2003 (11) TMI 14

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....e Tribunal was right in law and in fact in holding that the floor can be treated as a tool with which the business of the assessee is being carried on and it satisfies the functional test? 3. Whether, on the facts and in the circumstances of the case, the assessee is entitled to extra shift allowance on the main floor of the studio, studio bulbs and central air-conditioning plant?" These references arise out of the two appeals, I.T.A. No 362/Coch of 1989 and I.T.A. No. 116/Coch. of 1991, relating to the assessment years 1985-86 and 1987-88, respectively. In both the appeals the assessee is the same. The assessee is a registered partnership firm engaged in the production of cinematograph films. The primary question to be considered is whet....

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.... counsel appearing for the Department, contended that the outdoor shooting can be done with the aid of the building and films are at present made only by resort to outdoor shooting. Counsel submitted the mere fact that some scenes and settings have been taken in the studio, does not mean that it is a tool in the hands of the assessee. Counsel appearing for the assessee, on the other hand, contended that as the assessee is a film producer, studio and outdoor unit are plants in his hands. The building cannot be treated as mere building but is a business tool in the hands of Income Tax Reports the assessee. In the facts and circumstances of the case the main question is reframed as under: "Whether the assessee's studio building constituted a ....

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....f manipulation in order to create or enact scenes or settings. Counsel for the Revenue placed reliance on the decision of the apex court in CIT v. Anand Theatres [2000] 244 ITR 192 wherein it was held that theatre building and hotel building specially equipped for purposes of business is not a plant. Counsel appearing for the assessee placed reliance on the decision of the Madras High Court in CIT v. Indian Metal and Metallurgical Corporation [1990] 182 ITR 460; Scientific Engineering House (P.) Ltd. v. CIT [1986] 157 ITR 86 (SC); CIT v. Coromandel Fertilisers Ltd. [1985] 156 ITR 283 (AP) and CIT v. Oil India Ltd. [1983] 143 ITR 848 (Cal). Counsel for the assessee submitted that the studio is designed with wooden partitions and can be remov....

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....ctional test is a decisive test, and an item which falls within the category of building cannot be considered to be plant. Buildings with particular specification are not plants. In order to find out whether a building is a plant or not the following tests would be decisive: (i) Functional test is a decisive test. (ii) An item which falls within the category of building cannot be considered to be a plant. Buildings with particular specification for atmospheric control like moisture or temperature are not plants. (iii) In order to find out as to whether a particular item is a plant or not, the meaning which is available in the popular sense, i.e., the people conversant with the subject-matter would attribute to it, has to be taken. (iv) ....