1988 (9) TMI 2 - HC - Income Tax

Summary

Issues Involved:
1. Whether the entire cinema theatre, including various parts and fixtures, qualifies as "plant" for the purposes of the Income-tax Act.
2. Whether specific components within the auditorium, such as walls, ceilings, and furniture, can be treated as "plant."

Summary:

Issue 1: Entire Cinema Theatre as "Plant"
The primary question was whether the entire cinema theatre, including rolling shutters, fountains, mirrors, furniture, and fixtures outside the auditorium, qualifies as "plant" u/s 32 of the Income-tax Act, 1961. The Tribunal concluded that the entire cinema theatre cannot be considered a plant. The Tribunal specified that rolling shutters, fountains, mirrors, and furniture and fixtures outside the auditorium do not qualify as plant. The court upheld this view, emphasizing that the cinema house is merely a setting for the business and not an apparatus with which the business is carried on.

Issue 2: Specific Components within the Auditorium as "Plant"
The second issue was whether the walls, ceiling, wooden walls, false ceiling, wooden panelling, and chairs within the auditorium could be treated as "plant." The Tribunal held that these components within the auditorium fall within the definition of "plant." The court agreed, applying the functional test to determine that these elements are essential for the business operations and thus qualify as plant. The court referenced several cases, including IRC v. Barclay, Curle and Co. Ltd., and CIT v. Taj Mahal Hotel, to support the functional test approach. The court concluded that the screening wall and ceiling of the auditorium, along with the wooden walls, false ceiling, wooden panelling, and chairs, are integral to the business and thus constitute plant. However, chairs outside the auditorium do not qualify as plant.

Conclusion:
The court answered the first question in the affirmative, favoring the Revenue, and the second question in the affirmative, against the Revenue. The judgment emphasized the functional test to determine what constitutes a "plant" and clarified that only specific components within the auditorium qualify, not the entire cinema theatre or fixtures outside the auditorium.