Law:

Section:

Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1978-79 - Whether, to constitute plant, it is not necessary that asset should be directly engaged in manufacture of articles - Held, yes - Whether therefore, tube-well and weighing machines could be treated as plant for assessee's business of production of paper and as such eligible for investment allowance - Held, yes Word & Phrases - Word 'plant' as occurred in section 32A FACTS The IAC while completing the assessment disallowed the assessee's claim for investment allowance on electrical equipment, air conditioning machines, tube-well and weighing machines despite the fact that appropriate investment allowance reserve had been created and the details of plant and machinery were filed. On appeal, the Commissioner (Appeals) held that the IAC was not justified in withholding the investment allowance. On revenue's appeal, the Tribunal set aside the Commissioner (Appeals) order and restored that of the IAC. On reference : HELD The word 'plant' is one of the words used in fiscal legislation of which no statutory definition is provided, so that it is left to the court to interpret it, having regard to the context in which it occurs. Admittedly, it is not a term of art. The natural or dictionary meaning has been extended from case to case as a result whereof the meaning of the word gradually diverges from its natural or dictionary meaning. There is no fixed definition of plant; nor are there any exhaustive rules for application to any particular set of circumstances. What is properly to be regarded as 'plant' can only be answered in the context of the particular industry concerned, since most of the cases are illustrations rather than authorities. It cannot be disputed that weighing machine is not the stock-in-trade which the assessee buys or makes for sale but it is an apparatus used by the assessee in its business. It is not necessary that to constitute plant, an item must fulfil an active role. It is a tool of business which is used in the course of business of manufacture or production, although by itself it may be having a passive role. Tube-wells and weighing machines formed…

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