JUDGMENT 1. The Income-tax Appellate Tribunal, Bangalore, has referred to us the following two questions for our opinion in terms of section 256(1) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant was not entitled to depreciation at 100 per cent. on the cages whose individual cost was less than Rs. 750 on the ground that the cages had been fabricated into one unit and thereby lost its individuality ? (2) Whether, on the facts, the Tribunal was right in holding that each cage was not a plant by itself and accordingly the applicant was not entitled to depreciation at 100 per cent. when the cost of each of the cages was less than Rs. 750 ?" 2. Before we address ourselves to the legal position on the subject, a few facts relevant to the disposal of this reference may first be noticed. The assessee is carrying on the business of running a poultry farm. 3. It has, for that purpose, raised sheds and installed cages in the same for housing birds. During the period relevant to the assessment year 1981-82, the assessee added some new sheds to the existing ones and purchased 9,000 cages at the rate of Rs. 15 per cage for installation in these sheds. In the income-tax return filed by the assessee for the relevant year, it claimed 100 per cent. depreciation on the cost of the cages purchased on the ground that each cage was a separate plant whose value being less than Rs. 750, the same qualified for 100 per cent. depreciation under section 32 of the Income-tax Act. The assessee's claim was disallowed by the Income-tax Officer on the ground that the so-called cages were not separate but one continuous fabricated unit in which partitions are made for a number of birds to be enclosed in each compartment. The Income-tax Officer held that the cages purchased by the assessee did not have a separate existence apart from the bigger unit which consisted of hundreds of such cases and that the cost of each such unit being more than Rs. 750 only ten per cent. depreciation was allowable on the cost of the additions made. 4. The Income-tax Officer held that the cages purchased by the assessee did not have a separate existence apart from the bigger unit which consisted of hundreds of such cases and that the cost of each such unit being more than Rs. 750 only ten per cent. depreciation was allowable on the cost of the additions made. 4. The view taken by the Income-tax Officer was affirmed by the Commissioner to Income-tax (Appeals), Bangalore, by his order dated August 30, 1985, holding that the assessee necessarily purchased a number of cages to set up a common unit, with common facilities for lighting, feeding, watering, etc., for the birds housed in the same. The Commissioner was of the opinion that it was more reasonable to treat the whole unit as one single machinery rather than taking each small cage as a separate plant by itself. The assessee then went up in appeal to the Income-tax Appellate Tribunal to question the view taken by the Income-tax Officer and the Commissioner of Income-tax (Appeals). The Tribunal concurred with the said views and dismissed the assessee's appeal to that extent by its order dated February 10, 1989. The Tribunal observed thus : "It no doubt appears to us that the cost of each cage is less than Rs. 750. But the question is whether each cage can be treated as a unit by itself for the purpose of depreciation. The assessee has not kept each cage separately. Cages are fabricated in such a manner to form a bigger unit. We had also occasion to see the photograph of the fabricated unit which was shown to us at the time of the hearing by the learned representative of the assessee. It was argued by Shri Parthasarathy that cages are fixed in a row for the purpose of feeding water through a mechanised system and that the individuality of each cage is not lost. We are unable to accept this contention. Cages are so fabricated that a number of birds are enclosed in each Department so much so the individualness of each cage is totally lost. There is one bigger unit which alone can be recognised as one separate item of plant or machinery. Therefore, the authorities below were right in holding that 100 per cent. depreciation was not allowable and we confirm this finding, and reject the first ground." 5. There is one bigger unit which alone can be recognised as one separate item of plant or machinery. Therefore, the authorities below were right in holding that 100 per cent. depreciation was not allowable and we confirm this finding, and reject the first ground." 5. The assessee's application for a reference to this court was allowed by the Tribunal and the two questions reproduced earlier referred to this court for its opinion. 