Law:

Section:

Section 43(3), read with section 32, of the Income-tax Act, 1961 - Plant - Assessment years 1985-86 and 1987-88 - Whether term 'plant' would include any article or object, fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to any apparatus which is used for mechanical operations or process or employed in mechanical or industrial business - Held, yes - Assessee was engaged in production of cinematograph films - Its studio building was situated in a big space and included floor measuring 12,000 sq. ft. with asbestos roof, railing platforms and replaceable walls - Whether assessee's studio building would constitute plant in its hands and, consequently, would be entitled to depreciation at rate applicable to plant - Held, yes FACTS The assessee was engaged in the production of cinematograph films. It claimed that its studio building constituted a 'plant' in its hands for which it was entitled to depreciation applicable to plant and machinery. The ITO treated the studio building as a building and granted depreciation at the rate applicable to building. On appeal, the Commissioner affirmed the order of the ITO. On further appeal, the Tribunal having noticed that the studio was situated in a big space, that the building was designed with wooden partition so that it could be removed for creating different setting or scene, that walls of the studio were made up of plywood, cardboard and asbestos so that they could easily be removed or replaced for the movement of trolley carriers and that the floor of the studio contained asbestos roofing, held that part of the assessee's studio should be treated as plant entitled to higher rate of depreciation. On reference : HELD In order to find out whether a building is a 'plant' or not, the following tests would be decisive : (i )Functional test is a decisive test. (ii )An item which falls within the category of building cannot be considered to be a plant. Buildings with particular specification for atmospheric control like moisture or temperature are not plants. (iii )In order to find out as to whether a particular item is a plant or not, the meaning which is…

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