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PETITIONER: C.I.T., TRIVANDRUM

       Vs.

RESPONDENT: M/S ANAND THEATRES

DATE OF JUDGMENT:       12/05/2000

BENCH: M.B.Shah, A.P.Misra

JUDGMENT:

Shah, J.       Leave granted in SLP (Civil) Nos.4373-74 of 1999.

     Question involved in these appeals is whether building which  is  used  as  a  hotel or a  cinema  theatre  can  be considered  to  be  apparatus  or a  tool  for  running  the business  so  that  it  can  be   termed  as  a  plant   and depreciation  can  be  allowed  accordingly  or  whether  it remains a building wherein either hotel business or business for cinema could be conducted?

     The  aforesaid  question  is  to  be  decided  in  the background  of the specific provisions granting depreciation to buildings, machinery and plant under Section 32 of Income Tax  Act, 1961 (herein after referred to as the Act).  And also to decide whether time has come to have a fresh look at the  old precedents and to lay down the law with the changed perceptions  keeping  in  view the provisions  of  the  Act? Further,  to what extent are we required to follow and adopt artificial and largely judge-made sense of the word plant, which  is given inclusive meaning under Section 43(3) and in context of the Scheme of Section 32?

     In this batch of civil appeals, some appeals are filed by  the  Revenue  and  some by  the  assessees.   Since  the question  involved in all these appeals is similar, we would deal  with  the facts in Civil Appeal No.  4758 of 1998  for convenience.   For the assessment year 1986-87 the  assessee claimed depreciation at 15% on the theatre building claiming it  to  be  a plant.  The assessing officer by  order  dated 27.9.1988  rejected the claim and allowed depreciation  only at  5%.   The  appeal  filed  by  the  assessee  before  the Commissioner of Income Tax (Appeals), Trivandrum was allowed by  order dated 21.7.1989 holding that the theatre  building is to be treated as a plant.  Being aggrieved, the Revenue filed  appeal  ITA  No.748/Coch/89  before  the  Income  Tax Appellate  Tribunal, Cochin Bench, Cochin.  It was contended by  the  Revenue that the theatre building is not a  plant and even if it is to be construed as plant only that part of the  building  housing  the  auditorium  and  furniture  and fittings  found therein should be construed as plant and not the  entire building.  The Tribunal by order dated 29.9.1994 held that the entire theatre building should be construed as plant  for the purposes of granting depreciation and further allowed  the  claim of assessee for extra  shift  allowance. Revenue  filed  Reference Application No.264 of 1994  before

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Income   Tax  Appellate  Tribunal,   Cochin  Bench,   Cochin requesting  the Tribunal to draw up a statement of case  and refer  the  questions, arising out of the order of  Tribunal passed  in  ITA  No.748  [Coch]/1989  dated  29.9.1994,  for opinion of the High Court of Kerala.  After hearing both the sides, the Tribunal referred following questions to the High Court of Kerala.

     (1)  Whether on the facts and in the circumstances  of the case, the theatre building can be considered as a plant?

     (2)  Whether on the facts and in the circumstances  of the  case,  the  assessee  is entitled  to  higher  rate  of depreciation on the theatre?

     The  High  Court  of  Kerala  in  ITR  No.85  of  1996 considered  the  above questions and after relying upon  its earlier  decision  in  CIT,   Trivandrum  v.   M/s  Abhilash Theatre,  Kottayam  answered in favour of the  assessee  and against  the  revenue.   [Against the decision  rendered  in Abhilash  Theatres case, Civil Appeal No.5198-5199 of  1998 is  pending  before  this Court being disposed of  by  this judgment]

