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TMI Blog1995 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals were disposed of by a common order dated February 18, 1986. On the applications of the assessee as well as the Revenue, under section 256(1) of the Act, the following questions are referred to this court for opinion: " (1) Whether, on the facts and in the circumstances of the case, the assessee is not entitled for investment allowance under section 32A of the Income-tax Act, 1961, in respect of plant and machinery installed for running hotel business ? (2) Whether, on the facts and in the circumstances of the case, the building for running the hotel should be treated as 'plant' under section 43(3) of the Income-tax Act, 1961 ? " Mr. Y. Ratnakar, learned counsel for the assessee, contends that a "hotel" is "plant" so far as the business of the assessee is concerned both for the purposes of section 32A of the Act as well as section 43(3) of the Act ; therefore, the Tribunal ought to have granted the relief under the said provisions. Learned standing counsel for the Income-tax Department has contended that a "hotel" is a mere building and it cannot be treated as "plant", wherever Parliament intended to grant relief to a "hotel" it included the word "hotel" for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction by way of development rebate is allowable under section 33 ; and (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head ' Profits and gains of business or profession ' of any one previous year. Explanation.--For the purposes of this sub-section, ' actual cost ' means the actual cost of the ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been met out of the amount released to the assessee under sub-section (6) of section 32AB." A plain reading of sub-section (1), extracted above, and sub-section (2) of section 32A, shows that if a ship or an aircraft or machinery or plant is owned by the assessee and is wholly used for the purpose of the business carried on by him, then in the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum, by way of investment allowance, equal to twenty-five per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 922. After considering the definition of the term "plant" in section 10(5) of the said Act, the Supreme Court laid down that the sanitary and pipeline fittings fell within the definition of "plant" in section 10(5) and that the assessee was entitled to development rebate in respect thereof under section 10(2)(vib). Their Lordships observed that the intention of the Legislature was to give the word "plant" a wide meaning. In CIT v. Sri Krishna Bottlers Pvt. Ltd. [1989] 175 ITR 154 (AP), a Division Bench of our High Court considered the question whether bottles and shells used by the assessee in the manufacturing and selling of soft drinks would be "plant" for the purpose of section 32(1)(ii) of the Income-tax Act, 1961. After an exhaustive consideration of the various judgments, both of English courts as well as of Indian courts, the Bench held that the word "plant" has to be understood in the popular sense, viz., in the sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it and that it should be given a wide meaning. It has been held that in its ordinary sense it would include whatever apparatus is used for carrying on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarded as "plant" and thus concluded that the building constructed and used as a cinema wherein the cinema business was being carried on by the assessee did constitute "plant" along with its fittings and fixtures. With regard to the cinema building the same view was taken by the Karnataka High Court in Santosh Enterprises v. CIT [1993] 200 ITR 353. In CIT v. Dr. B. Venkata Rao [1993] 202 ITR 303 (Kar), the question before the Karnataka High Court was whether a "nursing home" was "plant" for purposes of section 32 of the Act. It was observed that the nursing home was not an ordinary building having regard to the number of persons using it and the manner of its use and the purpose for which it was used ; the building was used not only to house the patients and nurse them, but also to treat them for which various equipment and instruments were installed ; it had an operation theatre, a pathological laboratory, an X-ray room, a plant for sterilisation of clothes, a plant for sterilisation of other surgical instruments, an air-conditioning room, etc. Applying the functional test, it was held that the nursing home building was "plant". We may note here the view of the other High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 330 (Delhi) was treated as "plant". From the above discussion, it follows that for the purposes of deciding as to whether a building would be a "plant" within the meaning of the expression in section 43(3) of the Act : "(1) the term 'plant', as used, has to be given a wide meaning; and (ii) whether a building is a 'plant' or not has to be determined with reference to the functional test." Yet another approach to the question would be as to whether the building was serving as the setting in which the business is carried on or is a thing with which the business is being carried on. If it is a mere setting, it would not be "plant" but if it is a thing with which the business is carried on, then it would fall within the ambit of "plant". No general principle can be laid down as to whether a particular building is plant or not. The court will have to examine various aspects to find out as to whether the building in a given case satisfies the requirements of than object with which the business is being carried on and without which that business cannot be carried on, if so, it would fall within the meaning of "plant". So far as "hotels" are concerned, the business of a hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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