COMMISSIONER OF INCOME TAX Vs. KAMALASELVARAJ

JUDGEMENT

(1.) IN pursuance of the directions by this Court in t. C. P. No. 283/97 dated 9. 3. 1999, the matter was referred under Section 256 (2) of the INcome Tax Act, 1961 on the following questions: 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in treating the nurshing home building as a plant entitled for Extra Shift Allowance" 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in allowing extra shift depreciation allowance on equipment installed in the nursing home premises"

(2.) THE matter relates to the assessment year 1983-84.

(3.) THE Apex Court of this land, in the case of C. I. T. v. Dr. B. Venkata Rao (2000 (243) ITR 81), had an occasion to consider whether a building constructed with specific design, equipped to function as a nursing home, would be constituted as a'plant', entitling to depreciation, as contemplated under Section 32 of the Income Tax Act, 1961. THE Apex Court approving a ruling of Alahabad High Court in S. K. Tulsi and Sons v. CIT [ (1991)187 ITR 685], held as follows: "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 those activities but merely constituted a place wherein they were carried on, the building could not be regarded as a plant. " Thus, in order to qualify a nursing home building as a 'plant', the above test prescribed by the Apex Court should be satisfied. In the case involved in the above decision, it seems, the nursing home had a sterilisation room, equipped with an operation threatre. Considering the special construction required and the sterlisation process to be maintained, it was held, "the assessee is entitled to depreciation at 10% on the nursing home building on the ground that it is a'plant'". If this ratio is to be applied straight away, materials should be available, such as whether assessee's nursing home is of a special type, coming within the meaning of a 'plant', whether the building or structure constituted an apparatus or a tool of the taxpayer by means of which, business activities were carried on, then only defining the building as a'plant', these allowances could be ordered and not otherwise.