Law: Income Tax Act, 1961

Section: 43(3)

Income-tax----Depreciation---"Plant", meaning of---Section 43(3) gives only inclusive definition of "plant" ---Indicates that terms "building", "machinery" and "plant" are not mutually exclusive---Terms "building" and "plant" in S.32(1) are - not mutually exclusive and building depending on its nature and peculiarity can be held as "plant"---To find out whether a building or structure or a part thereof constitutes plant, "tunctional test" to be applied--¬"Building" which is merely a setting or place to accommodate some apparatus "is not "plant "---"Building" which plays an important role in carr ing on business or tool of business is "punt "---Hotel building---Hotel building specialty designed to run hotel is "plant "---Entilted to depreciation as applicable to "plant "---What holds good for hotel building equally applies to theatre building---Theatre building is also "plait" depreciation as applicable to "plant "---Indian Income Tax Act, 1961, Ss.32 & 43(3)---(CIT" v. Daniodar Corporation (1997) 225 ITR 699 (Ker.) and CIT v. Sasidhara Shenoy & Bros. (1998) 231 ITR 489 (Ker.) overruled]. Section 43(3), Income Tax Act, 1961, gives only an inclusive definition of the word "plant". Therefore, the word "plant" is of wider amplitude and cannot be construed .in a narrow fashion. The inclusive definition under section 43(3) is indicative of the fact that the terms "building", "machinery" and "plant" are not mutually exclusive. In order to find out whether a building or structure or a part thereof constimes a "plant", the functional test has to be applied. If it is found that the building or structure constitutes an apparatus or a tool of the taxpayer by means of which the business activities are carried on it would amount to plant but where the structure plays no part in the carrying on of those activities but merely constitutes a place within which they are carried on, the building cannot be regarded as plant. The terms "building" and "plant" occurring in section 32(1) of the Act, -are not mutually exclusive and a building, depending on its nature and peculiarity, can be held as "plant". "Plant" cannot necessarily be confined to an apparatus which is used for…

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