     The  question considered by the High Court in Abhilash Theatres  case  (Supra)  was  whether hotel  building  and theatre  building  can  be considered as a  plants.   With regard  to  the  hotel, the Court considered  whether  hotel building  is  merely a setting or premises or  whether  that plays  an  important  role  in running  the  hotel,  meaning thereby  whether the building is such without which business of  hotel  cannot  be conceived;  and if a  building  is  an integral  part  of hotel business, that is some  thing  more than merely a place, accommodating some requisites of hotel, then  that  would partake the character of plant.  For  this purpose,  the High Court considered the decisions in  Inland Revenue  Commissioners  v.   Barclay,   Curle  &  Co.   Ltd. [(1969) 1 WLR 675] and Scientific Engineering House P.  Ltd. v.   Commissioner  of Income-Tax, A.P.  [(1986) 157  ITR  86 SC].   The  Court  observed that the principle that  can  be deducted  is that if a building is merely a setting or place to accommodate some apparatus, then that will not be held as plant  but  if a building which does not merely  accommodate something or which cannot be regarded merely as a setting or premises, but if that plays an important role in carrying on the  business,  then  that would fall within  the  inclusive definition  of  the plant.  Thereafter, the  Court  observed thus:   -  The  hotel building in our  opinion,  cannot  be equated  with a residential building, which provides shelter to  the people living therein.  Building is essential to run the  business  of hotel.  Without befitting building  it  is ideal  to think of an hotel business.  A good hotel requires amenities  and a building which is so erected as to  fulfill the   requisite   norms  of   hotel.   A   building   simply accommodating  machinery or other apparatus to run a factory is  different  from the hotel building, which  is  specially designed,   suiting   to  the    hotel   requirements.    So specifically  erected  building cannot be said to be a  mere setting  or  premises.   No  hotel can  function  without  a suitable building satisfying the norms of hotel.

     The Court further observed:  - Building and plant are not  mutually  exclusive.   When  dry dock  a  concrete  dry

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structure  can  be held a plant because the whole  dock  was used  for  carrying  on  the entire operation,  we  fail  to understand why the hotel building specially erected for that purpose,  cannot  be held as plant.  As a specially  erected building  for  hotel  is  used for  carrying  on  the  hotel operation,  it must come within the inclusive definition  of the plant.

     The   High  Court  further   considered  the  case  of Scientific  Engineering House (P) Ltd.  (Supra) and applying the  functional test held that the hotel building is a  tool of  the  assessees business.  Plant cannot  necessarily  be confined  to  an  apparatus  which is  used  for  mechanical operations   or  process  or  is  employed   in   industrial operations.   The  Court further held that terms  building and  plant  occurring  in Section 32(1) are  not  mutually exclusive  and  a  building  depending  on  its  nature  and peculiarity  can be held as plant.  The High Court disagreed with  the  decisions  in C.I.T.  v.  Lake  Palace  Hotels  & Motels  P.  Ltd.  [(1997) 226 ITR 561 Rajasthan] and CIT  v. Damodar  Corporation  Hotel  Pankay,  [(1997)  137  ITR  574 Kerala] but agreed with the decision of Karnataka High Court in  C.I.T.   v.  Dr.  B.  Venkata Rao, [(1991) 202 ITR  302] and  the  decision of Calcutta High Court in  S.P.   Jaiswal Estates  (P)  Ltd.  v.  CIT, [(1995) 216 ITR 145  Calcutta]. The  High  Court finally held that the hotel  building  is plant entitled to depreciation applicable to plant under the rules  framed  under  the Act.  Further with regard  to  the theatre  building,  the Court referred to the decision  of Allahabad  High  Court  in S.K.  Tulsi and Sons  v.   C.I.T. [(1991)  187 ITR 685] and held that what holds good for the hotel building, that equally applies to a theatre building.

     Being  aggrieved,  the Revenue has filed  the  present appeal by special leave.

     VARIOUS  RELEVANT DECISIONS RENDERED BY THIS COURT AND THE HIGH COURTS ON THE ISSUE.

