JUDGMENT
Saraf, J. –
By this reference under section 256(1) of the Income Tax Act, 1961 (‘the Act’), the Tribunal has referred the following question of law to this Court for opinion:
“Whether, on the facts and in the circumstances of the case, the Tribunal was fight in law in holding that horses used for stock-breeding constitute ,plant’ so as to be eligible. for depreciation under section 37 of the Income-tax Act, 1961 ?”
2. This reference pertains to the assessment year 1978-79. The controversy is whether the horses used for stock-breeding constitute ‘plant’ for the purpose of depreciation under section 32 of the Act. The material fact s are in a narrow compass. The assessee is engaged in the business of livestock breeding. For that purpose, it purchases and imports horses. These horses are not sold. The assessee claimed that the horses having been used for the purposes of its business constituted ‘plant’ and, therefore, depreciation was allowable on cost thereof under section 32. The Income Tax Officer rejected the claim of the assessee on the ground that the horses were held by the assessee as stock-in-trade. The assessee appealed to the Commissioner (Appeals). It was contended by the assessee before the Commissioner (Appeals) that the horses were held by it not as stock-in-trade but as fixed assets. The Commissioner (Appeals) rejected the appeal of the assessee, He held that horses did not constitute ‘plant’. On further appeal, the claim of the assessee was accepted by the Tribunal. The Tribunal accepted the contention of the assessee that horses were not its stock-in-trade but fixed assets. The Tribunal also held that horses could be treated as plant and that the assessee was entitled to claim depreciation thereon. Hence, this reference at the instance of the revenue.
3. We have heard Mr. R.V. Desai, the learned counsel for the revenue. None appears for the assessee. Though at the material time there was a controversy whether livestock would constitute plant within the meaning of clause (3) of section 43 of the Act, that controversy has now been set at rest by the amendment of section 43(3) by the Parliament by the Finance Act, 1995 with retrospective effect from the inception of the Act, ie., 1-4 -1962 to exclude tea bushes and livestock from the ambit of ‘plant’. 1t is now made clear in the definition of ‘plant’ in section 43(3) that it does not include livestock.
4.1n view of the above, horses used for stock- breeding cannot be regarded as ‘plant’ within the meaning of section 43(3) and no depreciation would be allowable thereon under section 32.
5. The question referred to us is, therefore, answered in the negative, that is, in favour of the revenue and against the assessee. The reference is disposed of, accordingly, with no order as to costs.