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Issues involved:
Depreciation on flour mill building - Whether building qualifies as a plant for higher depreciation rate. Analysis: The primary issue in this case revolves around the classification of a flour mill building for the purpose of claiming depreciation. The assessee contended that the building should be considered a plant, thereby justifying a higher rate of depreciation. The Assessing Officer initially rejected this claim, but the CIT(Appeals) allowed it. The crux of the matter lies in determining whether the building qualifies as a plant based on its construction and functionality. The argument presented by the authorized representative relied on various case laws, such as the CIT v. Karnataka Power Corpn. and Dy. CIT v. Astra-IDL Ltd., to support the contention that a building can be treated as a plant if it serves special technical requirements. The functional test was emphasized, where the building is considered an apparatus or tool for conducting business activities. Reference was made to precedents like CIT v. R.G. Ispat Ltd., highlighting the importance of specific structural components in determining whether a building should be classified as a plant. The Tribunal analyzed the nature of the business conducted by the assessee, which involved a roller flour mill with machinery and equipment fitted throughout the building. The interpretation of the term 'plant' as defined in section 43(3) of the Income-tax Act was crucial. It was observed that the term 'plant' should be understood in the popular sense, considering the apparatus used by a businessman for business operations. The functional test emerged as a decisive factor in determining whether an asset qualifies as a plant. The Tribunal differentiated between the building and the machinery/equipment within the flour mill, concluding that while the equipment could be classified as plant based on the functional test, the building itself did not meet the criteria. Citing precedents related to other establishments like theatres, hotels, nursing homes, and poultry sheds, it was established that buildings in such contexts were not considered plants. Consequently, the Tribunal upheld the Assessing Officer's decision to deny higher depreciation on the flour mill building, applying a 10% depreciation rate applicable to factory buildings. In conclusion, the judgment delves into the intricate interpretation of the term 'plant' in the context of a flour mill building, emphasizing the functional test and established precedents to determine the eligibility for higher depreciation rates. The decision underscores the importance of distinguishing between buildings and plant machinery/equipment in assessing depreciation claims within the framework of the Income-tax Act.
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