Desai, J.
1. This is a reference at the instance of the Commissioner under s. 256(1) of the I.T. Act, 1961, although an additional question at the instance of the assessee also stands referred to us.
2. The assessee is a well-known bank doing banking business. While assessing the assessee for the assessment years 1962-63 to 1964-65, it was found by the ITO that the assessee had claimed development rebate as follows :
----------------------------------------------------------------------Safe deposit locker Electrical installations.cabinets.----------------------------------------------------------------------Rs. Rs.1962-63 2,04,791 65,5381963-64 2,45,146 91,9381964-65 1,78,712 1,22,502--------- ----------6,23,649 2,79,978--------- -----------
3. The view of the ITO was that safe deposit lockers were at best a special type of cupboard and could not be considered as plant for purposes of development rebate or depreciation. As far as electrical installations were concerned, he observed that they were in the nature of fittings and so disallowed the development rebate as claimed. It appears that the ITO had allowed development rebate on these two items for the assessment year 1962-63 for which the assessment was already completed. He reopened the same and cancelled the development rebate which had been given by him. The assessee then appealed to the AAC. It was contended that safe deposit lockers were the plant of the assessee. The AAC, however, rejected such contention and refused the claim for allowance of development rebate made by the assessee. With regard to the assessee's claim for development rebate on electrical installations the assessee relied upon Entry No. III(iii), E(3)(c) of Part I of Appendix 1 of the I.T. Rules and argued that according to the rules electric wiring was plant and machinery. This contention was also not accepted by the AAC and he rejected the claim of the assessee. The assessee then went in appeal to the Tribunal.
4. Before the Tribunal, it was submitted on behalf of the assessee that lockers were plant appropriate to the business activity in which the assessee was engaged. The Tribunal considered the submissions made on behalf of the assessee and observed that the word 'plant' had been defined very widely under the Act so as to include even books and scientific apparatus used for the purpose of business which need not necessarily be manufacturing business. Accordingly, the submissions made on behalf of the assessee, as far as safe deposit lockers were concerned, were fully accepted and the claim for development rebate was allowed. On the further claim of the assessee that electrical installations were also plant and machinery, the Tribunal dismissed these contentions of the assessee by observing simpliciter that they constitute ordinary fixtures and cannot qualify for development rebate.
5. Thus, the decision of the Tribunal aggrieved the department partly and the assessee partly. Accordingly, at the instance of the Commissioner, the following question of law has been referred to us, which may be called question No. 1 :
'Whether the Tribunal was right in holding that the safe deposit locker cabinets fell under the term 'plant', and, therefore, the assessee was entitled to development rebate thereon for the assessment years 1962-63, 1963-64 and 1964-65 ?'
6. At the instance of the assessee, an additional question of law, which will be called question No. 2, is referred to us. It is as follows :
'Whether, on the facts and in the circumstances of the case, it was rightly held that the electrical installations constitute ordinary fixtures and that the assessee was not entitled to development rebate in respect thereof ?'
7. As far as question No. 1 is concerned, Mr. Joshi on behalf of the Commissioner stated that, as far as this court was concerned, the matter stood concluded against the revenue by two decisions of this court, viz., CIT v. Union Bank of India Ltd. : [1976]102ITR270(Bom) and CIT v. Central Bank of India Ltd. : [1976]103ITR196(Bom) . We were informed that in accordance with these decisions the question referred to us at the instance of the Commissioner (question No. 1) would be required to be answered in the affirmative and in favour of the assessee.
8. We are, therefore, principally concerned in this reference with question No. 2 which pertains to disallowance of development rebate on electrical installations which question stands referred to us at the instance of the assessee.