6. We have heard learned counsel for the parties at length. Mr. Sarangan, learned counsel appearing for the assessee, strenuously urged that the view taken by the authorities below including the Tribunal was erroneous. He contended that the word "plant" was a word of wide amplitude and its definition as given in section 43(3) of the Income-tax Act was inclusive and not exhaustive in nature. He submitted that each cage purchased by the assessee was a plant within the meaning of section 32 of the Income-tax Act, regardless of the smallness of its size or the price thereof. According to learned counsel, once it was found that the cages purchased by the assessee were capable of use as independent units for a business similar to the one being carried on by the assessee, it was immaterial whether the assessee had utilised them as separate units or as part of a bigger unit as held by the Tribunal and the income-tax authorities below. The arrangement of the smaller cages in a row and the alterations made in the same to make bigger compartments to house the birds therein, was, according to learned counsel, a matter of convenience, for the assessee and not a compulsion. The units could have been used by the assessee, argued learned counsel, even individually, and the very fact that the same have been amalgamated or fabricated into one single, bigger unit, with bigger compartments did not make any difference for the purposes of allowing depreciation on the cost incurred by the assessee. 7. Shri Dattu, learned counsel appearing for the respondent, on the other hand, supported the view taken by the income-tax authorities and the Tribunal and argued that the smaller cages, having lost their identity, and merged in the bigger unit, it was the bigger unit alone which could be treated as plant or machinery of the assessee, for purposes of allowing depreciation on the cost of the additions made to the same. 8. 8. He urged that it was immaterial whether the smaller cages could be used by any one else for hoarding the birds. What was important, contended learned counsel, was whether the assessee had utilised these cages as independent units or simply used them for fabricating larger compartments to serve the requirements of his business. He relied upon the findings returned by the Income-tax Officer, the Commissioner of Income-tax (Appeals) and the Appellate Tribunal, that the cages were not being used by the assessee as independent units fully functional in themselves, but as an integrated single unit with common facilities for light, feed and water for the birds, and that the value of the integrated unit being more than Rs. 750 the additions made by the assessee qualified for depreciation only at ten per cent. of the cost incurred and not more. The question that falls for consideration is - by adding 9,000 cages of Rs. 15 each can the assessee be said to have set up or acquired for his business 9,000 independent plant, so as to qualify for 100 per cent. depreciation on the cost incurred on the acquisition thereof ? In other words, can the addition of these cages to the already existing establishment be said to be independent of the bigger existing unit being utilised by the assessee of his business of poultry farming ? An answer to this question would necessarily take us to the true scope and meaning of the term "plant" as the same appears in section 32 and the definition of the said term as provided by section 43 of the Act. The provisions of the said two sections, to the extent the same are relevant to the controversy at hand, may be set out first : "Section 32(1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed -" and "Section 43. In sections 28 to 41 and in this section, unless the context otherwise requires. . . (3) 'plant' includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession." 9. XX XX XX XX 10. In sections 28 to 41 and in this section, unless the context otherwise requires. . . (3) 'plant' includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession." 9. XX XX XX XX 10. A plain reading of the definition provided by section 43 would show that the meaning given to the term "plant" is not exhaustive in character. The definition is only inclusive in nature, leaving wide open the scope for items other than those mentioned in sub-section (3) of section 43, to be treated as plant, subject, of course, to the condition that the same is used by the assessee for the purpose of his business or profession. The other significant feature of the definition is the wide amplitude which the meaning given to the term "plant" enjoys. The definition embraces within its fold subjects and matters so diverse as a ship sailing on the high seas on the one hand, a book used whether by a lawyer or an architect on the other and a surgeon's scalpel on the third. It is obvious that there is absolutely no generic affinity between the items chosen for inclusion in the definition provided by the Legislature to the term "plant". The diversity of the subjects chosen and the marked extremities to which the definition has extended itself, makes the legislative intent much too clear and audible to need any emphasis, namely, that it has given the term "plant" the widest meaning possible, of course, constantly keeping in view the fact that whatever be the meaning and howsoever wide its sweep, the term "plant" would not include the stock-in-trade of the businessman nor would it include the place in which the business is carried on. 11. A review of the judicial pronouncements on the subject made in England as also in this country, however brings into sharp focus, the amazing diversity of articles, things and objects which have been held to be plant and others which have not been so accepted. 