Factory building classification affirmed where production processes occur; buildings qualify under rule 8 and attract double depreciation.

Whether studio buildings qualify as "factory buildings" under rule 8 was decided by applying the statutory definition: because manufacturing processes (carpentry with lathes and sawing machines, film laboratory work and other production activities) were actually carried on in the premises, the buildings fall within the third class in rule 8 and satisfy the term "factory" for the rule's purpose; accordingly the buildings qualify as factory buildings and are entitled to the double depreciation prescribed by the rule.

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Issues: Whether the assessee's studio buildings, used for producing motion pictures and housing workshops and machinery, are "factory buildings" within the meaning of rule 8 of the Income-tax Rules and therefore entitled to double depreciation.

Analysis: The facts established by the remand report demonstrate that manufacturing processes (including carpentry with lathes and sawing machines, film laboratory work, and other production activities) are actually carried on in the buildings. The buildings fall within the third class specified in rule 8 and satisfy the requirements of the term "factory" as applied for the purpose of the rule. The proper inquiry is whether the buildings come within the term "factory building" in rule 8, not whether their rate of physical wear and tear is greater or lesser than that of other factories; once the term is satisfied, the depreciation entitlement prescribed by the rule follows.

Conclusion: The studio buildings are factory buildings within the meaning of rule 8 of the Income-tax Rules and are entitled to double the depreciation prescribed by that rule. The decision is in favour of the assessee.

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