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TMI Blog1996 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... cts as appear from the statement of case are that the assessee has claimed extra shift allowance in respect of air-conditioners used by it for its unit of crimping yarn. The air-conditioners were fitted separately to the wall of the room. The Tribunal also found that the air-conditioners were necessary for crimping yarn. On this finding the Tribunal by applying the decision of the Gujarat High Court in Industrial Machinery Manufacturers Pvt. Ltd. v. State of Gujarat [1965] 16 STC 380, held that air-conditioners are plant and being essential for running crimping unit it fell in item III of sub-item (ii)B of Appendix (Part-I) and the assessee was entitled to extra shift allowance in respect of air-conditioners. It has been urged by Mr. Thakore, learned counsel for the Revenue, that air-conditioners of all types including room air-conditioners are subjected to a specific entry in the same Appendix (Part I), item III, sub-item (ii)B(2) just above the item on which the assessee relies. Item (2) is followed by an inscription "N.E.S.A". The import of this inscription has been stated in sub-item (iv) of item III which deals with depreciation on machinery and plant not being a ship, of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... silk plant. In the light of this plea, the two certificates reproduced in the order itself read in no unmistakable terms that what is meant by this finding is that use of air-conditioners are necessary and essential for the process of crimping of nylon yarn or for the functioning of crimping machinery. The certificate from the South Gujarat Textile Processors Association reads that "air-conditioners (apparatus) is part and parcel for the working of crimping machine in a crimping unit and without the simultaneous working of air conditioning machine, no crimping machinery can work. Therefore, in a crimping unit which works for 24 hours, the air conditioning machinery must work for 24 hours". The other certificate reads "This is to certify that crimping of nylon yarn on a crimping machine is always done in an air conditioned atmosphere ". It is on the basis of these two certificates that the finding of the Tribunal has been recorded. The true meaning of the finding has to be read in the context in which the contention about such fact has been raised. In the light of the assessee's own case, the finding is acceptance of his plea that air-conditioners are necessary for the use of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use by the assessee for the purposes of his business or profession : Provided further that no deduction shall be allowed under this clause or clause (iii) in respect of any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975, and is used otherwise than in a business of running it on hire for tourists . . . " In the four expressions used under section 32, the word "plant" can be of the widest import, though it has different shades of meaning. In the Concise Oxford Dictionary, different shades of meaning have been assigned to the word "plant". One meaning falls in the realm of botanical expression pertaining to vegetation ; as a noun it has been defined to a small organism of this kind as distinguished from a shrub or tree. Obviously we are not concerned with this meaning. Amongst other meanings which have been assigned to it in one sense it means "machinery, fixtures, etc., used in industrial process", in another sense it means "a factory itself". In Webster's Third New International Dictionary, the meaning of the word "plant" has been stated to be, which may be relevant for the present consideration, " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f machine also conveys the same meaning. Stroud's Judicial Dictionary, while giving meaning to "machinery" reads, "Machinery" implies the application of mechanical means to the attainment of some particular end by the help of natural forces ; "operative machinery" means machinery with the potentiality of operating or doing work. According to the plain dictionary meaning in its widest connotation in the context of trade or business, the expression plant may sometimes mean the factory itself as one composite unit including all buildings, machinery and apparatus therein which are required for the purposes of the factory. Obviously, the term "plant" has not been used under section 32 of the Act or for that matter under the Rules framed thereunder in that wide meaning. The very fact that four different terms have been used, namely, building, machinery, plant and furniture, the term "plant" has been used in a narrow sense to mean that it includes whatever apparatus is used by a person carrying on his business which is not as a stock-in-trade which he buys or makes or sells and which may not fall in the category of the building, machinery or the furniture as such. Thus, in principle t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of each asset machinery or plant on the basis of rates which have been prescribed by the Rules. So far as the present case is concerned, the controversy whether the air-conditioners are machinery or plant or whether the same are used for the purposes of carrying on business by the assessee who owns the assets in question does not arise as the same are accepted premises. The question, therefore, which really arises taking air-conditioners individually, can it be said to be a plant or machinery conforming to the description of artificial silk manufacturing plant or an air-conditioning machine. It is also not in dispute that the assets in question are primarily air-conditioning machinery and do fall within the description of item (2) under sub-item (ii) "B" of item III of Appendix I (Part-I) providing for different rates of depreciation on machinery and plant other than ships. It is also not in dispute that the said air-conditioners are necessary for the purpose of functioning of yarn crimping machine for the end-product of the factory. So, can it be said that because the air-conditioners are necessarily used for the functioning of the factory, it becomes an artificial silk ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machine to make that machine complete, becomes an integral part of the concerned asset itself and loses its independent identity then it cannot be said that the two assets exist. But mere interdependency of each other for their functioning does not make the two assets one for the purposes of claiming depreciation. The view that when a machine becomes an integral part of another machine or plant then it cannot be treated separately and has to be treated as a part of that machine itself finds support from an earlier decision of this court in State of Gujarat v. Jayant Paper Mills, 81 Taxation 367 (sic) wherein the