RELEVANT PARAGRAPH
8. Heard both sides. The issue for consideration is whether the fly over, roads, bridges, highway express, ROB etc can be classified as plant and machinery entitled to depreciation of 25% or whether they should be classified as building entitled to depreciation only of 10%
Section 43(3) defines plant as under:-
“Plant” includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession [but does not include tea bushes or livestock]
19. The definition of plant has been subject matter of consideration and interpretation in various cases. The Supreme Court in the case of Scientific Engineering Houses Pvt. Ltd. v. CIT reported in 157 ITR 86 was considering whether technical know-how would constitute plantentitled to depreciation . In that case the test to determine whether particular assets would constitute plant thereof, was laid down as under “Does the article fulfill the function of a plant in assessee’s trading activity? Is it a tool of his trade with which he carries onthe business ? If the answer is in the affirmative, it will be a plant.” Applying this test the Supreme Court observed that the documents containing technical know-how enabled the assessee to undertake its activity of manufacturing and there can be no doubt these documents had a vital function to perform in the manufacture of products. In fact it is with the aid of these complete and up-to-date set of documents that the assessee was able to carry out the manufacturing activities and these documents really formed the basis ofthe business of manufacturing. True that by themselves these documents did not perform any mechanical operations or process, but that cannot militate against their being considered as plant, since they were in a sense the basic tools of the assessee’s trade having a fairly enduring utility. Hence, the Apex Court held that technical know-how in the shape of documents, drawings etc., fail within the definition of plant.
24. Thus the test for determining whether a building is to be considered as a plant is the functional test. Viz., whether the premises are merely a site in whichthe business is carried on or adjunct with which the business is carried. In the case before us, the assessee is building fly over, roads, bridges, highway express, ROB etc. It is permitting vehicles to ply over these structure the assessee is carrying on its activities of developing and maintaininginfrastructure facilities. These assets cannot be considered as merely setting in which the business is carried on. They are essential tools of the trade and adjuncts of business without which the assessee could not have carried on their business. Without these there is no business of the assessee.
25. Thus we find, if the functional test for a plant enunciated by Apex Court and jurisdictional court in their decisions referred to supra is applied to the facts of the present case, we have no hesitation in holding that roads, flyovers bridges etc., constructed and owned by the assessee and utilized in its business of providing infrastructure is the tool of its trade and an essential adjunct to its business and not merely a setting in which the business is carried on and therefore would constitute plant and will be entitled to depreciation at 25%.
