1991 (6) TMI 4 - HC - Income Tax

Summary

Issues involved: Interpretation of depreciation allowance u/s 32 of the Income-tax Act, 1961 for a nursing home building - Whether the building qualifies as a 'plant' for depreciation at ten per cent.

The judgment addressed the issue of depreciation allowance under section 32 of the Income-tax Act, 1961 for a nursing home building. The assessee, a medical practitioner, claimed depreciation at ten per cent for the assessment year 1983-84 for a building constructed in 1979-80. Initially, depreciation was allowed at five per cent for the building. The Income-tax Officer rejected the claim, stating that even for cinema theatres and lodgings, depreciation is not allowed at more than five per cent. However, the Appellate Tribunal considered the functional aspects of the nursing home and classified it as a 'plant', emphasizing the presence of operation theatre, laboratory, X-ray room, sterilization plants, and air-conditioning. The court noted that the functional test is crucial in determining whether a building should be considered a 'plant'. The court highlighted previous decisions where functional tests were applied to distinguish between ordinary buildings and those considered 'plants'. The court also referenced the broad interpretation of the term 'plant' as including buildings, emphasizing the functional aspect in such determinations. Ultimately, the court ruled in favor of the assessee, allowing depreciation at ten per cent for the nursing home building, considering its specialized functions and equipment.