2004 (10) TMI 84

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....icer disallowed the claim or the assessee. The assessee went in appeal before the Commissioner of Income-tax (Appeals). The Commissioner in view of the Full Bench decision of this court in the case of CIT v. Hotel Luciya [1998] 231 ITR 492 held that prawn pond should be treated as "plant" and depreciation applicable to plant should be allowed. Against that order, the Revenue went in appeal before the Income-tax Appellate Tribunal. The Tribunal applying the functional test laid down by the Kerala High Court in Hotel Luciya's case [1998] 231 ITR 492 [FB] decided the issue in favour of the assessee and dismissed the appeal of the Revenue. The Tribunal held that depreciation on prawn ponds has to be allowed at the rate applicable to plant and ....

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....he Department and the Tribunal. The Tribunal took the view that the decision of the Bombay High Court does not apply to the case of the assessee as it is distinguishable, it dismissed the appeal filed by the Revenue. The question that arises is whether the pond is a plant. In CIT v. Anand Theatres [2000] 244 ITR 192, the Supreme Court held as follows: "Section 32 provides different rates of depreciation for building, machinery, plant or furniture, ships, buildings used for hotels, aeroplanes and other items mentioned therein. The word 'plant' is given an inclusive meaning under section 43(3) which nowhere includes buildings. The Rules prescribing the rates of depreciation specifically provide for grant of depreciation on buildings, furnit....

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.... carried on and is not something with which the business is carried on, except in some rare cases where it plays an essential part in the operations which take place. Hotel premises are not considered to be an apparatus or tool for running the hotel business but are merely a shelter or home or setting in which business is carried on. The same would be the position with regard to a theatre in which cinema business is carried on. Therefore, even the functional test is not satisfied." In another decision reported in CIT v. Karnataka Power Corporation [2001] 247 ITR 268, the Supreme Court held as follows: "The question whether a building can be treated as plant, basically, is a question of fact and where it is found as a fact that a building ....