TaxTMI 
TaxTMI 
2022 (7) TMI 289
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....purchased bottles and crates from various suppliers. The soft drinks, manufactured by the Appellant, were filled in bottles stacked in crates and distributed to its customers. 4. In its return for the assessment year 1989-90, the Appellant/Assessee claimed 100% deduction on the bottles and crates purchased by it. The total purchase cost of bottles and crates was Rs.47018507/-, and each bottle and crate was less than Rs.5000/-. According to the Appellant, the bottles and crates were the tools by which the Appellant carried on its business of manufacturing and sale of soft drinks. Since the cost of each bottle and crate was less than Rs.5000, the Appellant claimed 100% depreciation on the bottles and crates as per the proviso to Section 32(1)(ii) of the Act. 5. The Assessing Officer passed the order on 26 March 1992 under Section 143 (3) of the Act holding that the bottles and crates cannot be construed as "Plant" as per the definition of Section 43(3) of the Act and they have to be construed as stock-in-trade and accordingly, the depreciation as claimed by the Appellant was not allowed. The Appellant filed an appeal before the Commissioner of Income Tax (Appeals) on 30 April 1992.....
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....n of the Supreme Court in the case of State of Bihar vs. Steel City Beverages Ltd.235 ITR 131 opined that the depreciation claimed by the Appellant was rightly denied by the Assessing Officer in light of the definition of "Plant" as held by the Supreme Court in the case of Steel City Beverages Ltd. Both the appeals were disposed of by the Tribunal by the impugned order dated 21 September 2001. Being aggrieved by the said order, the Appellant filed the present appeal. The appeal is admitted on the question of law as reproduced above. 7. We have heard Mr. Jeet Kamdar, the learned Counsel for the Appellant and Mr. Arvind Pinto, learned Counsel for the Respondent. 8. Section 43(3) of the Act as it stood at the relevant time, i.e., assessment year 1989-90 reads thus: "43(3) "plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession." 9. Mr.Kamdar, the learned Counsel for the Appellant submitted that the Tribunal had not followed the decisions of the Andhra Pradesh High Court and Rajasthan High Court, which are directly on the point as to the definition of "Plant" in Section 43(3) of the Act and has errone....
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....bunal. 11. The definition of "Plant", reproduced above, shows that it is an inclusive definition. The Division Bench of Rajasthan High Court in the case of Jai Drinks (P.) Ltd. followed the decision of the Supreme Court in the case of Taj Mahal Hotel, where the Supreme Court, after considering the term "Plant" under the provisions of the Act, observed that the same has to be construed in a wide manner. In Taj Mahal Hotel, the Supreme Court construed the definition of "Plant" as occurring in Section 10(5) of the Indian Income-tax Act, 1922 ("the 1922 Act"), which corresponded to Section 43(3) of the 1961 Act. It was held that had the definition of "Plant" was an inclusive definition, and the intention of the Legislature was to give it a wide meaning which is evident from the fact that articles like books and surgical instruments were expressly included in the definition of "Plant". The Rajasthan High Court also followed the decision of the Supreme Court in Scientific Engineering House (P.) Ltd., wherein while construing the definition of "Plant" in Section 43(3), the question of whether drawings, designs, charts, plans, etc., were within the definition of "Plant" where the assessee....
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....ne must look at the finished product and not at the bits and pieces as they arrive from the factory. The fact that a building or part of a building holds the plant in position does not, convert the building into the plant. A piecemeal approach is not permissible, and the entire matter must be considered as a single unit unless, of course, the component parts can be treated as separate units having different purposes. (8) The functional test is a decisive test. Bearing these principles in mind, we shall approach the facts of the present case. The bottles containing the soft drink cannot be stock-in-trade inasmuch as the bottle by itself is not the subject of sale. The customer or the retailer returns back the bottle to the assessee after the soft drink is consumed. Likewise, the shells which are sent to the customer or dealer also come back with the empty bottles, and they cannot also be stock-in-trade. What is the function these bottles and shells perform in the assessee's trade ? Are they essentially tools in the assessee's business? In our opinion, yes. The bottles are essential tools of the trade for it is through them that the soft drink is passed on from the ass....
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....include bottles and crates employed by an industrial unit manufacturing softdrinks and beverages for carrying on its business. The word plant has a very wide meaning and a variety of articles, objects or things have been held to be plant. Dictionaries have defined plant as land, building, fixtures, machinery, implements and tools, and apparatus used in carrying on a mechanical operation or an industrial process. This Court in C.I.T. v. Taj Mahal Hotel [1971] 82 ITR 44 and Scientific Engineering House P. Ltd. v. CIT [1986] 157 ITR 86 referred to with approval the observations of Lindley LJ In Yarmouth v. France [1887] 19 QBD 647 that in its ordinary sense plant includes whatever apparatus is used by a businessman for carrying on his business - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business. In that case, this Court further held that the test to decide whether a particular thing is plant would be : "Does the article fulfil the function of a plant in the assessee's trading activity? Is it a tool of his trade with which he carries on his business? If the answ....