CIT Vs Shivalik Hatcheries Pvt. Ltd.
High Court of Himachal Pradesh
I.T.A No. 21 of 2005
Deepak Gupta and Sanjay Karol, JJ
Decided on: 16 February 2011
Deepak Gupta, J.(Oral)
This appeal was admitted on the following substantial question of law:-
1. Whether on the facts and circumstances of the case the Hon’ble Tribunal was right in law holding that Poultry Sheds used for the business of hatching constitute ‘Plant’ for the purpose of granting depreciation particularly in the light of decisions of the Hon’ble Supreme Court in the following cases wherein it has been specifically held that such buildings could not be treated as plant for the purposes of depreciation u/s 32 of the I.T. Act, 1961?
2. It is not disputed that this question is squarely covered by the judgment of this Court delivered in Commissioner of Income Tax v. M/s.Shivalik Hatcheries Pvt. Ltd., ITR No.6 of 1996 decided on 24.6.2008 wherein after considering the entire law on the point, the same question was answered in the following terms:-
“The line of demarcation between what is a ‘plant’ or not is a very thin one. Each case will have to be decided with reference to the particular facts of the case. It, however, needs to be noted that the definition of ‘plant’ in section 43(3) is not an exhaustive definition. It is only inclusive in nature. Therefore, there is a wide scope for including in the definition many items. It is clear that the legislature by including, ships, vehicles, and books in the definition of plant, had widened the scope of the word ‘plant’. As noted above, now the legislature has stepped in and specifically excluded buildings from the definition of the word ‘plant’. This itself indicates that prior to the exclusion with effect from 1.4.2004, buildings if specifically constructed and felling within the guidelines of the various authorities referred to here-in-above could be treated as ‘plant’. The various authorities referred to above also indicate that very wide amplitude has been given to term ‘plant’. The definition of ‘plant’ engulfs within its ambit many diverse subjects, such as, ships sailing on the high seas, books used by lawyers or engineers and scalpels used by doctors.
In the present case, the ITAT, on the basis of the material placed before it came to the conclusion that the building of the poultry shed has been specifically designed with a view to protect the birds from disease. It has been designed to ensure proper lighting and circulation of air; proper and scientific feeding arrangement; proper water system; proper arrangement for collection of manure and droppings; proper arrangement for medication and vaccination; and a right environment conducive for laying of eggs by the birds. The building had been designed in a manner so as to protect the birds and increase their productivity. The argument made on behalf of the revenue that the building can be used with certain modification for certain other purposes cannot be accepted. It is how the building is designed which is the main factor which is to be taken into consideration. The law is clear that if it is found that the building has been designed specifically to further the cause of manufacture or production then the same is a plant. Applying the aforesaid test, we hold that the poultry sheds are plant within the meaning of section 243, as it then stood.”
3. In view of the law laid down by a Division Bench of this Court in the aforesaid case, the question is answered against the revenue and in favor of the assessee. The appeal is accordingly rejected. No costs.