1. The assessee is a company carrying on the business of marine and general survey. The assessee maintained offices at every major port of the Indian Coasts for providing services round the clock to the Indian as well as foreign ships. The assessee rendered various types of services to the ships, viz., marine and cargo survey inspection, technical management and chemical analysis and testing. The main clients of the assessee were shipping cargo and shipping agents. In the accounting year relevant to the assessment year 1979-80, the assessee had purchased 3 ship models for Rs. 70,000 and those models were displayed in the business premises of the assessee. The assessee claimed depreciation on the ground that those ship models constituted 'plant'. The alternate claim of the assessee was that those ship models constituted 'furniture' and, as such, depreciation was admissible.
2. The ITO rejected the claim of the asssessee. According to the ITO, those ship models were neither 'plant' nor 'furniture' and as such, no depreciation was admissible. The Commissioner (Appeals) upheld the order of the ITO. The assessee has now come in appeal before us.
3. The first point that requires consideration is whether the said ship models could be treated as 'plant' for allowance of depreciation under Section 32 of the Income-tax Act, 1961 ('the Act'). It is now well settled that the term 'plant' in Section 32 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. This definition is subject to the qualification that the term 'plant' does not include the place in which the business is carried on. In the present case, the ship models cannot be said to be an apparatus used by the assessee for carrying on its business. Consequently, they would not come in the category of 'plant' for claiming depreciation.
4. The term 'furniture' has not been defined in the Act. It would, therefore, be necessary to refer to the dictionary meaning. Webster's New International Dictionary defines furniture to mean 'articles of convenience or decoration used to furnish a house, apartment, place of business or of accommodation'. So far as the word furnish is concerned, the Shorter Oxford English Dictionary defines, the word 'furnish' inter alia, as follows: To fit up (an apartment, a house) with all that is requisite, including movable furniture, which is now the predominant notion.
Movable articles in a dwelling house, place of business, or a public building.
It would, thus, appear that all articles of convenience or decoration used for the purpose of furnishing a place of business or an office are articles of furniture. In the present case, the three ship models have been kept in the office premises of the assessee as show-pieces to decorate those premises. The ship models have direct connection with the business of the assessee. They represented symbols pertaining to the assessee's business and had commercial use. In the circumstances, having regard to the various meanings referred to above, we hold that those ship models should be treated as 'furniture' owned and used by the assessee for the purpose of the business and, as such, depreciation was allowable under Section 32.
5. We may now refer briefly to the reasons given by the ITO in holding that those models would not come under the category of furniture. The learned departmental representative has relied on those reasons. The first reason given by the ITO is that the term 'furniture' would include as part of the set up of a furnished room, curtains, cushions, pillows, carpets, etc., and since ship models were not essential requirements for the office room of the assessee for the purpose of the business, they would not come under the category of 'furniture'. We are unable to agree with these reasons. As already observed, ship models have been used for furnishing the office premises of the assessee and those ship models have direct connection with the business of the assessee. The question is not whether it was essential for the assessee to place those ship models in the office premises. The question was whether the assessee had placed those ship models to furnish the office premises for the purposes of its business. The second reason given by the ITO is that the 'utility value is zero as the assessee's activities are concerned. This reason is also not sound. The ship models are quite useful as far as the business of the assessee was concerned'. As already stated, they represent symbols for the business activities of the assessee. The third reason given by the ITO is that these ship models have not been put to use and they do not tend to depreciation in value as compared to other assets. This reason is equally untenable. It cannot be said that the ship models have not been put to use. The office premises stand furnished by these ship models. It is also not correct to say that they would not depreciate in value by passage of time. Further observation of the ITO that depreciation was not allowable because the value of these ship models would increase by passage of time from the point of view of antiquity is equally without merit. The depreciation allowance is a statutory allowance not confined expressly to diminution in value of the asset by reason of wear and tear. The said allowance can be claimed if the asset in question is shown to be capable of diminishing in value on account of any factor known to the prevailing accounting or commercial practice. The principal factors responsible for depreciation, besides ordinary wear and tear are unusual damage, inadequacy and obsolescence. The factors listed above include not only those relating to physical deterioration but also those referring to the suitability at a particular point of time. Considering all the circumstances, there is no ground to disallow the claim of depreciation on the value of the said ship models. We, therefore, set aside the orders of the lower authorities on this point and direct the ITO to allow depreciation treating these ship models as 'furniture' used for the purpose of business of the assessee for furnishing the office premises.