1999 (2) TMI 11 - SC - Income Tax

Specially equipped nursing home building treated as 'plant' for 10% depreciation after functional test; appeal dismissed.

The dominant issue was whether a nursing home building used by a medical practitioner qualifies as 'plant' so as to attract depreciation at 10%. Applying ... Plant - functional test - building as plant versus mere premises - depreciation - nursing home buildingPlant - functional test - building as plant versus mere premises - nursing home building - depreciation - The nursing home building was held to be a 'plant' for the purpose of claiming depreciation at the specified rate. - HELD THAT: - Applying the functional test, the Court accepted the findings of the Tribunal and the High Court that the particular building was so equipped as to constitute an apparatus or tool by means of which the assessee carried on the business of running a nursing home rather than being merely premises in which the business was carried on. The record showed that the nursing home included facilities for sterilisation of surgical instruments and bandages (a sterilisation room of about 250 sq. ft.) and, reasonably inferred, an operation theatre; these physical adaptations and equipment brought the building within the concept of a 'plant'. The Court observed, however, that the Tribunal should base its conclusion on material actually placed before it by the assessee establishing that the building was specially equipped for the business, rather than on assumptions about what a nursing home should contain.The High Court's affirmative answer that the building is a 'plant' for depreciation purposes is accepted and upheld.Final Conclusion: The appeal is dismissed; the High Court's decision that the nursing home building qualifies as a 'plant' for depreciation is affirmed, with the observation that findings of that character should be supported by material placed before the Tribunal. The Supreme Court upheld the decision that a nursing home building can be considered a 'plant' for depreciation purposes if equipped for business activities like treating patients. The functional test was applied, and the appeal was dismissed. (Case citation: 1999 (2) TMI 11)