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TMI Blog2017 (11) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... ls within the category of “plant & machinery” as laid down in the l.T. Rules, 1962. The “visicooler” also does not fall within the exceptions provided in clauses (A) to (D) of the proviso to Section 32(1)(iia) of the Act. We note that the assessee is in the business of manufacturing and sale of Coca-Cola, which is a soft drink. Since the assessee is situated at a long distance and the product has to be sold at long distance, the Coca-Cola becomes hot due to the humid weather in the State of West Bengal. It is a known fact that soft drink, like Coca-Cola, cannot be consumed in hot state, whereas it is preferred by majority of customers as a cold drink. So, the assessee, in order to sell its final product to the customers, in various parts of the state required to give the Coca-Cola, in cold state for which the assessee has purchased, the tool, to keep the same in cool condition by the machine called ‘Visicooler’. The test laid down by Hon’ble Supreme Court in the case of Scientific Engineering vs. CIT (1985 (11) TMI 1 - SUPREME Court), was: Did the article fulfil the function of a plant in the assessee's trading activity? Was it a tool of his trade with which he carried on his bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely chilling of aerated water cannot be termed as manufacturing activity and even that chilling job is the activity of the retailer and not of the assessee. This way, the assessing officer has disallowed the assessee s claim of additional depreciation of ₹ 90,56,200/-. 4. Aggrieved by the order of the assessing officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who had deleted the addition made by AO. During the course of the appellate proceeding, the assessee explained to CIT(A) that the law does not specifically lay down the condition that the assets had to be installed in the premises of the assessee company and that the twin conditions of owning the assets and putting them to use for business purpose were enough for claiming depreciation which is not a disputed fact. The Assessee submitted before the CIT(A) that assessee does business at a state level and hence cold drinks manufactured by it are distributed from its Dankuni plant (manufacturing unit) to the different designated districts of West Bengal. The soft drinks are preferred by consumers when they are cold, but in view of the above facts it stands established that, by the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t used for the purpose of business or profession [but does not include tea bushes or livestock] [or buildings or furniture and fittings] An analysis of the aforesaid provision i.e. Section 43(3) of lncome Tax Act, 1961 shows that the word 'plant' as defined therein includes any movable item/object which is used and stands incidental for the purpose of business or profession. In support of the above contention, the assessee submitted the judgment of the Hon'ble Supreme Court of lndia in the matter of Scientific Engineering vs. CIT reported in [1986] 157 ITR 86 (SC).The Apex Court of lndia observed therein the aforesaid matter that The intention of the legislature was to give the word plant a wide meaning.The Apex Court further held that the the word plant was not necessarily confined to an apparatus which was used for mechanical operation or process or was employed in mechanical or industrial process. The test to be applied was: Did the article fulfil the function of a plant in the assessee's trading activity? Was it a tool of his trade with which he carried on his business? lf the answer was in the affirmative, it would be a plant. ln view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd reported in [1988] 232 ITR 270 (Guj) it was held that The provisions regarding depreciation allowance get attracted when a plant is used for the business of the assessee. The expression plant has not been extensively defined and Section 43(3) of the lncome-tax Act, 1961, provides only an inclusive definition, which was the effect of adding items mentioned thereunder to the meaning of the word plant as understood in its ordinary sense. The word plant as defined in the Oxford English Dictionary means fixtures, implements, machinery and apparatus used in carrying on any industrial process . The word apparatus would mean the equipment needed for a particular purpose or function, and the word equipment would mean the necessary articles, etc., for a purpose. The word plant in its ordinary sense would, therefore, mean the equipment needed for a particular purpose or function. Such equipment can be any article, which may be necessary for a purpose. In the context of business, therefore, a plant would mean any equipment or article necessary for the purpose of that business. The articles or equipment which it may become doubtful to read into the plain meaning of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether by way of depreciation or otherwise) in computing the income chargeable under the head Profits and gains of business or profession of any previous year ln view of the above, the assessee submitted that it is already an established fact that 'visicooler' is a 'plant' incidental for manufacturing process in the concerned case. 5. Considering the above submissions of the assessee, the ldCIT(A) held thatthe main focus of the AO for disallowing the claim of additional depreciation under Section 32(iia) was on the following reasons: - The viscicooler was not used by the assesseeat its own premises but at the premises of the distributor; - The visicooler cannot be said to be used for manufacture of cold drinks. The ldCIT(A) observed that section 32 of the l.T. Act grants deduction on account of depreciation. The depreciation shall be allowed if owned by the assessee and used for the purposes of business or profession. Save and except these two conditions no further or additional conditions are required to be fulfilled by an assessee so as to claim deduction by way of depreciation. The AO is of the view that the asset was although owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual cost of plant machinery. lt is therefore clear that the benefit is available on the plant machinery only to those assessees who are manufacturers and it is not restricted to plant machinery used for manufacture or which has first degree nexus with manufacture of article or thing. We note that the second condition cited by the AO in the impugned order is not borne from the provisions of Section 32(1)(iia) of the Act. The conditions laid down in Section 32(1)(iia) is that if the assessee is engaged in manufacture of article or thing then it is entitled to additional depreciation on entire additions to plant machinery provided the items of addition does not fall under any of the exceptions provided in clauses (A) to (D) of the proviso. ln the present case the assessee is engaged in the business of manufacture of cold drinks. This fact has not been disputed by the AO. The AO has categorically observed that the assessee's nature of business is manufacture of cold drinks. We therefore find that the assessee is legally entitled to avail the benefit of additional depreciation under Section 32(1)(iia) of the Act. The visicooler is a plant machinery . The said ite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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