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TMI Blog1984 (3) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... d floor and three floors above plus a water tank, sump tank, and pump house. This unit has been designed to produce mainly Asawarishtas. It is designed with a view to have mechanisation and modernisation of operations. The process involves extraction of herbs in aqueous medium dissolution. The entire process is done at five different levels, starting at the fifth level or the top level. The description of the process at the various levels is given below : " Fifth Level : Water forms the vehicle for the Asawarishtas. This water is treated at the fifth level to make it germ free and to settle the suspended matter, so that the water is suitable for the processing of herbs. Fourth Level : This level is the 'Extraction Level'. Water is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o air in order to minimise the effects of temperature variation. The alcoholic fermentation generates several other alcohols besides ethanol which are responsible for the pleasant flavour of the end product. The liquid are sampled periodically to monitor refractive index, pH, ethanol, specific gravity, dissolved solids, etc. First Level : The liquids syphoned from vats at second level are stored in smaller vats for further sedimentation wherein in fine silt sediments and the liquid is syphoned again. It is then passed on to the ground level. Ground Level : The processing undertaken on this level are bottle washing, drying, filling, capping and labelling. The liquid is received in tanks from the first level and then filled in bottles after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, felt that it was only a building and could not be considered as a plant or machinery. He, therefore held that the assessee was not entitled to the benefit under section 32A. Since it was considered as a first class building, the assessee could get depreciation at the rate of 2 1/2 per cent. 5. The assessee came on appeal before the Commissioner (Appeals). The Commissioner (Appeals), agreeing with the ITO, held that it was not a plant. It was only a factory building. Merely because the factory is a little better designed and takes care of the special requirements of the manufacturing process, it does not follow that the building has to be classified as plant. 6. The assessee is on further appeal before us. Shri Mahajan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain whether it can be treated as an apparatus which is used by a businessman for carrying on business and whether with that asset he carries on the trade as opposed to the place where and the setting in which the trade was carried on. We have, therefore, to consider the structure could be considered as an apparatus which is used for carrying on the business. The business of the assessee is preparation of ayurvedic tonics. Instead of considering the structure as one unit, it will be better to consider each storey and find out whether it fulfils the functions as an apparatus or whether it is merely a setting. 8. We will first take up the top level. At the top level, we have already indicated that the structure is in the shape of a water tan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the court of appeal held to be a plant insofar as operation was carried on by the assessee therein. The company therein carried on the business of importers of grain. It purchased grain and resold it exsilo. The silos consisted of large concrete structure into which were built concrete bins, a small structure which was in effect the lift shaft and plant and machinery consisting of conveyor belts, mobiles chutes, etc. The grain was sucked up from the ship into the bins and from there released as required and permitted to descend by gravity. The walls of the bins were either party walls with the next bin or the exterior walls of the silo. It was the case of the assessee that the silos as a whole qualified for capital allowances as plant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also part of the plant. The same is the position with the first level. 13. However, we are satisfied that the structure in the ground level is not part of the plant. This structure is used only for bottle washing, drying, filling, cleaning, etc. This is a setting in which the business is being done. 14. Therefore, on consideration of the facts, we are satisfied that a part of the structure has to be considered as plant. Now, the total expenditure incurred by the assessee is Rs. 13,31,378, out of which the following expenditure referring to ground level and other structures would not be eligible for being considered as plant. Rs. Ground level expenditure 3,64,380 Pump house 4,000 Borewell Pump House 7,369 --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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