1. This is a reference under Section 256(1) of the I.T. Act, 1961, and it relates to the assessment year 1974-75, the corresponding previous year ended March 31, 1974. The assessee, a registered firm, had constructed four warehouses at a cost of Rs. 2,89,064. In the relevant previous year its main business was to book space for storing potatoes on behalf of its customers on rent agreed to with M/s. Kanodia Cold Storage and thereafter realise hire charges from the customers for storage of potatoes. The nature of the business was that the assessee stored the potatoes of its customers in its warehouses for sorting and grading and thereafter loaded the same in the cold storage. For the year under consideration, the assessee declared a loss of Rs. 27,410. It had charged development rebate at Rs. 58,360 in respect of those warehouses. The ITO did not accept the assessee's claim in regard to the development rebate since in his opinion the warehouses of the assessee were merely godowns and did not fulfil the requirement of Section 33 of the Act. Further, in his opinion, the machinery or plant must be installed so as to claim development rebate and since it could not be said that the warehouses of the assessee had been installed, he disallowed the claim.
2. On appeal, the AAC took a contrary view and relying on the decision of the Supreme Court in CIT v. Taj Mahal Hotel : 82ITR44(SC) , held that the warehouses of the assessee were ' buildings which were used for trade and they were entitled to development rebate if other conditions are fulfilled '. Since the ITO had not given any other ground for not allowing development rebate except that the warehouses did not amount to installations, the AAC accepted the assessee's claim and allowed the claim for development rebate. Being aggrieved, the revenue preferred an appeal before the Income-tax Appellate Tribunal but remained unsuccessful and now at its instance the following question has been referred to this court for its opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the warehouses constructed by theassessee could be held to be ' plant ' entitled to development rebate under, Section 33 of the Income-tax Act, 1961 '
3. It would be seen that there are certain undisputed facts and they are that the assessee had constructed certain warehouses. In the relevant previous year its main business was to book space for storing potatoes on behalf of its customers with M/s. Kanodia Cold Storage and for that it had collected hire charges from them. So far as these warehouses are concerned, they were used for temporary storage of the potatoes for the purpose of sorting and grading them. Thereafter it was loaded in the cold storage. In other words, the warehouses were used by the assessee in connection with its business.
4. The short question that falls for our consideration on these facts is as to whether these warehouses can be regarded as ' plant ' within the meaning of its definition as contained in Section 43(3) of the Act. According to this definition, ' plant includes vehicles, books, scientific apparatus and surgical equipments used for the purposes of business or profession'. It is an inclusive definition and the very fact that even books have been included, shows that the meaning intended to be given to plant is wide. As observed in the case of Taj Mahal Hotel : 82ITR44(SC) :
' 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 construed 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. '
5. The meaning of plant as given in Yarmouth v. France  19 QBD 647 (QB), where a horse was held to be a plant because it was used by a wharfinger to carry on his business, was accepted as correct. According to that meaning 'plant' includes whatever apparatus or instruments are used by a businessman in 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 Jarrold (Inspector of Taxes) v. John Good & Sons Ltd.  1 WLR 214, movable partitions in an office accommodation were held to be plant because the nature of the business required the operator of the business to be able, rapidly and cheaply and without much interruption of business, to alter the sub-divisions of the office building. Similarly, in Taj Mahal Hotel : 82ITR44(SC) , sanitary fittings in the bath rooms in a hotel were treated as plant.
6. In CIT v. Elecon Engineering Co. Ltd. : 96ITR672(Guj) , where thequestion before the Gujarat High Court was whether drawings and patterns received by an assessee from a foreign company under a collaborationagreement can be said to be plant on which depreciation is allowable under Section 32 of the Act, a large number of English and Indian cases were considered and it was ultimately held (p. 710) :
' It appears to us, therefore, that it would not be correct to limit the meaning of the word 'plant' in Section 32 to only such articles as are capable of diminution in value year after year by reason of wear and tear in the course of their application for the purposes of the assessee's business or profession. It would also take in other articles which diminish in value on account of other known factors such as obsolescence. '
7. On this view of the matter 'know-how ' was held to be a peculiar kind of asset and an accumulated fund of knowledge acquired by years of observation, research, experiment and experience. It was observed that when books which one consults to inform one's mind and thereby uses them in the course of one's business or profession are expressly included within the meaning of the word 'plant', there is no reason to exclude from the wide meaning of the term objects of similar nature such as drawings, patterns, designs, etc., which, like books, are the embodiments of know-how and serve the purpose of teaching in the long range. Again, in CIT v. S, L. M. Maneklal Industries Ltd. : 107ITR133(Guj) , the same court treated the workshop drawings as coming within the definition of ' plant '.
8. Fencing constructed around the processing unit under the Petroleum Rules, 1937, was held to be a plant by the Bombay High Court in CIT v. Caltex Oil Refining (India] Ltd. : 116ITR404(Bom) . The Andhra Pradesh High Court in CIT v. Warner Hindustan Ltd. : 117ITR15(AP) has treated a well dug for the purposes of carrying on the business of manufacturing pharmaceutical as a plant within the definition of this expression as given in Section 43(3).