9. Learned counsel for the assessee first drew our attention to the relevant statutory provision. The assessee had claimed development rebate under s. 33 of the I.T. Act, 1961. Sub-s. (1) of s. 33 grants development rebate at varying rates in respect of ships, machinery and plants provided certain conditions are satisfied. The fact that the electrical installations were owned by the assessee was not disputed, but the matter in dispute is whether such installations can be said constitute machinery or plant. We were then referred to s. 32 of the I.T. Act, 1961, which provides for the allowance by way of depreciation of buildings, machinery, plant and furniture owned by the assessee. Finally, we were referred to the definition of the word 'plant' to be found in s. 43(3). This section provides that in ss. 28 to 41, unless the context otherwise requires, the word 'plant' would include ships, vehicles, books, scientific apparatus and surgical equipment used for the purpose of the business or profession. It is now well settled that the word 'plant' is required to be given a wide meaning. It connection with the meaning to be given to the word 'plant', Mr. Dastur drew our attention to various decisions given by several High Courts in India and by the Supreme Court, and submitted that by reason of these decisions the assessee was entitled to claim development rebate on the electrical installations installed by him in the three years in question. Very strong reliance was placed by Mr. Dastur on the observations to be found in a decision of the Madras High Court, viz., Sundaram Motors Pvt. Ltd. v. CIT : [1969]71ITR587(Mad) . In the said decision, the High Court has held that development rebate under s. 10(2)(vib) of the Indian I.T. Act, 1922, was available in respect of electric fans, bicycles, motor cycles, office cars, typewriters, adometers, refrigerators, survey instruments, etc., used by the assessee who were dealing in motor cars, trucks, etc., purchase and sale of motor spare parts and engineering contractors. The Division Bench of the Madras High Court was dealing with the case of two assessee. In Tax Case No. 80 of 1964, the assessee was a private limited company dealing in motor cars, trucks, jeeps, motor parts and accessories, tractors, etc. The claim for the development rebate had been made by it in respect of electric fans, bicycles, motor-cycles, office cars, typewriters, jeeps, tractors, office appliances and electric installations. The claim in its entirety was disallowed by the ITO, but the AAC allowed such claim for electric fans and electric installations. He otherwise sustained the order of the ITO. The assessee approached the Tribunal but without success. The assessee, thereafter, required a reference to the High Court and it is in this context that various observations have been made by the Division Bench. The question of allowing development rebate on electric installations was thus not directly before the High Court although there are general observations which may be relevant to the question under consideration before us. Ultimately, the court held that appliances like typewriters, office accessories, bicycles, motor cars and adometers, etc., used for the purpose of expansion of the trade of the assessee or marketing their products would be entitled to the development rebate contemplated in clause (vib) of s. 10(2). In its view, if such development rebate was granted, there would be no straining of any language. According to the court, these items in combination with other appliances in the business effectuated and perpetuated the trade or commerce in question.
10. We were then referred to CIT v. Indian Turpentine and Rosin Co. Ltd. : [1970]75ITR533(All) , in which the assessee was allowed development rebate on a total expenditure of Rs. 1,11,407 made for the purposes of changing over its electric installations from D.C. system to A.C. system. The Tribunal had described the change-over as involving new installations of poles, cables, conductors and switchboards for distribution to various feeders. The Division Bench of the Allahabad High Court observed that the definition of 'plant' in s. 10(5) (of the I.T. Act, 1922) was very wide and there would be no difficulty in treating poles, cables, conductors and switchboards for distribution of electricity as plant within the meaning of s. 10(2)(vib) of the Act. It is true that, in the above case, the High Court was directly concerned with allowing development rebate on cables which were installed, but this was part of a complete change-over of the installation from D.C. to A.C. system and the installation was directly concerned with the supply of electricity to the various items of machinery employed in the factory of assessee. The considerations which would be available for application to such a case need not necessarily be available in the case of the assessee before us.
11. We were also referred to CIT v. Jagadeeshchandran & Co. : [1970]75ITR697(Mad) , in which it was held that light fittings, ceiling and pedestal fans and water pipe fittings were plant and they did not cease to be plant merely because they had been fixed to the building. However, the assessee before the Division Bench of the Madras High Court was a registered firm running a hotel called Ashok Hotel in the City of Madras. Such fittings in respect of a hotel would be required to be considered somewhat differently from an ordinary business. As a matter of fact, the question of a hotel arose before the Supreme Court CIT v. Taj Mahal Hotel : [1971]82ITR44(SC) . The assessee which ran a hotel installed sanitary and pipeline fittings in one of its branches. In respect of these fittings, it claimed depreciation allowance under the head 'furniture and fittings.' The question was whether the sanitary and pipeline fittings installed fell within the definition of 'plant' in s. 10(5) and whether the assessee was entitled to development rebate in relation thereto under s. 10(2)(vib). It was held by the Supreme Court that sanitary and pipeline fittings fell within the definition of 'plant' in s. 10(5) and that the respondent-assessee was entitled to development rebate on cost thereof. It was observed by the Supreme Court that the intention of the legislature was to give the word 'plant' a wide meaning. It was mentioned, however, that the Supreme Court was only considering sanitary and pipeline fittings installed in a building which was run as a hotel. In this connection, the Supreme Court observed (p. 47) :
'In the present case, section 10(5) enlarges the definition of the word 'plant' by including in it the words which have already been mentioned before. The very fact that even books have been included shows that the meaning intended to be given to 'plant' is wide. 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 constructed 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. The word 'include' is also susceptible of other constructions which it is unnecessary to go into.'
