COMMISSIONER OF INCOME TAX Vs. B VENKATA RAO

JUDGEMENT

(1.) The revenue is in appeal by special leave against the judgment and order of a Division Bench of the High Court of Karnataka. The High Court answered in the affirmative and in favour of the assessee the following question :

(2.) The assessee is a medical practitioner. He runs a nursing home. In respect of the building in which the nursing home is run, the assessee claimed, for the assessment year 1983-84 that it was a plant. His contention was rejected by the ITO and by the Commissioner (Appeals). The Tribunal found to the contrary. Applying the functional test, it held that the nursing home was a plant. The High Court affirmed that view. It said that a building used as a nursing home is not comparable with an ordinary building having regard to the number of persons using it, the manner of its use and the purpose for which it is used. The building was used not only to house patients and nurse them, but also to treat them, for which various kinds of equipment and instruments were installed.

(3.) The most apposite decision in this context is that delivered by the Allahabad High Court in S.K. Tulsi & Sons V/s. CIT, 1991 187 ITR 685. Reference was made to an earlier judgment, where also the functional test approved by this Court in several decisions was applied. It was held that if it was found that the building or structure constituted an apparatus or a tool of the taxpayer by means of which business activities were carried on, it amounted to a plant; but where the structure played no part in the carrying on of these activities but merely constituted a place wherein they were carried on, the building could not be regarded as a plant.