     (A) DECISIONS OF THIS COURT

     In  CIT, Andhra Prdesh v.  Taj Mahal Hotel [(1971)  82 ITR  44  (SC)] this Court considered that the  sanitary  and pipeline  fittings fell within the definition of plant  in section 10(5) of the Income Tax Act, 1922 and therefore, the assessee  was  entitled  to development  rebate  in  respect thereof.   The  Court  further held that the fact  that  the assessee claimed depreciation on the basis that sanitary and pipeline  fittings  fell under furniture and  fittings  in Rule  8(2) of the Income Tax Rules 1922 did not detract from this  position  as  the  Rules  cannot  take  away  what  is controlled  by  the Act or whittle down its  effect.   After considering the contentions raised by the Revenue, the Court observed as under:  - 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 bath room is one of the essential amenities or conveniences which are  normally  provided  in any good hotel, in  the  present times.  If the partitions in Jarrolds case [(1963) 1 W.L.R. 214] could be treated as having been used for the purpose of

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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 large profit by charging higher  rates for  the  use  of  rooms if the  bath  rooms  have  sanitary fittings and similar amenities.

     (Emphasis supplied)

     Thereafter,  the Court further held if the dictionary meaning   of  the  word  plant   were  to  be  taken  into consideration on the principle that the literal construction of  a statute must be adhered to unless the context  renders it plain that such a construction cannot be put on the words in  questionthis  is what is stated in Websters Third  New International  Dictionary:   Land,   buildings,  machinery, apparatus  and  fixtures  employed in carrying on  trade  or other industrial business.

     It  is,  however,  unnecessary to dwell  more  on  the dictionary meaning because, looking to the provisions of the Act,  we  are  satisfied that the assets  in  question  were required  by  the  nature of the hotel  business  which  the assessee  was  carrying on.  They were not merely a part  of the setting in which hotel business was being carried on.

     In Scientific Engineering House P.  Ltd.  (Supra) this Court  considered that the drawings, designs, charts, plans, processing  data  and  other  literature  comprises  in  the documentation   service  as  specified   in   clause   (3) constituted  a  book  which fell within  the  definition  of plant  in section 43(3) of the Income Tax Act.  The  Court held  that  these documents did not perform  any  mechanical operations  or  processes, but that cannot militate  against their  being  a plant since they were in a sense  the  basic tools  of  the  assessees trade having  a  fairly  enduring utility.   The  Court  further   held  that  capital  assets acquired  by the assessee, namely, the technical know how in the  shape  of drawings, designs, charts, plans,  processing data  and  other literature falls within the  definition  of plant  and therefore a depreciable asset.  The Court  also referred  to  the functional test referred by Lord Guest  in Barclays  case and observed as under:  In other words, the test  would  be:  Does the article fulfil the function of  a plant  in the assessees 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 a plant.

     We  would  add  that  the   learned  counsel  for  the assessees  on  3rd  May,  2000   has  filed  an   additional submission  pointing out the decision rendered by this Court in  CIT  v.   Dr.   B.  Venkata Rao, [(2000)  243  ITR  81], wherein  this  Court  dismissing  the appeal  filed  by  the revenue  held  that the nursing home building was  specially equipped  as a plant for the assessees business.  The Court observed:   What  is  to  be  determined  is  whether  the particular  nursing home building was equipped as to  enable the  assessee  to  carry on the business of a  nursing  home therein or whether it is just any premises utilised for that object.

     We  find  from the order of the Tribunal as  also  the assessment  order  that  the   assessees  nursing  home  is equipped to enable the sterilisation of surgical instruments

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and  bandages to be carried on.  It is reasonable to  assume in  the  circumstances,  particularly having regard  to  the Tribunals  order  which states that the sterilisation  room covers  about  250 sq.  ft.  that the nursing home  is  also equipped with an operation theatre.  In the circumstance, we think  that  the  finding  of   the  High  Court  should  be accepted.

     This  decision  is  based on the facts  found  by  the Tribunal and the High Court wherein it was held that nursing home  was  equipped  to  enable  sterilisation  of  surgical instruments  and  bandages  to be carried on and  that  room covered  250 sq.  fts.  and hence was a plant As such,  no legal  contentions  were raised and considered by the  Court and  the  matter  is decided solely on the facts  as  quoted above  without  any discussion.  Hence, this decision  would not  be  of  any  assistance  in  determining  the  question involved.