9. Learned counsel for the revenue contended that plant does not include the place in which business is carried on and thus even if it be accepted that these warehouses are used by the assessee as a place for carrying on its business, they cannot be treated as a plant. According to the counsel, Section 32 of the Act, which provides for depriciation, makes mention of building along with machinery, plant or furniture in Sub-section (1) thereof while Section 33, which makes provision for development rebate, does not mention building, but provides only for a new establishment or a machinery or plant in Sub-section (1)(a). It was submitted that this omission was indicative of the fact that a building cannot qualify for development rebate unless it is treated as ' plant ' and that can only be when without such building it is not possible for a taxpayer to carry on his business.
10. On the other hand, according to counsel for the assessee, the expression ' plant ' should be given a wide connotation and such was the inten-tion of the legislature when it made provision in the definition of ' plant' that even books would be treated as plant. It was also emphasised that the use to which these warehouses were admittedly put by the assessee would bring them within the definition of ' plant ', Our attention was invited to CIT v. Kanodia Cold Storage : 100ITR155(All) . In that case the view expressed was that in common parlance the word ' plant ' includes within its ambit buildings and equipment used for manufacturing purposes and the definition of plant in Section 43(3) is inclusive and does not exclude things normally included in it. A building with insulated walls used as a freezing chamber, though not machinery or a part thereof, was treated as part of the air-conditioning plant of the cold storage of the assessee.
11. In our opinion in a case where the subject-matter is the building or some other kind of structure a distinction is to be made with a view to find out whether the building or the structure is something by means of which the business activities are carried on or the building or structure is such that it does not play any part in the carrying on of those activities, but is merely a place within which they are carried on. In order to decide this question, what is said to be the functional test, is to be applied. If on the application of this test it is found that the subject-matter, a building or apparatus or a part thereof, is employed in carrying on the activity of the business, then it shall be treated as a plant, no mafter that it consisted of some structure or building which is attached to the soil. If on the other hand it is found that the structure or a building or a part thereof does not constitute a part of the apparatus employed in carrying on the activities of the business, then it cannot be regarded as a plant. In the case of Kanodia Cold Storage : 100ITR155(All) itself it would be seen that the subject-matter of the case, that is, the building, had insulated walls and was being used as a freezing chamber and hence it was treated as a part of the air-conditioning plant. It other words, that building played an active role in the business of the assessee and was not merely a passive spectator.
12. It would be useful to refer to a recent decision of the Cdurt of Appeal rendered in Benson v. yard Arm Club Ltd.  1 WLR 347, where the question involved was whether the taxpayer company was entitled to capital allowances in respect of certain capital expenditure incurred in acquiring a vessel and the cost of its conversion into floating restaurant, together with a barge which provided services to it. The facts of that case were that in 1962, the taxpayer company purchased and converted a vessel which was moored at a permanent site on the Thames where, together with a barge, she was used as a floating restaurant. Between 1962 and 1973 expenditure of 75,862 was incurred by the taxpayer company inrespect of the cost of the vessel, hull alterations, equipment and fixtures. The taxpayer company appealed against assessments to Schedule D income-tax for the years from 1963 to 1966 and corporation tax for the years from 1966 to 1973 claiming capital allowances in respect of the capital expenditure. The General Commissioners held that the vessel was plant used in the taxpayer company's trade and the cost of conversion was capital expenditure that qualified for the allowance. On appeal, it was held that as the shop was the place where the taxpayer company carried on its business it did not fall within the definition of plant. On appeal by the taxpayer company before the Court of Appeal the view taken by Buckley L.J., with which the other two judges constituting the Bench concurred, was that the vessel and the barge ' although chattels and although used in connection with the business of the taxpayer company as restaurateurs, were not part of the apparatus employed in the commercial activities of those businesses, but were the structure within which the business was carried on.' (p. 357)
13. It would be seen that the test is whether the subject-matter involved, that is, a building or a structure or a part thereof, constitutes an apparatus or a tool of the trade of the taxpayer or it is merely a space where the taxpayer carries on his business. For this purpose the use which is made of the subject-matter under consideration is to be kept in view. If, as noted above, the building, structure or a part thereof is something by means of which the business activities are carried on, it would amount to a plant but where the structure plays no part in the carrying on of those activities but merely constitutes a place within which they are carried on, it cannot be regarded as a plant. If we apply this decision to the facts of the instant case, the only inference at which we can arrive is that the warehouses cannot be treated as a structure by means of which the assesses carries on ;its business. They only serve as a place within which the business is being carried on. We have already stated above the nature of the assessee's business. It books space in the cold storage on behalf of its customers and when the customers bring their potatoes for keeping in the cold storage for a short while, that potatoes are kept in the assessee's warehouses where, it is sorted and graded and then it is loaded in the cold storage, This being the business activity of the assessee it cannot be said that the warehouses are something by means of which this business activity is being carried on. They do not play any part whatsoever in the carrying on of its business activity, but merely provide a place within which this business activity is carried on. On this view of the matter we are not prepared to hold that the warehouses, of the assessee faH within the definition of ' plant ' as contained in Section 43(3) of the Act andthat being so the assessse was not entitled to any development rebate thereon under Section 33 of the Act.
14. Our answer to the question, therefore, is that the Tribunal erred in holding that the warehouses constructed by the assessee can be treated as ' plant ' entitled to any development rebate under Section 33 of the Act. The question is answered in the negative, in favour of the department and against the assessee. The department is entitled to its costs which we assess at Rs. 200 and counsel's fee in like amount.