreciation at 15 per cent. The question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Sanitary pipeline fittings used as business apparatus within a commercial premises can fall within the wide meaning of "plant" under the Income-tax Act, even though the building housing them remains a building and not plant.

---