S.43(3) - Clarification on 'plant'

[DEV KUMAR KOTHARI]

S.43(3)- defines 'plant' in an inclusive and broad manner, subject to some exclussions. Only tea bush is excluded, any other tree, plant or bush are not excluded. Like a tea bush, rubber tree, coffee plant / bush, cashew plants, mango plant, guawa plant etc. are also durable assets used for the purpsoe of producing respective product. Ther are specially made, planted ( like machine installed), and used for specific purpose of producing specific item. All these are durable and have longer but limited useful life,they require repair, maintenance,and replacement , they suffer wear and tear over a perio dof time, they also suffer from osolescence. Therefore these trees are depreciable assets. Similar is case of many other fruits, vegetables, dry fruits, producing trees.In case of General Fibre Dealers 46 TTJ 496 it was held by learned Tribunalthat tea bush satisfy all characterstics and functional test of 'plant' in business of tea producer and is eligibl;e for treatment as 'plant' according to tests laid down in several judgments of the Supreme court and various High Courts, there is no provision of terminal depreciaion as is case of animals by way of S. 36 (1) (v), to compute real income over a period of time it is essential to allow depreciation on tea bushes. therefore, deprecaition and other allowances were held allowable. After amendment tea bushes have been excluded from the meanign of plant. Any other tree, bush , shrub etc. have not been excluded. Therefore, it is clear that other such trees which have longer life and which are used as tool or basic apparatus and asset to porduce article or thing or to render certain services like in case of shade trees or decorative plants, are plant within the meaning of s. 43(3) and S 32 and are eligible for deprecation allowance. Readers are requeste to send their feedback.

[Rama Krishana]

Technically you may be right sir, but how to capitalize them and how to assess the cost. It may also means that AO would not allow revenue expenditre on such trees but he would force the assessee to capitalize the cost. Kindly through more light on this issue.

AI Summary

Plant classification: perennial trees and bushes regarded as depreciable plant under income tax; tea bushes specifically excluded. Trees, shrubs and perennial crops that are durable, deliberately cultivated and used as apparatus in production or service activities qualify as depreciable plant and are eligible for depreciation and related allowances; tea bushes were previously treated as plant by judicial test but have been expressly excluded by statutory amendment, while other such botanical assets remain within the meaning of plant, raising practical issues of capitalization and cost assessment.