Law:

Section:

Section 43(3) of the income-tax act, 1961 - Plant-Whether warehouses used by assessee for temporary storing of potatoes of customers for sorting and grading before placing them in cold storage could be treated as "plant" entitled for development rebate Held, no Facts The business of the assessee was to book space in a cold storage on behalf of its customers for storing potatoes on agreed rents and to temporarily store the potatoes in its own warehouses for sorting and grading before finally loading the same in the cold storage. In the assessment year 1974-75, the assessee constructed four warehouses at a cost of Rs. 2,89,064 and claimed development rebate of Rs. 58,360 thereon. The ITO rejected the claim, holding (i) that the warehouses were merely godowns which did not fulfil the required conditions under section 33 ; and (ii) that the machinery and plant had to be installed for being eligible for development rebate but the warehouses could not be installed. The AAC, however, allowed the development rebate on the basis that the warehouses were buildings which were used for trade and, accordingly, entitled to the same. The Tribunal confirmed the AAC's order. On reference, the Revenue contended that "plant" did not include the place in which business was carried on and, as the warehouses were being used as a place for carrying on business, these were not plants and, as such, not entitled to development rebate. Held 1. To determine whether a building or some kind of a structure was a "plant", a functional test had to be applied. It was to be seen whether the structure was something by means of which or with the help of which the business was being carried on or it was merely a place in which the business was being carried on. If the building or the structure itself was used for carrying on of the business, that is, if it was a tool of the trade, it would be a "plant". If on the other hand, it was merely a place of business and played no part in carrying on the. business activities, it was not a "plant". In the instant case, the warehouses could not be treated as structures by means of which the assessee carried on its business. These only served as a place within…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492