11. A review of the judicial pronouncements on the subject made in England as also in this country, however brings into sharp focus, the amazing diversity of articles, things and objects which have been held to be plant and others which have not been so accepted. To cite a few, while knives and lasts used in the manufacture of shoes, an aircraft engine which was being dismantled, movable partitions, a concrete dry dock, electrical fans and other office appliances, poles, cable conductors and switch boards for distribution of electricity, light fittings, ceiling and pedestal fans and water pipe fittings, sanitary and pipeline fittings in a hotel have been held to be plant, stallions used to serve the mares, solicitors, law books, water tower electric lamps and fittings in a tea shop, human body, designs for wall-paper and furnishing fabrics and water storage tanks used for storing water for irrigation purposes, have been held not to be plant. It is unnecessary for us to refer in detail to all the judgments cited before us by Mr. Sarangan, for, in our opinion, the true legal position would emerge by reference only to a few of the said judgments, to which we shall presently turn. 12. In Yarmouth v. France 1887] 19 QBD 647 which is treated by all subsequent judgments as the locus classicus for the definition of plant, the court observed thus (at page 658) : "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 moveable, live or dead, which he keeps for permanent employment in his business." In Jarrold v. John Good and Sons Ltd. [1962] 40 TC 681 (CA), the question that arose for consideration was whether certain movable office partitions installed in the office of the assessee represented "plant" for purposes of initial allowance and annual allowance under the relevant statutory provisions. Ormerod L. J., who delivered the leading judgment, referred with approval to the definition given in Yarmouth's case [1887] 19 QBD 647 to the word "plant" and observed thus (at page 693) : "The dividing line between what is 'plant' and what is not is a narrow one, and the facts of this particular case come near to that dividing line. But, in my judgment, in the circumstances of this case - and I think each case does depend largely on its own circumstances - the partitions should be regarded as something more than a mere setting for the carrying out of the trade; in other words as coming within the definition of 'plant' as contained in section 279." 13. In CIT v. Taj Mahal Hotel, the Supreme Court while approving the definition given in Yarmouth's case [1887] 19 QBD 647 and the view expressed in Jarrold's case [1962] 40 TC 681 (CA), held that sanitary and pipeline fittings installed in a hotel fell within the definition of the term "plant" under the Act. The Supreme Court observed thus (at page 48) : "It cannot be denied that the business of a hotelier is carried on by adapting a building or premises in a suitable way to be used as a residential hotel where visitors come and stay and where there is arrangement for meals and other amenities are provided for their comfort and convenience. To have sanitary fittings, etc., in a bathroom is one of the essential amenities or conveniences which are normally provided in any good hotel, in the present times. If the partitions in Jarrold's case [1962] 40 TC 681 (CA), could be treated as having been used for the purpose of the business of the trader, it is incomprehensible how sanitary fittings can be said to have no connection with the business of the hotelier. He can reasonably expect to get more custom and earn larger profits by charging higher rates for the use of rooms if the bathrooms have sanitary fittings and similar amenities. He can reasonably expect to get more custom and earn larger profits by charging higher rates for the use of rooms if the bathrooms have sanitary fittings and similar amenities. We are unable to see how the sanitary fittings in the bathrooms in a hotel will not be 'plant' within section 10(2) (vib) read with section 10(5) when it is quite clear that the intention of the Legislature was to give it a wide meaning and that is why articles like books and surgical instruments were expressly included in the definition of 'plant'. In decided cases, the High Courts have rightly understood the meaning of the term 'plant' in a wide sense." 