Judgment

GROVER, J.:- This is an appeal by certificate from the judgment of the Andhra Pradesh High Court in a case referred under S. 66 (1) of the Income-tax Act, 1922 (hereinafter referred to as the Act).

2. The respondent who is the assessee is a registered firm running a hotel at Secunderabad with branches at Sultan Bazar and King Kothi in Hyderabad. During the previous year ending 30th September, 1959 relating to the assessment year 1960-61, the assessee incurred an expenditure of Rs. 57,154/- in installing sanitary fittings and of Rs. 1,370/- for pipe-line fittings. The assessee claimed development rebate on these two items at the rate of 25 per cent under S. 10 (2) (vi-b) of the Act amounting in the aggregate to Rs. 14,639/-. The Income Tax Officer disallowed the claim. On appeal, the Appellate Assistant Commissioner upheld the disallowance. An appeal was taken to the Appellate Tribunal. The Tribunal rejected the appeal holding that the definition of "plant" must necessarily be the same, whether it was for claiming depreciation under S. 10 (2) x(vi) or for development rebate under S. 10 (2) (vi-b). Accordingly, it was held that the sanitary and pipe-line fittings did not fall within the meaning of the word "plant". On being moved under S. 66 (1) of the Act, the following question was referred for the opinion of the High Court:

"Whether the sanitary fitting and pipelines, installed in the King Kothi branch of the Hotel, constituted plant within the meaning of S. 10 (5), of the Indian Income-tax Act and whether the assessee is entitled to development rebate in respect thereof under S. 10 (2) of the Act?"

The Tribunal answered the question in the affirmative and in favour of the assessee.

3. The only question that was argued before the High Court and which has been debated before us is whether sanitary and pipe-line fittings in a building which is run as a hotel would fall within the meaning of the word "plant" in section 10 (2) (vi-b) of the Act.

4. Section 10 (1) of the Act provides that tax shall be payable by an assessee in respect of the profits and gains of any business, profession or vocation. Sub-section (2) gives the allowances which have to be made in computation of such profits and gains. Clause (vi) of that sub-section relates to the depreciation in respect of "such buildings, machinery, plant or furniture being the property of the assessee."

Clause (vi-b) of S. 10 (2) is as follows:

"(vi-b) in respect of a new ship acquired or new machinery or plant installed after the 31st day of March, 1954, which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of acquisition of the ship or of the installation of the machinery or plant, equivalent to..."

Section 10 (5) provides inter alia that in sub-section (2) "plant" includes "vehicles books, scientific apparatus and surgical equipment purchased for the purpose of the business, profession or vocation".

5. The main argument of the learned counsel for the Commissioner of Income Tax who is the appellant is that the word "plant" should not have been given a wide meaning and should have been interpreted according to the common understanding in commercial circles among persons who deal in plant and machinery. It is asserted that the development rebate cannot be claimed in respect of the items which have become a part of the building itself. It has also been pointed out that the assessee while claiming depreciation allowance has included the assets in question under the heard "furniture and fittings" the rate claimed being 9 per cent which was duly allowed by the Income Tax Officer. This rate of 9 per cent was applicable under Rule 8 only to furniture and fittings used in hotels etc. If the assets were to be treated as plant, only the general rate of 7 per cent would be applicable. The definition of "plant" must necessarily, therefore, be the same whether it be for claiming depreciation under S. 10 (2)