1. Two questions are referred under section 66(1) of the Indian Income-tax Act, 1922, for our determination. They are as under :
'1. Whether, on the facts and in the circumstances of the case, the air-conditioning equipment installed by the assessee in its safe deposit vault can be said to be machinery or plant which consists of office appliance as referred to in the second proviso to section 10(2)(vib) of the Indian Income-tax Act, 1922
2. Whether, on the facts and in the circumstances of the case, the relief contemplated under section 56A and under section 49B of the Indian Income-tax Act, 1922, was available in relation to the whole of the dividends without reducing the same by interest and administrative expenses ?'
2. So far as question No. 2 is concerned, it is conceded by the revenue that it is covered by a decision of a Division Bench of this court in Commissioner of Income-tax v. New great Insurance Co. Ltd., and that question No. 2 has to be answered in the affirmative in favour of the assessee. We, accordingly, answer question No. 2 in the affirmative.
3. This takes us to the question whether the air-conditioning equipment installed by the assessee in its safe deposit vault can be regarded as machinery or plant. We find that it is not necessary to discuss in detail this question, because it can be regarded as fairly covered by the decision of the Supreme Court in Commissioner of Income-tax v. Taj Mahal Hotel. The Supreme Court was concerned in this case with the question whether the sanitary and pipeline fitting installed in one of the branches of the hotel fell within the definition of 'plant' and the question was answered in the affirmative. The Supreme Court cited with approval the decision of the Court of Appeal in Jarrold (Inspector of Taxes) v. John Good and Sons Ltd., and it referred to the passage at page 233. In that case the nature of the assessee's business required that office accommodation should be capable of sub-division into a number of rooms varying in size, etc., according to the requirements from time to time of the agencies which it carried on. The office accommodation consisted of a large open floor space in which partitions would be erected so as to sub-divide the floor space into a number of rooms of any size. Certain partitions were made which were screwed to the floor and ceiling only and could be easily moved if it was desired to alter the size or number of the rooms. The question was whether these partitions were 'plant' within sections 279 and 280 of the English Income Tax Act, 1952, so as to entitle the company to allowances under those sections. There the material words in the statute were 'where a person carrying on a trade in any year of assessment has incurred expenditure on the provision of machinery or plant for the purposes of the trade'. It was held that the partitions were 'plant' as they were used in the carrying out of the company's trade or business. Donovan L.J. held that the partitions were used to enable the trader to cope with the vicissitudes of the business as it increased and diminished and relied on the finding of the commissioners that the flexibility of accommodation which the partitions provided was a commercial necessity for the company. Further illustrations were given of assets which would fall within the meaning of 'plant'. 'The heating installation of a building may be passive in the sense that it involves no moving machinery, but few would deny it the name of 'plant'. The same thing could, no doubt, be said of many air-conditioning and water softening installations.'
4. This passage has been cited with approval by the Supreme Court and it is quite apparent that an air-conditioning equipment installed by the assessee in its safe deposit vault will be 'plant' within the meaning of the section. Accordingly, question No. 1 above referred to is answered in the affirmative in favour of the assessee. The revenue will pay the costs.