14. The question that fell for the consideration of the House of Lords in IRC v. Barclay, Curle and Co. Ltd. [1970] 76 ITR 62, was whether a dry dock was plant within the meaning of section 279(1) of the Income-tax Act, 1952, which provided for a deduction of a certain percentage of the expenditure as an initial allowance where the person carrying on a trade incurs capital expenditure on the provision of machinery or plant for the purpose of the trade. Lord Reid, in his speech, observed thus (at page 67) - "Here it is apparent that there are two stages in the respondents' operations. First the ship must be isolated from the water and then the inspection and necessary repairs must be carried out. If one looks only at the second stage it would not be difficult to say that the dry dock is merely the setting in which it takes place. But I think that the first stage is equally important, and it is obvious that it requires massive and complicated equipment. No doubt a small vessel could be got out of the water by the use of comparatively simple plant and machinery but clearly that is impossible with a very large vessel. It seems to me that every part of this dry dock plays an essential part in getting large vessels into a position where work on the outside of the hull can begin, and that it is wrong to regard either the concrete or any other part of the dock as a mere setting or part of the premises in which this operation takes place. The whole dock is, I think, the means by which, or plant with which, the operation is performed." Then came Scientific Engineering House P. Ltd. v. CIT, in which the Supreme Court was considering whether drawings, designs, plans, processing data, etc., could be treated as "books" so as to constitute plant within the meaning of sections 32 and 43 in order to qualify for depreciation allowance under the Act. The court while approving the view taken in CIT v. Elecon Engineering Co. Ltd., by the Gujarat High Court held that, in the assessee's trading activity of manufacturing theodolites and microscopes the documents in question had a vital function to perform, as it was only with the aid of these complete and uptodate sets of documents that the assessee was able to commence its manufacturing activity. The fact that the documents did not themselves perform any mechanical operation or process was held by the court to be immaterial. The court referred with approval to the observations of Lord Reid and the following passage from Lord Guest's speech in Barclay's case (1970) 76 ITR 62, 75 (at page 96 of 157 ITR) : "In order to decide whether a particular subject is an 'apparatus', it seems obvious that an enquiry has to made as to what operation it performs. The functional test is, therefore, essential at any rate as a preliminary." (emphasis' supplied). 15. The Supreme Court then formulated the following test for application while deciding whether a particular object, thing or article would amount to plant (at page 96) : "In other words, the test would be : Does the article fulfil the function of plant in the assessee's 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 plant." 16. Before we proceed to summarise the legal position, we must, in fairness to Mr. Sarangan, notice one more judgment upon which he placed reliance. This judgment of the House of Lords in Commissioners of Inland Revenue v. Scottish and Newcastle Breweries Ltd. [1982] 55 Tax Cases 252, 269, deals with a case where a hotelier who spent on improving the decor and the ambience of his hotel in order to attract a better clientele, claimed that the expenditure was allowable for that purpose, as an expenditure on purchase of plant. The claim was upheld by the House of Lords holding that the assessee's trade was intended to be furthered by the provision of what may be called "atmosphere" or ambience which, rightly or wrongly, they thought would attract customers, and any expenditure made by the assessee, on providing things like murals and artefacts were not just a matter of setting in which the assessee carried on his business, but a special feature of the trade in which the assessee was engaged. And yet the judgment cautions that no test can be said to be conclusive, and no formula of universal application. The following passage from Lord Wilberforce's speech is instructive (at page 270) : "Another much used test word is 'functional' this is useful as expanding the notion of 'apparatus'; it was used by Lord Reid in Barclay, Curle's case [1970] 76 ITR 62 (HL). But this too, must be considered, in itself, as inconclusive. Functional for what? Does the item serve a functional purpose in providing a setting ? Or one for use in the trade ? It is easy, without excessive imagination, to devise perplexing cases. A false ceiling designed to hide unsightly pipes is not plant, though the pipes themselves may be (Hampton v. Fortes Autogrill Ltd. [1979] 53 TC 691; [1980] STC 80) is a tapestry hung on an unsightly wall any different from a painted mural ? And does it make a difference whether there was a damp patch underneath ? What limit can be placed on attractions, interior or exterior, designed to make premises more pleasing to the eye or other senses ? There is no universal formula which can solve these puzzles. In the end each case must be resolved, in my opinion, by considering carefully the nature of the particular trade being carried on, and the relation of the expenditure to the promotion of the trade. I do not think that the courts