Question

Although the Income Tax Act, 1967 does not provide any definition of the term “plant and machinery”, the definition given by case law stands as its legal definition.
Describe how “plant and machinery” is identified in case law.

Answer 1

Much of the case law regarding whether something is plant (machinery is easier to define) or concerns tax legislation as there are capital allowances for items of plant and machinery.  By way of an example, it has been held that items of a purely decorative nature can be considered to be plant if they are a fundamental part of the business (such as in a pub or hotel) – otherwise, the items would be considered part of the premises.

In this regard, the distinction between something being plant and not being plant (being part of the business premises) is unlikely to be important to the official receiver as liquidator or trustee, and of more importance (in, for example, deciding if something is an asset of the insolvent or a third-party) is likely to be the case law relating to whether something has become a fixture, or not.