Law:

Section:

Section 43(3) of the Income-tax Act, 1961 – Plant – Assessment years 1962-63 and 1965-66 – Whether expression plant has to be construed in context of particular kind of trade or manufacture carried on by assessee and if in context it could be taken as plant as understood in popular sense it would be eligible for allowance of depreciation and development rebate - Held, yes – Whether special reinforced concrete foundation for purpose of locating or installing rotary kiln in cement factory would come within scope of expression 'plant' and would be entitled to depreciation and development rebate - Held, yes FACTS The assessee-company carried on business in the manufacture and sale of cement. The rotary kiln which formed part of the production machinery was supported on a specially reinforced foundation. The foundation was treated by the assessee as part of the kiln itself and depreciation and development rebate was claimed on it. The ITO disallowed the claim on the ground that the special foundation for supporting the rotary kiln should be classified as building and not as plant and machinery. On second appeal, it was contended by the assessee that having regard to the fact that the foundation formed part of the plant and the plant could not function without the foundation, there was no justification to treat the machinery foundation as building and, thus, depriving the relief of development rebate and depreciation rebate on the basis that the foundation was not plant. The Tribunal upheld the assessee's contention. On reference: HELD The definition of the word ‘plant' given in section 43(3) is an inclusive one. The meaning of this term would, therefore, comprehend its ordinary meaning as understood by the common man. The decisions of various courts also go to show that the expression ‘plant' has to be construed in the context of particular kind of trade of manufacture carried on by the assessee and if the context it could be taken as ‘plant' as understood in the popular sense it would be eligible for the allowance of depreciation and development rebate. When once the term ‘plant' comprehends buildings employed in carrying on trade or other industrial business, it…

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