ORDER Per Shri George Cheriyan, Senior Vice President - This appeal by the Revenue relates to the assessment year 1981-82. Only a short point is involved in this appeal. The assessee had claimed 15% depreciation on electrical installations in an Acetic Acid manufacturing unit which had been set up in the accounting year which ended on the 31st May, 1980. The I. T. O., however, allowed only 10% depreciation stating that electrical installations came under "general machinery". The difference between the amount claimed and the amount allowed was as under :- 2. In appeal, the C. I. T. (A) held that 15% depreciation should be allowed since electrical installations formed part of the plant. 3. The Department aggrieved with the decision of the C. I. T. (A) is in appeal before us. It is submitted that the finding of the C. I. T. (A) that electrical installations formed part of the Acetic Acid plant was not correct and further the electrical installations consisted of transformers etc. which are only stationary items and are hence entitled to depreciation only at the general rate of 10%. 4. The learned counsel for the assessee, on the other hand, submitted that electrical installations were part of the plant and came into contract with corrosive chemicals etc. and were clearly entitled to depreciation at the rate of 15% in terms of Item III (ii) B (7) - Appendix I - Part I of the Income-tax Rules, 1962, which permits depreciation at 15% on "Machinery and plant coming into contact with corrosive chemicals". 5. We have considered the rival submissions. and were clearly entitled to depreciation at the rate of 15% in terms of Item III (ii) B (7) - Appendix I - Part I of the Income-tax Rules, 1962, which permits depreciation at 15% on "Machinery and plant coming into contact with corrosive chemicals". 5. We have considered the rival submissions. In the Appendix as relevant for the assessment year 1981-82 now under consideration, in respect of "extra shift depreciation allowance", there is the following mention :- "The extra shift allowance shall not be allowed in respect of any item of machinery or plant which has been specifically excepted by inscription of the letters N. E. S. A. (meaning No Extra Shift Allowance) against it in sub-item (ii) above and also in respect of the following items of machinery and plant to which the general rate of depreciation of 10 per cent applies :- (1) Electrical machinery - Switchgear and instruments, transformers and other stationary plant and wiring and fittings of electric light and fan installations." It is from the aforesaid that the Revenue seeks to contend that only 10% depreciation rate applies to electrical machinery such as transformers and other stationary plant and wiring and fittings etc. The aforesaid is the general rule, namely, that the general rate of depreciation of 10% applies to the type of machinery set out in the example. But while item III (i) deals with machinery and plant for which no special rate has been prescribed, item III (ii) deals with machinery and plant for which special rate has been prescribed. Item III (ii) is again sub-divided into items A, B, C, D, E and F and the following appears as an item for which special depreciation rate of 15% is applicable, namely, item III (ii) B (7) : "Machinery and plant coming into contact with corrosive chemicals." The first point for consideration, therefore, is whether the electrical installations in the present case comprised of the machinery and plant come into contact with corrosive chemicals. An amount of Rs. 6,18,704 represents electrical installations including lighting in the premises where Acetic Acid is manufactured and an amount of Rs. 2,13,971 relates to electrical installations connected with transformer installed just by the side of the Acetic Acid storage tank. It is claimed that the corrosive atmosphere by escaping of vapour etc. equally affects both the items. An amount of Rs. 6,18,704 represents electrical installations including lighting in the premises where Acetic Acid is manufactured and an amount of Rs. 2,13,971 relates to electrical installations connected with transformer installed just by the side of the Acetic Acid storage tank. It is claimed that the corrosive atmosphere by escaping of vapour etc. equally affects both the items. We have to first decide whether the transformer and water pump house and the other electrical installations constitute part of the plant manufacturing Acetic Acid. This was a new unit set up in the year of account. As to what constitutes "plant", we now have the following discussion in the judgment of the Supreme Court in the case of Scientific Engg. House (P.) Ltd. v. CIT [1985] 23 Taxman 66/ [1986] 157 ITR 86 where the Supreme Court has observed at pages 95 and 96 as under :- "The classic definition of plant was given by Lindley, L. J. in Yarmouth v. France [1887] 19 QBD 647, a case in which it was decided that a cart-horse was plant within the meaning of section 1(1) of the Employers Liability Act, 1880. The relevant passage occurring at page 658 of the Report runs thus : "There is no definition of plant in the Act : but 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." In other words, plant would include any article or object fixed or movable, live or dead, used by a businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. In order to qualify as plant, the article must have some degree of durability, as for instance, in Hinton v. Maden & Ireland Ltd. [1960] 39 ITR 357 (HL), knives and lasts having an average life of three years used in manufacturing shoes were held to be plant. In order to qualify as plant, the article must have some degree of durability, as for instance, in Hinton v. Maden & Ireland Ltd. [1960] 39 ITR 357 (HL), knives and lasts having an average life of three years used in manufacturing shoes were held to be plant. In CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC), the respondent, which ran a hotel, installed sanitary and pipeline fittings in one of its branches in respect whereof it claimed development rebate and the question was whether the sanitary and pipeline fittings installed fell within the definition of plant given in section 10(5) of the 1922 Act which was similar to the definition given in section 43(3) of the 1961 Act and this court after approving the definition of plant given by Lindley, L. J. in Yarmouth v. France [1887] 19 QBD 647, as expounded in Jarrold v. John Good & Sons Ltd. [1962] 40 TC 681 (CA), held that sanitary and pipeline fittings fell within the definition of plant. In IRC v. Barclay, Curle & Co. Ltd. [1970] 76 ITR 62 (HL), the House of Lords held that a dry dock, since it fulfilled the function of a plant, must be held to be a plant Lord Reid considered the part which a dry dock played in the assessee-company’s operations and observed (at p. 67) : "It seems to me that every part of this dry dock plays an essential part.... The whole dock is, I think, the means by which, or plant with which, the operation is performed." Lord Guest indicated a functional test in the words (p. 75 of 76 ITR) : "In order to decide whether a particular subject is an apparatus it seems obvious that an enquiry has to be made as to what operation it performs. The functional test is, therefore, essential at any rate as a preliminary." In other words, the test will be : Does the article fulfil the function of a plant in the assessees trading activity ? Is it a tool of his trade with which he carries on his business ? If the answer is in the affirmative, it will be a plant". Is it a tool of his trade with which he carries on his business ? If the answer is in the affirmative, it will be a plant". The test to be applied as to whether an item constitutes "plant" or not is whether the item fulfils the function of a plant in the assessees trading activity and is it a tool of his trade with which he carries on his business. The assessee manufactures Acetic Acid and all the electrical installations formed part of the apparatus used for carrying on the business of such manufacture. The functional test as well as the final test are fully satisfied and the electrical installations in the present case are part of the plant of the assessee which manufactures Acetic Acid. This plant comes in contact with acetic acid fumes and, therefore, is clearly plant which comes into contact with corrosive chemicals. Therefore, the electrical items comprising the aforesaid plant are entitled to a special rate of 15%. Since it comes under the special rate of 15%, it falls outside the items of machinery referred to in the Explanation which includes electrical machinery to which only the general rate of 10% applies. Therefore, we are in agreement with the C. I. T. (A) that the assessee is entitled to depreciation at 15%. The appeal of the Department is accordingly dismissed.