court after referring to two decisions of the Punjab and Haryana and Kerala High Courts in CIT v. Straw-Board Mfg. Co. Ltd. [1975] 98 ITR 78 and Travancore Rayons Ltd. v. ITO [1977] 109 ITR 43, respectively, observed "there does not appear also serious controversy that where electric installations become integral part of other machines, they become eligible for extra shift allowance as part of general machinery, but if such electric installations are independent of other machines then they are not eligible for extra shift allowance. " The provision for extra shift allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N.E.S.A. under sub-item (ii). In that view of the matter, whatever rates are prescribed under sub-items (i) and (ii) of item III of Appendix I in the first instance, depreciation has to be calculated at the rates as have been stated in column 2 of the table against each item and thereafter alone, the question of computing extra shift allowance subject to the eligibility of each item of machinery or plant has to be considered. Therefore, the fact that a particular type of machinery has been enlisted for computation of depreciation at a special rate other than general rate would not by itself be a ground for treating the two sets of machinery and plant falling under the general rate or the special rate, would make any difference. Obviously, when air-conditioning machinery, has been enlisted as a separate item of machinery or plant for the purposes of computation of rate of depreciation and it has also been enlisted for no extra shift allowance, it cannot be treated as artificial silk manufacturing machinery by treating it to be necessary part of the unit manufacturing artificial silk falling under that item unless it has become integral part of other machinery. It is a well known pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g special rates of depreciation, the artificial silk manufacturing machinery and plant by itself is of general description meaning thereby all items of machinery and plant of artificial silk manufacturing like any other machinery and plant of any other manufacturing, would fall in the general category where a special rate has not been prescribed and vis-a-vis the controversy in question air-conditioning machinery installed at any manufacturing factory will form a distinct item of asset calling for treatment of depreciation than machinery and plant in general for functioning of that factory. To illustrate, textile manufacturing machinery and plant is not separately dealt with for the purposes of special rates and the same would attract general rate applicable under sub-item (i). If the provision has to be applied with respect to textile machinery and plant, it would read rate applicable to textile machinery and plant under sub-item (i). Obviously, in that event while the textile machinery and plant is being dealt with under the general item, the air-conditioning machinery will have to be dealt with as an item of machinery and plant dealt with specifically under sub-item (2) of sub-i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer had, therefore, no power to allow extra shift allowance on electrical machinery. " We may notice here that the question has arisen on the like contention raised by the assessee in the case in respect of electrical machinery. The assessee had claimed extra shift allowance on electrical machinery which was allowed by the Income-tax Officer in the first instance ; however, noticing the aforesaid provision under rule 5 read with Appendix I, a notice to show cause was issued to the assessee for rectifying the mistake which was considered to be apparent from the record and the order was rectified by him. The assessee had contended that the machinery forms part and parcel of the machinery as a whole and could not be treated as electrical machinery, as is the contention before us that air-conditioners form part and parcel of the artificial silk manufacturing machinery as a whole and shall fall within that description and on that premise it was further contended that since this question raised an arguable issue the pre-condition for invoking the provisions for rectification did not exist. This contention that the issue raises any arguable question obviously did not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be machinery used in the manufacture of such goods. Every item of machinery which has a use in the manufacture of finished goods, which plays some role in the process of manufacture of finished goods and without which manufacture of finished goods would not be possible would be machinery used in the manufacture of such goods. Such machinery would be an essential and integral part of the plant which manufactures finished goods and would certainly satisfy the description that it is machinery used in the manufacture of finished goods. If this test be applied, it is clear that humidifiers are machinery used in the manufacture of cloth. " Thus, it is apparent that the court was concerned with the question whether a particular item of machinery on which the rate of tax was to be applied was a machinery used in manufacture of goods and was not concerned with whether the machinery is a textile machinery as such. The term "plant" was used in the sense of manufacturing unit as a whole and not with reference to indicate separate apparatuses composing that unit. The case before us is whether air-conditioners are artificial silk manufacturing machinery or plant. The question before us is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliances. As we have already noticed, there is no dispute before, nor is it the case of the Revenue that air-conditioners are not plant or machinery at all. Therefore, we are unable to see how this case advances the case of the assessee in any manner. There is yet another reason which fortifies our conclusion. The phrases used in entry (2) of sub-item (ii) under item III of Appendix I is air-conditioning machinery including room air-conditioners. This goes to show that this entry deals with all types of air-conditioning machinery whether used in a room, factory or office or any other place of business irrespective of any particular use to which it is put. The air-conditioning machinery in any form including, even if it be a room conditioner only, is subjected to special treatment with non-applicability of provisions relating to extra shift allowance. The applicability of this provision is not depending upon the particular use to which an air-conditioning machinery is put. If we are right in our conclusion and we think so, there is no room for accepting the further argument that it should be treated to be falling in another description because its use is necessary for the function ..... X X X X Extracts X X X X X X X X Extracts X X X X
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