12. The Supreme Court thereafter considered a number of English decisions and observed that in its judgment the more apposite decision was that of the Court of Appeal in Jarrold (Inspector of Taxes) v. John Good & Sons Ltd. [1963] 1 WLR 214. In the said case, it was held that movable partitions put up for the purposes of sub-division of floor space into a number of rooms of various sizes were 'plant' as they were used for the carrying out of the company's trade or business. The Supreme Court then considered the nature of the business of the assessee and it was satisfied that the assets in question were required by the nature of the hotel business which the assessee was carrying on. It concluded by observing that they were not merely a part of the setting in which hotel business was being carried on. In its view, therefore, the fittings constituted plants in respect of which the assessee was entitled to claim development rebate.
13. The question was once again very exhaustively discussed by the Gujarat High Court in CIT v. Elecon Engineering Co. Ltd. [1974] 96 ITR in CIT v. Elecon Engineering Co. Ltd. : [1974]96ITR672(Guj) . It reviewed various English cases and on such review observed (p. 698) :
'On reviewing these authorities, a broad consensus emerges from which the essential characteristics of plant can be clearly gleaned. The word 'plant', in its ordinary meaning, is a word of wide import and in the context of section 32 it must be broadly construed. It includes any article or object, fixed or movable, live or dead used by a businessman for carrying on his business. It is not necessarily confined to an apparatus which is used for mechanical operations or process or is employed in mechanical or industrial business. It would not, however, cover the stock-in-trade, that is, goods bought or made for sale by a businessman. It would also not include an article which is merely a part of the premises in which the business is carried on as distinguished from a part of the plant with which the business is carried on. An article to qualify as plant must furthermore have some degree of durability and that which is quickly consumed or worn out in the course of a few operations or within a short time cannot properly be called 'plant'. But an article would not be any the less plant because it is small in size or cheap in value or large quantity thereof is consumed while being employed in carrying on business. In the ultimate analysis the inquiry which must be made is as to what operation the apparatus performs in the assessee's business. The relevant test to be applied is : Does it fulfil the function of plant in the assessee's trading activity Is it the tool of the taxpayer's trade If it is, then it is plant no matter that it is not very long-lasting or does not contain working parts such as a machine does and plays a merely passive role in the accomplishment of the trading purpose.'
14. Many of these authorities were dealt with in the decision of the Division Bench of this court, viz., CIT v. Union Bank of India Ltd. : [1976]102ITR270(Bom) , earlier referred to as a result of which we were informed that question No. 1 would be required to be answered in favour of the assessee. At page 274 of the report, the Division Bench refers to the meaning assigned to the word 'plant' by Lindley L. J. in Yarmouth v. France [1887] 19 QBD 647 , which has been quoted with approval by Lord Reid in Hinton (Inspector of Taxes) v. Maden and Ireland Ltd. [1960] 39 ITR 357 . This definition is as under :
'In its ordinary sense it includes whatever apparatus is used by a businessman for carrying on his business, - not his stock-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.'
15. The Division Bench expressed its complete agreement with the meaning given by Lindley L. J. in Yarmouth v. France [1887] 19 QBD 647 .
16. It is this test then which we will have to apply and consider, viz., whether the installation could be regarded as something, call it apparatus or fixtures or fittings or whatever you like, used by the assessee for carrying on its business. It is undoubtedly not the assessee's stock-in-trade. At the same time the qualification on the above definition of Lindley L.J. put in the case of J. Lyons & Co. Ltd. v. Attorney-General [1944] Ch 281 must also be borne in mind. Plant may include whatever apparatus or instruments as are used by a businessman in the carrying on of business but it would not include the stock-in-trade or the place in which the business is carried on. This is what the Gujarat High Court itself observed in CIT v. Elecon Engineering Co. Ltd. : [1974]96ITR672(Guj) , when it stated that it would not include an article which is merely a part of the premises in which the business is carried on as distinguished from a part of the plant with which the business is carried on. It may be mentioned that J. Lyons & Co.'s case [1944] Ch 281 was referred to by the Supreme Court in Taj Mahal Hotel's case : [1971]82ITR44(SC) , where the case was explained as one in which it was held that electric lamps and fittings in a tea shop were not part of the apparatus used for carrying on the business but were part of the setting in which the business was carried on and on that footing were not 'plant'. It may be mentioned, however, that the court then was only considering certain provisions of the War Damage Act, 1943. However, it is important to bear in mind that as stated by the Gujarat High Court in Elecon's case : [1974]96ITR672(Guj) , none of the decisions was concerned with any statutory provision which had expressly defined 'plant'.
17. Mr. Dastur on behalf of the assessee submitted that the various electrical installations must be regarded as being used for the purposes of the assessee's business and urged that the assessee's banking business was of such a type that it could not be carried on without the various electrical fittings which had been installed. According to this argument, a safe deposit vault could not function in darkness and various banking operations would be not be carried on without inter-communication facilities, for which purpose electrical installations were necessary.
