The functional test applied to determine the purpose and manner of use of a building can influence whether it can be considered as a 'plant' for claiming depreciation.

K. Shivashankar Bhat, J.—The question referred to us under the provisions of the Income Tax Act, 1961, reads thus :

" Whether, on the facts and in the circumstances of the case, the assessee is entitled to depreciation at ten per cent. on the nursing home building on the ground that it is a 'plant' ?"

2. The assessee is an individual and is a medical practitioner. He is running a nursing home in respect of which he claimed depreciation allowance at ten per cent. for the assessment year 1983-84. The building was constructed during 1979-80. For the earlier year, depreciation was allowed at five per cent. treating it as a second class building. For the year 1983-84, the assessee put forth the claim that either it is a factory building or a plant entitling him to depreciation at ten per cent.

3. The Income Tax Officer did not accept the assessee's case that the life of the building was reduced by the heat generated in the canteen and sterilisation room ; according to the Income Tax Officer, even in respect of cinema theatres and lodgings, depreciation is not allowed at more than five per cent. The Commissioner of Income Tax (Appeals) affirmed this order. The Appellate Tribunal, however, accepted the assessee's claim and treated the nursing home as a plant ; the Appellate Tribunal held :

" (i) A nursing horn is not just a couple of rooms where the patients are lodged. It should have an operation theatre, a pathological laboratory, X-ray room, plant for sterilisation of clothes, plant for sterilisation of other surgical instruments, etc. Sometimes air-conditioning may also be necessary. Therefore, applying the functional test and following the decision in the case of Hotel Srilekha (P.) Ltd. supra, we have to hold that the nursing home building is 'plant'. Further, in the case of theatres, we have held already that the auditorium along with the room housing the projector, etc., is a 'plant'."

4. This court has taken the view that theatres, to the extent of the actual auditorium, are plant Commissioner of Income Tax Vs. A.B. Kakatkar, (1993) 202 ITR 301 KAR -I. T. R. C. No. 91 of 1987, dated January 16, 1989). However, Mr. Chanderkumar contended that in I. T. R. C. Nos. 40 to 42 of 1985, dated February 11, 1991, Commissioner of Income Tax Vs. Herekar's Hospital and Maternity Home, (1991) 192 ITR 525 KAR, this court held that running of a nursing home is not a business ; therefore, the inference to be drawn is that it is not a plant. The said decision was rendered in the context of Section 64(1), wherein both the husband and wife were doctors who formed a partnership firm to run the nursing home. For the purposes of the Partnership Act, the definition of " business " included a profession also ; but, in the context of Section 64(1), the word " business " would not include profession. This is the ratio of the said decision.

5. The instant case has nothing to do with Section 64. The claim now is under Section 32 of the Income Tax Act, 1961, and the question is whether the nursing home is a "building" or "plant" used for the purposes of the "profession ".

6. In several decisions, a functional test has been applied to find out whether a "building" is to be treated as a mere "building" or should be considered as a "plant". The two decisions cited before us are : (1) Commissioner of Income Tax Vs. Motor Industries Co. Ltd., (1988) 173 ITR 374 KAR a case of borewells and storage tanks ; and (2) S.K. Tulsi and Sons Vs. Commissioner of Income Tax, (1991) 187 ITR 685 All regarding a cinema theatre.

7. A "nursing home" is not an ordinary building. 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 is used not only to house the patients and nurse them, but also to treat them for which various equipment and instruments are installed. In Commissioner of Income Tax, Andhra Pradesh Vs. Taj Mahal