     (B) DECISIONS RENDERED BY THE HIGH COURTS

     In  C.I.T.   Lucknow v.  Kanodia Cold Storage  [(1975) 100  ITR  155]  the  Allahabad High  Court  arrived  at  the conclusion  that  where a building with insulated  walls  is used  as  a freezing chamber, though it is not machinery  or part  thereof,  it is part of the air conditioning plant  of the  cold  storage of the assessee and will be  entitled  to special depreciation at 15% on its written down value.

     In  S.K.   Tulsi and Sons v.  C.I.T.  [(1991) 187  ITR 685],  the  Allahabad High Court arrived at  the  conclusion that  the  cinema building constructed and used as a  cinema along  with  its  fittings and fixtures and  wherein  cinema business was carried on constitute a plant.

     In  C.I.T.  v.  Hotel Luciya [(1998) 231 ITR 492]  the Full  Bench  of  Kerala High Court held  that  for  deciding whether  a building is plant or not Court must apply what is called  functional  tests  and  further  held  that  hotel building  and theatre building are plant within the  meaning of  Section  43(3)  of the Act and accordingly  entitled  to depreciation  as  applicable  to the plant  [Against  this decision,  Civil Appeal No.15 of 1999 is pending before this Courtbeing disposed of by this judgment]

     Further,  in  CIT Patiala II v.  Yamuna  Cold  Storage [(1981)  129 ITR 728], Punjab & Haryana High Court held that the  building with insulated walls of the cold storage was a plant  and  was entitled to depreciation at 15%.   Allahabad High  Court in Leela Movies v.  CIT [191 ITR 113] and  Tulsi Theatre  v.   CIT [(1991) 190 ITR 575] held that the  cinema building  constitute  plant within the meaning of  Section 43(3).   Andhra  Pradesh  High  Court   in  CIT  v.   Warner Hindustan  Ltd.  [(1991) 117 ITR 15] held that the well  dug in  the factory by the assessee for the purpose of  carrying on  its  business was a plant within the meaning of  Section 43(3)   and,  therefore,  the   assessee  was  entitled   to depreciation  and development rebate on the cost of  digging the well.  Bombay High Court in CIT v.  Caltax Oil Refinding (India)  Ltd.   [(1979) 116 ITR 404] held that  the  fencing round the refinery processing unit constitutes plant and was entitled  to depreciation and development rebate.  Karnataka High  Court  in CIT v.  Dr.  B.  Venkatarao [(1993) 202  ITR 303] held that building which was used as nursing home was a

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plant.   Similarly,  in CIT, Karnataka v.   Woodlands  Hotel Pvt.   Ltd.   [IRTC No.48 & 49 of 1993 dt.16th  June,  1997] [Against this decision, Civil Appeals No.4373-74 of 1999 are pending   before  this  Courtbeing   disposed  of  by  this judgment]  and in CIT v.  Hotel Rama Pvt.  Ltd.  [(1998) 146 CTR  243]  held  that building in which  hotel  business  is carried  on  is  a  plant  for   the  purpose  of  grant  of depreciation.   Madras  High  Court  in  Additional  CIT  v. Madras  Cement  Ltd.   [110 ITR 281] held that  the  special reinforced  concrete foundation for the purpose of  locating or  installing  the  rotary kiln in the factory  would  come within  the scope of the expression plant and is entitled to development rebate.

     In  C.I.T.  v.  Krishna Botttlers P Ltd.  [(1989)  175 ITR  154]  the Andhra Pradesh High Court held  that  bottles were  essential  tools of the trade for it was through  them that  soft  drink  was passed on from the  assessee  to  the customers  and,  therefore, were plant for the purpose  of Income-tax.   In  that case, Court  exhaustively  considered various  decisions including the decisions of the Courts  in England  and  inter  alia  held that  the  building  or  the setting  in  which  the business is carried on  cannot  be plant;   in  considering  whether a structure  is  plant  or premises,  one must look at the finished product and not  at the  bits  and pieces as they arrive from the factory.   The fact  that a building or part of a building holds the  plant in  position  does not convert the building into  plant.   A piecemeal  approach is not permissible and the entire matter must  be  considered as a single unit unless of course,  the component  parts  can  be treated as separate  units  having different  purposes  and the functional test is  a  decisive test.

