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Issues involved: Determination of whether the fencing around the refinery processing units constitutes 'plant' for depreciation allowance and development rebate under section 10(2)(vi)(via) and section 10(2)(vib) of the Indian Income-tax Act, 1922 for assessment years 1959-60, 1960-61, and 1961-62.
First Issue - Fencing as 'Plant': The Income-tax Officer initially denied depreciation and development rebate on the fencing around the refinery processing units, arguing it did not constitute "plant." However, the Appellate Assistant Commissioner considered the fencing as plant. The Tribunal, based on previous orders, determined that the fencing qualified as "plant" for depreciation allowance and development rebate. The Commissioner of Income-tax referred the matter to the High Court for determination. Legal Interpretations: The definition of "plant" under section 10(5) of the Income-tax Act is inclusive, encompassing items used for business purposes. Precedents such as Hinton v. Maden and Ireland Ltd. and Commissioner of Income-tax v. Taj Mahal Hotel have established that items like machinery, sanitary fittings, and partitions can be considered "plant" if essential for business operations. Analysis and Conclusion: The High Court analyzed the necessity of the fencing for refinery operations, as per Petroleum Rules, 1937, which mandated protective measures around processing units. The Tribunal's findings indicated the fencing was integral to the processing units, both in cost and construction durability. Considering these factors and legal precedents, the Court concluded that the fencing constituted "plant" eligible for depreciation allowance and development rebate. The decision favored the assessee, affirming the Tribunal's conclusion.
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