Bottles as plant for depreciation: Patna HC allowed full depreciation on beverage business containers

The Patna HC held that bottles and containers used in a beverage business fell within the statutory meaning of "plant" under the Income-tax Act, read with the depreciation provisions. Applying the Supreme Court's exposition of "plant" and following other High Court decisions, the Court treated the items as business assets eligible for depreciation. As the individual cost of the bottles was below the prescribed limit, cent per cent depreciation was allowable on the purchases. The reference was accordingly answered in favour of the assessee and against the Revenue.

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Issues: Whether bottles and containers purchased by the assessee constituted "plant" for the purpose of depreciation under the Income-tax Act, 1961, and whether cent per cent depreciation was allowable on such purchases.

Analysis: The question turned on the meaning of "plant" under section 43(3) of the Income-tax Act, 1961, read with the depreciation provision in section 32(1)(ii). The Court followed the view taken by the Delhi, Rajasthan and Andhra Pradesh High Courts and relied on the Supreme Court's exposition of "plant" to hold that bottles used in the business of sale of beverages are covered by the statutory concept of plant. Since the bottles were treated as plant and their individual cost was below the prescribed limit, depreciation at the rate claimed was admissible.

Conclusion: Bottles and containers constituted plant, and the assessee was entitled to cent per cent depreciation on the purchases.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, affirming the allowance of full depreciation on the bottles and containers.

Ratio Decidendi: Articles or items used in business that answer the statutory meaning of "plant" are eligible for depreciation, and bottles employed in the assessee's beverage business fell within that expression.

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