     In CIT v.  Lawly Enterprises (P) Ltd., [1997 (225) ITR 154]  the High Court of Patna considered  whether the hotel is  a  plant  within  the meaning of section  43(3)  of  the Income-tax  Act, 1961 and depreciation at the rate of 15 per cent  is  admissible  to  it?  The  Court  observed  that  a building  intended  to be used or in fact used earlier as  a residential  accommodation can be converted any time into  a lodge  and used for running a hotel business.  On the  other hand,  there  are  hotels, self-contained in many  ways  and having  a small world of their own;  and it is possible that the  buildings housing such hotels may have certain  special design  and features and those buildings may be said to form an  integral part of the business of running that hotel  and in  those cases, the buildings may qualify as plant but that would depend upon the facts of each case.

     In S.P.  Jaiswal Estates (P) Ltd.  v.  Commissioner of Income-Tax  [(1995)  216 ITR 145], the Calcutta  High  Court considered  similar questions and observed as under:   (Page 151}:   - the hotel building owned by the assessee and used for  the  purpose of carrying on its hotel business  was  an apparatus  with  which  the assessees  hotel  business  was carried on.  It cannot be treated as a setting, within which or  a  canopy  under  which, the  assessee  carried  on  its business.   The  hotel building is to be treated as  plant for the purpose of depreciation allowance under Section 32.

     (C) Judgments expressing contrary views:  -

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     In  CIT v.  Damodar Corporation Hotel Pankay,  [(1997) 137  ITR 574] the Kerala High Court held that a hotel in its entirely  is not a plant for the purpose of depreciation and observed  as  under:   - a perusal of  the  said  statutory provisions  of Section 32- A of the Act would show that  the words  machinery  and  plant have been  separately  with  an exclusive  character  from  each other finds  place  in  the concerned   enactments  of  the   Section.   The   statutory provision  also  of  other requirements for  entitlement  to investment allowance on the count.

     In  R.C.Chemical Industries v.  CIT, New Delhi [(1982) 134  ITR  330 (Delhi)], the Delhi High Court held  that  the definition  of word plant given under Section 43(3) should be  given a wide meaning as it is inclusive definition.   It held  that  assessee  who   constructed  a  building  having atmospheric  controls,  namely   moisture,  temperature  and provision   for  filtered  air,   which  were  required  for manufacturing  of  saccharine,  would not  come  within  the expression  plant.   It observed that the mere  fact  that manufacture of saccharine would be better carried on in this type  of  building would not convert the building from  the setting  to the means for carrying on the business.  Such a  building  which is free from atmospheric  vagaries  might have   certain   advantages  as   compared  with  a   normal construction, but it remained the space or shelter where the business  of  manufacturing  saccharine was  carried  on  as opposed to the means.

     In  Siemens  India Ltd.  v.  CIT, [(1996) 217 ITR  622 (Bombay)]  the Court observed that an item would not qualify to be plant even if it satisfied the functional test, if on  an application of premises test it is found to be used as  or part of the premises or place upon which the business was conducted.

     In  C.I.T.   v.  Lake Palace Hotels & Motels P.   Ltd. [(1997)  226  ITR 561] the Rajasthan High  Court  considered similar questions and after perusal of various judgments and dictionary  meanings  observed that the Legislature  has  by subsequent  amendments  made it clear that hotel and  cinema premises  will  fall within the definition of  building  and summarised   various   principles   emerging  from   various decisions  of different courts as under:- (i) The functional test is a decisive test.

     (ii)  An  item  which  falls within  the  category  of building  cannot  be considered to be plant.   Buildings with  particular specification for atmospheric control  like moisture temperature are not plant.

     (iii)  In order to find out as to whether a particular item  is  a plant or not, the meaning which is available  in the  popular  sense,  i.e., the people conversant  with  the subject-matter would attribute to it, has to be taken.