should shrink, as a backstop, from asking whether it can really be supposed that Parliament desired to encourage a particular expenditure out of, in effect, taxpayers' money, and perhaps ultimately, in extreme cases, to say that this is too much to stomach." What then is the true test to be applied? I do not think that the courts should shrink, as a backstop, from asking whether it can really be supposed that Parliament desired to encourage a particular expenditure out of, in effect, taxpayers' money, and perhaps ultimately, in extreme cases, to say that this is too much to stomach." What then is the true test to be applied? Is it the possibility of the thing or the article in question being capable of use in some other business of a similar or dissimilar kind, which would provide the answer, whether or not to treat the article or thing as a plant ? Or is it the function which the article performs in the trading activity of the assessee which is the key to the solution? Mr. Sarangan's submission that we should accept the former of the two options as decisive of the matter, has not impressed us. The fact that the cages which the assessee in the case before us has purchased could be used by the same or some other assessee for a similar or some other business is not, in our opinion, a conclusive test. What is important is the function which the cage is utilised to perform, in the trading activity of the assessee. If this function was one of a self-contained unit, it may have been permissible to treat all the 9,000 cages purchased by the assessee to be as many independent units, in which case, each one of those cages may have qualified for a 100 per cent. depreciation, the value of each cage being admittedly less than Rs. 750. A clear finding of fact which the income-tax authorities and the Appellate Tribunal have returned is that the cages are not used as independent units, but are utilised by the assessee for fabrication of bigger compartments to have a larger number of birds, with common facilities of lighting and feeding and watering, etc. 17. The assessee is therefore using the smaller cages to so integrate them with his bigger unit that they lose their individuality. They become a part of the bigger plant and cease to either perform or remain capable of performing any function independent of what is performed by the entire unit as one complete plant or machine. 17. The assessee is therefore using the smaller cages to so integrate them with his bigger unit that they lose their individuality. They become a part of the bigger plant and cease to either perform or remain capable of performing any function independent of what is performed by the entire unit as one complete plant or machine. The position of these smaller cages is, therefore, no better than the components of an engine which in a knocked down condition do not perform any function but when assembled together make a vital contribution towards the functioning of the engine. Just as the components of an engine cannot be treated as plant in themselves, so also these cages cannot be termed as plant to individually qualify for the depreciation allowance claimed by the assessee. The test of "functional integrality" of any such components, with the whole or bigger unit of which they become a part, in the course of and for the purpose of the assessee's business, is what will determine whether the components can be treated to be plant in themselves to qualify for the depreciation allowance. In other words, for any article or thing, component or object to be termed plant itself so as to qualify for depreciation allowance at 100 per cent. of the cost incurred on the purchase or fabrication thereof, the article or component, as the case may be, must be used by the assessee, as a self-contained unit and not as a part or attachment of a bigger unit as in the case before us. This, however, does not mean that the article or object would cease to be plant for the purpose of depreciation, as a part of the bigger unit. All that it would mean is that while it may qualify for depreciation as a part or extension of the bigger plant of which it becomes a part, it would not be entitled to be termed plant in itself to qualify for the allowance in its own right. This is precisely what has happened in the present case. The income-tax authorities and the Tribunal have allowed depreciation on the cost of the cages, but not at 100 per cent. This is precisely what has happened in the present case. The income-tax authorities and the Tribunal have allowed depreciation on the cost of the cages, but not at 100 per cent. for they did not treat, and in our opinion rightly so, the purchase of 9,000 small cages by the assessee to be tantamount to setting up 9,000 separate plants as was being canvassed on behalf of the assessee before us. 18. For all that we have said, our answer to both questions referred by the Tribunal for our opinion is in the affirmative. The Tribunal was in our opinion justified in taking the view it has actually taken. The reference is answered accordingly.