Functional test for depreciation: cold storage chambers qualify as plant, but only the storage chamber portion of the building.

The functional test treats the cold storage chamber as plant because it is the apparatus through which the storage business is carried on, not a mere setting for it. The licensing regime requires the premises to be constructed, insulated, maintained and operated in a specified manner, and the chamber and insulation are mutually dependent on the building. On that reasoning, only the part of the cold storage building used as the storage chamber qualifies as plant for depreciation under section 43(3) of the Income-tax Act; the remaining portion of the building does not.

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Issues: Whether the chambers of a cold storage, or the cold storage building housing those chambers, constitute "plant" for the purpose of depreciation under section 43(3) of the Income-tax Act, 1961.

Analysis: The statutory regime governing cold storages required the premises to be constructed, insulated, maintained, and operated in a specified manner under the licensing law, and breach of those requirements could result in cancellation of licence and stoppage of business. The chamber was not a mere shelter or setting for the business; it was the very apparatus through which the storage activity was carried on. The structure and insulation were mutually dependent, and the chamber could not function without the building, nor could the building serve the business without the chamber and insulation. Applying the functional test, the relevant part of the cold storage was a tool of the trade and formed an integral and composite apparatus for carrying on the business.

Conclusion: The chambers of the cold storage are plant within section 43(3), but only that part of the cold storage building used as the storage chamber qualifies for depreciation as plant; the remaining portion of the building does not.

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