S.A. Hakeem, J. - (1.) THE Tribunal has referred the following questions of law for the opinion of this court : At the instance of the assessee : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the bins, racks and shelves were not plant but were furniture ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that radar was a wireless equipment and thus not entitled to extra shift allowance ?" At the instance of the Department : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in confirming the order of the Commissioner of Income-tax (Appeals) allowing provision for accrued leave salary amounting to Rs. 2,37,66,620 as a deduction for the assessment year 1981-82 ?"
(2.) THE assessee had claimed that bins, racks and shelves were "plant" and as such extra shift allowance was admissible on them. THE Income-tax Officer was of the opinion that these bins, racks and shelves were "furniture" and not "plant" as claimed by the assessee and hence the question of allowing extra shift allowance in respect of these items did not arise. In the assessee's first appeal before the Commissioner of Income-tax (Appeals), the assessee's contention was accepted and the Income-tax Officer was directed to allow extra shift allowance for the said items. This decision was challenged by the Revenue in second appeal before the Tribunal. In so far as the first and second questions are concerned, the Tribunal reversed the order of the Commissioner of Income-tax (Appeals) and held that bins, racks and shelves were essentially items of furniture and it is erroneous to treat them as plant only on the ground that the locale of their use was the factory. The second question pertains to the radar equipment which, according to the Revenue, is excluded from the benefit of extra shift allowance on the ground that it is wireless equipment. While the Income-tax Officer considered radar as wireless apparatus and not entitled to the extra shift allowance, the Commissioner of Income-tax (Appeals) reserved the said finding and held that the equipment is entitled to extra shift allowance. However, on further appeal by the Revenue, the Tribunal, agreeing with the view taken by the Income-tax Officer, held that radar being a wireless apparatus, extra shift allowance in respect of it was not admissible. In the instant case, bins, racks and shelves were admittedly kept in the workshop of the factory and used as tools for the manufacture of goods. The Tribunal has held that, if certain items fall under the head "furniture", they are entitled only to the percentage of depreciation admissible for furniture, and it is immaterial whether the furniture is used as a tool of the trade. The Tribunal has further observed that, in the instant case, even though it could be described as "plant" in the sense that it is a tool of the trade, since the special description of furniture would fit in with the description of the asset, that special provision will be applicable to it and not the general provision with regard to the plant. It is further held that the articles are merely used in storing the components which are assembled together to manufacture machines later. The role of the bins and shelves is passive as they merely help in keeping them in store. We are unable to agree with this reasoning of the Tribunal to exclude the said items from the purview of "plant".
(3.) THE term "plant" had come up for interpretation in a number of decisions and the courts have evolved what is known as the "functional test" as against merely the "amenities test" for determining as to what constitutes "plant". THE classic definition of "plant" as given by Lindley L. J. with reference to the Employers' Liability Act in Yarmouth v. France [1887] 19 QBD 647, reads as under (at page 658) : "THEre is no definition of plant in the Act : but, in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business, - not his sock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business." In Scientific Engineering House P. Ltd. v. CIT , after referring to the classic definition of "plant" as stated above, the Supreme Court has observed thus (at page 96) : "In other words, plant would include any article or object fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. In order to qualify as plant, the article must have some degree of durability. . . ." ;