Warehouses constructed by the assessee cannot be treated as 'plant' entitled to development rebate under Section 33 of the Income-tax Act, 1961, as they merely provide a place within which the business activity is carried on and do not play any part in the carrying on of the business activity.

Rastogi, J.

1. THIS is a reference under Section 256(1) of the I.T. Act, 1961, and it relates to the assessment year 1974-75, the corresponding previous year ended March 31, 1974. The assessee, a registered firm, had constructed four warehouses at a cost of Rs. 2,89,064. In the relevant previous year its main business was to book space for storing potatoes on behalf of its customers on rent agreed to with M/s. Kanodia Cold Storage and thereafter realise hire charges from the customers for storage of potatoes. The nature of the business was that the assessee stored the potatoes of its customers in its warehouses for sorting and grading and thereafter loaded the same in the cold storage. For the year under consideration, the assessee declared a loss of Rs. 27,410. It had charged development rebate at Rs. 58,360 in respect of those warehouses. The ITO did not accept the assessee's claim in regard to the development rebate since in his opinion the warehouses of the assessee were merely godowns and did not fulfil the requirement of Section 33 of the Act. Further, in his opinion, the machinery or plant must be installed so as to claim development rebate and since it could not be said that the warehouses of the assessee had been installed, he disallowed the claim.

2. ON appeal, the AAC took a contrary view and relying on the decision of the Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44, held that the warehouses of the assessee were "buildings which were used for trade and they were entitled to development rebate if other conditions are fulfilled". Since the ITO had not given any other ground for not allowing development rebate except that the warehouses did not amount to installations, the AAC accepted the assessee's claim and allowed the claim for development rebate. Being aggrieved, the revenue preferred an appeal before the Income-tax Appellate Tribunal but remained unsuccessful and now at its instance the following question has been referred to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the warehouses constructed by the assessee could be held to be ' plant ' entitled to development rebate under, Section 33 of the Income-tax Act, 1961 ? "

It would be seen that there are certain undisputed facts and they are that the assessee had constructed certain warehouses. In the relevant previous year its main business was to book space for storing potatoes on behalf of its customers with M/s. Kanodia Cold Storage and for that it had collected hire charges from them. So far as these warehouses are concerned, they were used for temporary storage of the potatoes for the purpose of sorting and grading them. Thereafter it was loaded in the cold storage. In other words, the warehouses were used by the assessee in connection with its business.

3. THE short question that falls for our consideration on these facts is as to whether these warehouses can be regarded as "plant" within the meaning of its definition as contained in Section 43(3) of the Act. According to this definition, "plant includes vehicles, books, scientific apparatus and surgical equipments used for the purposes of business or profession". It is an inclusive definition and the very fact that even books have been included, shows that the meaning intended to be given to plant is wide. As observed in the case of Taj Mahal Hotel [1971] 82 ITR 44 (SC) at page 47 :

"The word 'includes' is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import, but also those things which the interpretation clause declares that they shall include."

4. THE meaning of plant as given in Yarmouth v. France [1887] 19 QBD 647 (QB), where a horse was held to be a plant because it was use