Law: Income Tax Act, 1961

Section: 32,32(1)(v),43,43(3)

Law: Income Tax Rules, 1962

Section: 5

(a) Income-tax---Depreciation---Nature of---Plant---Building---Two separate categories--­Theatre building' and hotel building specially equipped for purposes of business---Are still buildings---Not entitled to depreciation at rate applicable to plant---Indian Income Tax Act, 1961, Ss. 32 & 43(3)---Indian Income Tax:: Rules, ]962, R.5; Appendix. 1, Part L. The scheme of section 32 of the Income Tax Act, 1961 unequivocally leads to the conclusion that building and plant are treated separately for the purpose of grant of depreciation. A higher rate of depreciation is granted to machinery and plant as against buildings which have more durability. Section 32 provides different rates of depreciation for building, machinery, plant or furniture, ships, buildings used for hotels, aeroplanes and other items mentioned therein. The word "plant" is given an inclusive meaning under section 43(3) which nowhere includes buildings. The Rules prescribing the rates of depreciation specifically provide for grant of depreciation on buildings, furniture and fittings, machinery and plant and ships. Machinery and plant include cinematograph films and other films and other items and "building" is further given a meaning to include roads, bridges, culverts, wells and tube-wells. For a building used as a hotel, there is a specific provision in section 32(1)(v) for granting additional depreciation allowance at specified rates depending upon fulfilment of the conditions mentioned therein. In the context of the legislative scheme under section 32, even though .the word "plant", may include building or structure in certain set of circumstances as per the dictionary meaning, to say that a building used for running the business of hotel or a cinema would be "plant" under the Act would be inconsistent with the provisions of section 32 and the legislative intent. There is well-established distinction, in general terms, between the premises in which the business is carried on and the plant with which the business is carried on. The premises are not plant. It is proper to consider the function of the item in dispute. If it functions as part of the premises it is not plant. The fact that the…

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