Wide meaning of "plant" supports depreciation on structural steel and tubular structures used in manufacturing.

For depreciation purposes under section 43(3) of the Income-tax Act, 1961, structural steel and tubular structure used in a manufacturing undertaking were treated as part of "plant and machinery" because the term "plant" receives a wide functional meaning. The structures were owned by the assessee and used integrally in the industrial activity, so they qualified within the statutory concept of plant. On that basis, the assessee was entitled to depreciation at 30 per cent on those structures. The note also clarifies that manufacturing activity need not involve sale of the end product by the assessee itself for the undertaking to retain its manufacturing character.

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Issues: (i) Whether structural steel and tubular structure formed part of "plant and machinery" within the meaning of section 43(3) of the Income-tax Act, 1961. (ii) Whether the assessee was entitled to depreciation at 30 per cent on the structural steel and tubular structure.

Issue (i): Whether structural steel and tubular structure formed part of "plant and machinery" within the meaning of section 43(3) of the Income-tax Act, 1961.

Analysis: The assessee was found to be engaged in manufacturing activity involving the use of plant, machinery, labour and capital. The structural steel and tubular structure were held to be owned by the assessee and to form part of the plant and machinery used in the industrial undertaking. The wide definition of "plant" under section 43(3) supported inclusion of such structures within that expression.

Conclusion: Yes. The structural steel and tubular structure were correctly treated as plant and machinery.

Issue (ii): Whether the assessee was entitled to depreciation at 30 per cent on the structural steel and tubular structure.

Analysis: Once the structures were held to be part of the plant and machinery of a manufacturing undertaking, the assessee became entitled to the depreciation claimed on that basis. The nature of the manufacturing activity did not require the assessee itself to sell the end product, and the use of the goods for construction purposes did not detract from the character of the undertaking as manufacturing.

Conclusion: Yes. The assessee was entitled to depreciation at 30 per cent.

Final Conclusion: The questions referred were answered in favour of the assessee, and the reference stood disposed of accordingly.

Ratio Decidendi: For the purposes of section 43(3) of the Income-tax Act, 1961, a functional and wide meaning must be given to "plant", and structures integrally used in a manufacturing undertaking may qualify as plant and machinery for depreciation.

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