TaxTMI 
TaxTMI 
2008 (6) TMI 363
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.... "plant". The Assessing Officer only allowed depreciation treating the poultry shed as "building" and not as "plant". Investment allowance was not allowed. The claim of the assessee for treating the water-lines of the poultry sheds as "plant" was also rejected. The appeal filed by the assessee was rejected. Thereafter, the assessee approached the Income-tax Appellate Tribunal (ITAT). The Income-tax Appellate Tribunal came to the conclusion that the poultry sheds were in the nature of "plant" because the sheds constituted an apparatus or tool for the assessee. According to the Income-tax Appellate Tribunal, the poultry sheds were unlike others buildings and the nature and type of construction was quite different. In the poultry sheds special provision had to be made for proper light, air, scientific feeding arrangements, proper water system, proper arrangement for collection of manure and droppings, arrangement for medication and vaccination, etc. On this basis it was held that the poultry shed was specifically designed from a technical point of view so as to facilitate the various hatchery operations on scientific lines. The Income-tax Appellate Tribunal agreed with the assessee an....
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....nable to see how the sanitary fittings in the bath rooms in a hotel will not be `plant' within section 10(2)(vib) read with section 10(2)(5) when it is quite clear that the intention of the Legislature was to give it a wide meaning and that is why articles like books and surgical instruments were expressly included in the definition of `plant'. In decided cases, the High Courts have rightly understood the meaning of the term `plant' in a wide sense. (See CIT v. Indian Turpentine and Rosin Co. Ltd. [1970] 75 ITR 533 (All))." 7. In CIT v. McGaw Ravindra Laboratories (India) Ltd. [1981] 132 ITR 401 (Guj), the question raised before the Gujarat High Court was whether the expenditure incurred for cost of preparing and providing additional specifications for analysis and testing of raw materials and for providing production methods was a "plant" and also whether roads were a "plant". Following the test laid down by the apex court, the Gujarat High Court held that whereas the expenditure incurred on preparing and providing additional specification for analysis would be "plant", the amount spent on construction of the road would not be plant because it was not shown by the assess....
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.... is combined to form the larger unit it loses its individuality and becomes a part of the bigger plant. The court further held that after each small cage merges in the larger unit it cease to perform and becomes incapable of performing any function independent of the entire unit as a plant or machine. Each of the smaller cages was, therefore, treated to be no better than the individual components of an engine. 11. The apex court again considered the question as to what meaning should be given to the word "plant" in Scientific Engineering House P. Ltd. v. CIT [1986] 157 ITR 86 (SC). It was held that even drawings, designs, charts, plans, processing data and other literature comprised in the documentation service constituted a book and, therefore, fell within the definition of a plant. The court held that purpose of rendering such documentation service by supply of the documents to the assessee was to enable it to undertake its trading activity. It was held that these documents had a vital function to perform in the manufacture of the instruments and, therefore, even though the documents did not perform any mechanical operations or process they still fall within the definit....
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....r the plant was constructed to that dry dock can operate. It operated as an essential part in the operations which took place in getting a ship into the dock, holding it securely and then returning it to the river. The dock as a complete unit contained a large amount of equipment without which the dry dock could not perform its function. (5) Even in England, courts have repeatedly held that the meaning to the word `plant' given in various decisions is artificial and imprecise in application, that is to use the words of Lord Buckley, `it is now beyond doubt that the word `plant' is used in the relevant section in an artificial and largely judge-made sense.' Lord Wilberforce commented by stating that `no ordinary man, literate or semi-literate, would think that a horse, a swimming pool, movable partitions, or even a dry-dock was plant.' (6) For the hotel building and hospital in the case of Carr (H. M. Inspector of Taxes) v. Sayer 65 TC 15 (Ch D) it has been observed that a hotel building remains a building even when constructed to a luxury specification and similarly, a hospital building for infectious diseases which might require a special layout and other featu....
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....d constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant for the purposes of investment allowance." 16. The line of demarcation between what is a "plant" or not is a very thin one. Each case will have to be decided with reference to the particular facts of the case. It, however, needs to be noted that the definition of "plant" in section 43(3) is not an exhaustive definition. It is only inclusive in nature. Therefore, there is a wide scope for including in the definition many items. It is clear that the Legislature by including, ships, vehicles, and books in the definition of plant, had widened the scope of the word "plant". As noted above, now the Legislature has stepped in and specifically excluded build-ings from the definition of the word "plant". This itself indicates that prior to the exclusion with effect fromApril 1, 2004, buildings if specifically con-structed and falling within the guidelines of the various authorities referred to hereinabove could be treated as "plant". The various authorities referred to above also indicate that a very wide amplitude has been given to the term "plant". The definition of "....
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....he Rules relating to extra shift depreciation allowance it must be held that for the purpose of claiming the said allowance the assessee must establish that the concern had worked double shift or triple shift and if he succeeds in establishing that the concern had actually worked double shift or triple shift on particular days in the previous year, extra shift depreciation allowance would be allowable in accordance with the formula laid down in the said provision on the various items of machinery or plant except the items against which the letters N. E. S. A. are inscribed in sub-items (ii) of the Table in Part I of Appendix I as well as the items of machinery and plant expressly specified to which the general rate of depreciation of 10 per cent. was applicable. Except these excluded items the extra shift depreciation allowance would be allowable on all items of machinery and plant on which normal depreciation is allowable and has been allowed."Thereafter, the apex court on consideration of the entire law went on to hold thus (page 300) : "For the reasons aforementioned, it must be held that extra shift allowance had to be calculated on the basis of number of days during ....