Plant - Definition / Legal Terminology - Income Tax

In sections 28 to 41 and in section 43(3) of the Income tax Act 1961, unless the context otherwise requires- plant includes - ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession but does not include tea bushes or livestock or buildings or furniture and fittings Explanation.(i) -For the purposes of section 44BB of the Income tax Act 1931,- plant includes- ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; Commissioner of Income-tax vs Anand Theatres- [ 2000 (5) TMI 4 - SUPREME COURT] The word plant is given inclusive meaning under section 43(3) which nowhere includes buildings. The rules prescribing the rates of depreciation specifically provide grant of depreciation on buildings, furniture and fittings machinery and plant and ships. Machinery and plant include cinematograph films and other items and the building is further given a meaning to include roads, bridges, culverts, wells and tube-wells. (2) In the case of Taj Mahal Hotel [1971] 82 ITR 44, this court has observed that the business of a hotelier is carried on by adapting building or premises in suitable way, meaning thereby building for a hotel is not apparatus or adjunct for running of a hotel. The court did not proceed to hold that a building in which the hotel was run was itself a plant, otherwise the court would not have gone into the question whether the sanitary fittings used in bath room was plant. (3) For a building used for a hotel, specific provision is made granting additional depreciation under section 32(1)(v) of the Act. (4) Barclay, Curle and Co.'s case [1970] 76 ITR 62, decided by the House of Lords pertains to a dry dock yard which itself was functioning as a plant that is to say, structure for the plant was constructed so that dry dock can operate. It operated as an essential part in the operations which took place in getting a ship into the dock, holding it securely and then returning it to the river. The dock as a complete unit contained a large amount of equipment without which the dry dock could not perform its function. (5) Even in England, courts have repeatedly held that the meaning of the word plant given in various decisions is artificial and imprecise in application, that is to use the words of Lord Buckley, it is now beyond doubt that the word 'plant' is used in the relevant section in an artificial and largely judge-made sense. Lord Wilberforce commented by stating that no ordinary man, literate or semi-literate, would think that a horse, a swimming pool, movable partitions, or even a dry-dock was plant. (6) For the hotel building and hospital in the case of Carr v. Sayer 65 TC 15 (Ch. D.), it has been observed that a hotel building remains a building even when constructed to a luxury specification and similarly a hospital building for infectious diseases which might require a special layout and other features also remains a premises and is not plant. It is to be added that all these decisions are based upon the interpretation of the phrase machinery or plant under section 41 of the Finance Act, 1971, which was applicable and there appears no such distinction for grant of allowance on different heads as provided under section 32 of the Income-tax Act. (7) To differentiate a building for grant of additional depreciation by holding it to be a plant in one case where the building is specially designed and constructed with some special features to attract the customers and a building not so constructed but used for the same purpose, namely, as a hotel or theatre would be unreasonable. used as a cinema along with its fittings and fixtures and wherein cinema business was carried on constituted a plant.