18. There is no finding by nor a claim before any of the taxing authorities that the electric installations in respect of which claim for development rebate was made were special electrical installations absolutely necessary for the purposes of carrying on the banking business of the assessee. In our opinion, it would not be proper for us to proceed upon any such footing as is contended by Mr. Dastur. These must be regarded as electrical installations which would normally occur in any business office and we have no material before us from which it could be held that these were any special electrical installations for the purpose of banking business or that banking business is one which requires any special electrical installations. If that be so, then it would appear to us that it will be difficult to regard these electrical installations as a plant with which the assessee's business is carried on and they would appear merely to be a part of the premises in which the business is carried on or, to use the words in J. Lyons case [1944] Ch 281, a part of the setting which the business is carried on.
19. There remains for consideration only one more argument which was based on the provisions of the Schedule to the I. T. Rules, in force at the relevant time, which provided for the rates at which depreciation was admissible. As stated earlier, under s. 32, depreciation is permissible on buildings, machinery, plant or furniture. In Part I of Appendix I to the I. T. Rules, 1962, in force for the relevant years, machinery and plant were provided for in Entry III. The Schedule provided for various specific items of machinery and plant and then we have Entry III (iii) for special rates to be applied to other machinery and plant. In Division 'e' of this residuary provision we have electrical machinery in sub-division (3) and our attention was drawn to clause (c) thereof which specified the rate of 10 per cent. depreciation allowable on wiring and fittings of electric light and fan installations. The argument was that by this provision, wiring and fittings of electric light and fan installations were prescribed rates of depreciation considered and classified as machinery or plant. The argument proceeded further that if for the purposes of depreciation these items were required to be considered as machinery or plant they must be regarded as machinery or plant for the purposes of development rebate.
20. A perusal of the order of the Tribunal indicates that the Tribunal has failed to deal with this argument which had been advanced by the assessee both before the AAC and before the Tribunal. Two answers can be given to the contention raised on behalf of the assessee. In the first place, if the entire item in the depreciation rate schedule is properly considered, it would appear that wiring and fittings of electric light and fan installations are not dealt with as a specific item for which a separate rate of depreciation is provided, but that these are considered as adjuncts to switchgears and instruments, transformers and other stationary plant. It is the wiring and fittings of electric light and fan installation as are appurtenant to such switchgear instruments and plants that is covered by sub-item (c) of Item 3. Further, the argument which was advanced, viz., that inasmuch as the ITO had allowed depreciation on these items at 10% considering them as falling within item E(3)(c) of Entry III(iii), then it must be held to be plant and machinery and considered as such for the purposes of development rebate, does not reflect a correct approach. An argument such as this does appear to have been pressed into service before the Division Bench of the Allahabad High Court in CIT v. Indian Turpentine and Rosin Co. Ltd. : [1970]75ITR533(All) . We must respectfully express our disagreement with the learned judges of the Allahabad High Court in this connection. We have to consider in the first place, whether such electric installation can be regarded as plant and machinery and, secondly, whether they can be considered to be plant and machinery used by the assessee in its business. The various cases referred to above would show that what is plant and machinery on which development rebate is available for one assessee need not be plant and machinery for another assessee. For example, certain types of fixtures may constitute plant and machinery used in an assessee's business if the assessee's business is a hotel, but such fixtures and fittings would not amount to plant and machinery of another assessee whose business may totally different, e.g., an ordinary commercial office. In the latter case, it may merely be a part of the building or setting in which the business is carried on and not the apparatus with which the business is carried on. The answer to be given to the question would depend upon the facts of each case. On such facts as are available to us, it would appear to us that these electric installations in the case of the assessee, cannot be regarded as apparatus or appliances or fittings with which the assessee was carrying on its business and if that be so, the assessee would not be entitled to claim development rebate thereon, on the basis of these being its plant and machinery with which it carries on business.
21. In the result, the decision of the Tribunal disallowing development rebate to the assessee on electrical installations will be required to be confirmed. The questions are, accordingly, answered as follows :
Question No. 1 : (Referred to us at the instance of the Commissioner.)
In view of the decision given by this court in CIT v. Union Bank of India Ltd. : [1976]102ITR270(Bom) and CIT v. Central Bank of India Ltd. : [1976]103ITR196(Bom) , this question is answered in the affirmative and in favour of the assessee.
Question No. 2 : (Referred to us at the instance of the assessee).
22. This question is answered in the affirmative and against the assessee.
23. As far as costs are concerned, it was conceded by the revenue that the answer to question No. 1 was concluded as far as this court was concerned by these two decisions and the only question which was argued at length was question No. 2. In the result, it is the assessee who must pay the costs of the reference and there will be an order accordingly.