Pharma building qualifies as plant for depreciation under Income-tax Act, 1961

The court affirmed the 'pharma building' as a plant for depreciation purposes under the Income-tax Act, 1961. The building's exclusive use for pharmaceutical manufacturing, with distinct sections and specialized facilities, led the court to conclude it served as a plant aiding business activities. The court emphasized the functional test, highlighting the building's role as an apparatus for business operations and its design solely for medicine production. The decision favored the assessee, dismissing the Revenue's appeal.

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Issues:
1. Whether the 'pharma building' should be considered as a 'plant' for the purpose of allowance of depreciation under the Income-tax Act, 1961Rs.
2. Whether the 'pharma building' in the respondent-assessee's case requires to be considered as 'plant' based on the report of the District Valuation OfficerRs.

Analysis:

1. The respondent-assessee, engaged in pharmaceutical manufacturing, claimed depreciation on a factory building treating a portion as 'plant' instead of 'building.' The assessing authority rejected the claim, considering the 'pharma building' as an ordinary building. The Commissioner of Income-tax (Appeals) accepted the appeal, directing higher depreciation. The Tribunal, relying on a previous case and District Valuation Officer's report, upheld the 'pharma building' as a plant. The court applied a functional test, citing precedents that buildings serving business activities can be considered 'plant.' The court affirmed the Tribunal's decision, emphasizing the building's use solely for manufacturing medicines, concluding it as a plant aiding business activities.

2. The court referenced a functional test precedent, emphasizing the building's role as an apparatus for business operations. The report highlighted the building's exclusive use for medicine manufacturing, with distinct sections for various processes and additional facilities like air-conditioning. The court noted the building's design and utility solely for medicine production, with no other business activities involved. Considering these factors, the court affirmed the 'pharma building' as a plant, dismissing the Revenue's appeal and ruling in favor of the assessee.

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