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Issues involved: Interpretation of the term "plant" for investment allowance under section 32A of the Income-tax Act.
The judgment addressed the issue of whether a storage tank could be considered as "plant" for the purpose of claiming investment allowance under section 32A of the Income-tax Act. The assessee, engaged in the manufacture of non-edible oil, constructed a storage tank for the storage of hexane and manufactured oil. The Income-tax Officer disallowed the claim, stating that a storage tank cannot be treated as "plant" or "machinery." However, the Appellate Tribunal accepted the contention that the tank is an apparatus used in the manufacturing process and constitutes "plant," leading to a reference at the instance of the Revenue. The court analyzed the definition of "plant" under section 32A and section 43(3) of the Act. While section 43(3) defines "plant" to include various items like ships, vehicles, books, and scientific apparatus, the court rejected the argument that a storage tank cannot be considered "plant" based on the principle of ejusdem generis. The court emphasized that the definition of "plant" should encompass items necessary or facilitating the business or profession of an assessee, irrespective of fitting into specific categories mentioned in the statute. The judgment referred to precedents such as Indian Aluminium Co. Ltd. v. CIT and CIT v. Taj Mahal Hotel to support the broad interpretation of the term "plant." These cases established that items essential for business operations, like storage tanks and sanitary fittings, could be considered as "plant." The court also cited decisions from the Calcutta and Andhra Pradesh High Courts where tube-wells and wells were treated as "plant" due to their importance in industrial production. In conclusion, the court held that the storage tank in question was essential for the assessee's oil production business and therefore qualified as "plant" for claiming investment allowance under section 32A. The judgment favored the assessee, affirming the Appellate Tribunal's decision and ruling against the Revenue's contention.
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