TaxTMI 
TaxTMI 
2010 (11) TMI 338
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.... T. A. No. 376 of 2006. 2. In R. C. No. 53 of 2001, M/s. Srinivasa Hatcheries (Private) Limited, Hyderabad, which runs a hatchery and poultry farm, buys one-day old chicks, grows them, hatches them and after incubating them, sells one-day old commercial chicks to poultry farms. In the return for the assessment year 1991-92, they claimed depreciation at 20 per cent. on the poultry sheds treating them as "plant". The Assessing Officer declined to accept the same and completed the assessment treating the poultry sheds as "building" allowing depreciation at 10 per cent. In their appeal, the assessee was successful. The Revenue unsuccessfully appealed before the Income-tax Appellate Tribunal. The Commissioner of Income-tax sought reference. The Tribunal by order dated July 8, 1996, declined to do so. The matter went to the Supreme Court. Their Lordships by order dated February 4, 2000, in Civil Appeal No. 841 of 2000 (CIT v. Srinivasa Hatcheries P. Ltd. [2000] 245 ITR 8 (SC)) (arising out of SLP (C) No. 4847 of 1989) directed the Tribunal to refer the question to the High Court. 3. I. T. T. A. No. 376 of 2006 is filed by the Revenue against the order of the learned T....
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....pplicable to depreciation ? 7. Sections 28 to 41 of the Act contain the procedure for computation of profits and gains of business or profession. Section 32 of the Act allows the assessee certain deductions in respect of depreciation of tangible assets like buildings, machinery, plant or furniture. Deduction in respect of depreciation of intangible assets like know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature is also permitted. Section 43 contains definitions of the terms used in sections 28 to 41. Section 43(3) defines "plant". For understanding the controversy, it is necessary to read sections 32(1) and 43(3) of the Act, extracted hereunder : "32. Depreciation.-(1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed- (i) in the case of ships other than ships ordinarily plying on inland waters, such percentage on the actual cost thereof to the assessee as may, in any case or class of cases or in re....
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....aspect. It merely relied on its earlier decision in Srinivasa Hatcheries P. Ltd. for the assessment year 1989-90 and agreed with the Commissioner of Income-tax (Appeals). Therefore, in so far as finding of fact is concerned, there is no reasoning by the Appellate Commissioner or the Tribunal. We may recall the reasoning of the Assessing Officer that poultry shed is not a tool, with the help of which, the assessee carried on business and that it is a mere place where business activity of the assessee is carried on. This is indisputable even in these referred cases, and for that matter, in all other matters. Indeed, the assessee did not dispute that whether or not a poultry shed is constructed as per the specific needs of the particular hatcheries, a poultry shed is a place in which the business is carried on. It is a place from where the hatcheries company carries on the business of hatching, brooding and producing commercial chicks and marketing them to needy poultry farms. With this background, we may now consider the case law, relied on by both the sides. 11. Anand Theatres [2000] 244 ITR 192 (SC) involves the question whether a building used as a hotel or cinema theatr....
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....ntioned therein are satisfied then for a building which is used for a hotel, a sum equivalent to 25 per cent. of the actual cost of the erection of the building is granted as depreciation. Further, the Legislature has considered building as separate from the hotel business and building is not considered as a plant for running the hotel. Therefore, building and the use of such building as a hotel are considered distinct. (4) All throughout section 32 for building it is specifically mentioned that 'whenever it is erected', while for machinery and plant, the words used are 'whenever it is installed' and there is no question of installing building. Section 32(1)(iia) uses the phrase 'machinery' or 'plant' installed in any premises used as a hotel and section 33(1)(b)(B)(ii) provides in case of 'machinery' or 'plant' is installed for the purposes of business or construction, etc., which indicates that 'plant' is to be installed and there is no question of erection." 12. Further, the apex court also laid down that even if special fittings or equipment to control atmospheric affects are permitted in a building, it would not make "building" a "plant" although special fi....
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....hich the business is carried on. Thus, the poultry shed cannot be termed as plant but would fall under the term 'building'." 14. Karnataka Power Corporation [2001] 247 ITR 268 (SC) is a case wherein it was held that the question whether a place is a "building" or a "plant" is a question of fact and that (page 271) : ". . . where it is found as a fact that a building has been so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant ". The Supreme Court therein held that, "power generating station is a plant eligible for investment allowance under section 32A of the Act". Dr. B. Venkat Rao [2000] 243 ITR 81 (SC) and Dr. Ganga R. Menon [2003] 259 ITR 661 (Ker) are the cases of nursing home and hospital respectively. It was held therein that, "in case of nursing home or hospital, the building with sterilization plants, operation theatres plays an important part in the business and, therefore, can be treated as 'plant'". 15. The brief analysis of the precedents would show that if a building itself is the place with which the business is carried on, it is a "plant". But, if the building is a place fr....