     (iv)  The  term plant would include any  article  or object,   fixed  or  movable,  live  or  dead,  used  by   a businessman  for  carrying  on his business and  it  is  not necessarily  confined  to  any apparatus which is  used  for mechanical   operations  or  process  or  is   employed   in mechanical  or  industrial business.  The article must  have some degree of durability.

     (v)  The building in which the business is carried  on

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cannot be considered to be a plant.

     (vi)  The  item should be used as a tool of the  trade with which the business is carried on.  For that purpose the operations it performs have to be examined.

     On  the basis of aforesaid principles, the Court  came to  the  conclusion  that:  - the building of  hotel  is  a building.    Simply  because  some   special   fittings   or controlling equipments are attached, it will not take it out of  the category of building.  Even if a particular building falls  within  the  category of plant then it could  not  be considered  to be a plant and will be considered as building because  the  golden  rule of interpretation is  that  if  a particular  item  is  more  near to one  category,  then  by stretching it should not be considered to fall in a category which is far off.

     The Court further observed:  - The building which is used  in the business of hotel remains a building inspite of the  fact  that  it  is decoratedIf  the  skeleton  of  the building  without  decoration is building then the items  by which  it  is  decorated would not change the  character  of building.   The  item may, however, be considered  as  plant subject  to  its  use.   The use of the  building  is  as  a setting.   Building  is  not used as a tool  of  the  trade. Different  rates  of  depreciation for  building  have  been provided  which also makes the legislative intent clear that the  different  types of buildings remain as building.   The amendment  of  Section  32(1)(v)   has  only  clarified  the legislative intent that the building of hotel is a building, though by amendment a higher rate of deprecation is provided for  it.   In  an  industry no production  can  be  normally carried  on without a building where the plant and machinery is  installed  but  for that reason the building  cannot  be considered  as  plant  when there is a  separate  entry  for buildings  for  purpose  of   depreciation.   Buildings  may accommodate  plant  and  machinery or  living  persons.   It remains  a building If the building of a five star hotel is a  plant there is no reason why the building of an  ordinary hotel  should be treated differently only on account of  the charges  for extra facilities.  The difference of charges is because  of extra service facilities, etc., provided and the role  of the building in the two types of hotels remains the same  and at the same time even better services are provided in a number of guest houses.

     The  building  which  is used  for  accommodating  the cinema-goers remains a building even if specially designed.

     If  the functional test is applied, it would be  found that  it  accommodates the machinery for exhibition  of  the film  like any other factory where production is carried  on and provides the accommodation to the public for viewing the picture  and  cannot  be taken out from  the  definition  of building.  The building is not used as a tool of the trade as  it is used for accommodating the customers as a setting. In respect of cinema the work is carried on by the projector which displays the film on screen.

     The  Court  lastly  held that looking  to  the  common parlance meaning and the specific use of the word building in  section  32  of the Act, the building of a  hotel  is  a

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building and not a plant.

     SUBMISSIONS:  -

     On  the basis of the aforesaid judgments, the  learned counsel  for  the  revenue  as well as  assessee  have  made elaborate  submissions.   Mr.   S.  Ganesh,  learned  senior counsel  for  the appellant-revenue submitted:  (i)  Section 32(1)  of  the  Income  Tax  Act   draws  a  clear  line  of distinction  between  a  building used for  the  purpose  of business  and plant/machinery used for the same purpose.   A building  though specially designed for use in a  particular business does not, therefore, cease to be a building.  Every building used for the purpose of a particular business would contain  special  features which make the building  suitable for  that  particular  business use.  Further,  without  the building,  the business cannot be carried on.  That does not lead  to  the  conclusion that the building  becomes  plant. Otherwise,  every  building  would become  plant  and  the dividing  line  between  plant and  building  would  get obliterated  which  is not permissible.  (ii) Section  43(3) defines  plant  in inclusive terms.  Each item  included  in Section   43(3)  is  movable.    Section  43(3)  does   not, therefore,  contemplate  immovable property like a  building being  considered  as  plant.   The  ejusdem  generis  and noscitor   a  socis  principles   are  relevant  in   this connection.   (iii) Section 32(i)(ii), Section 32-A and  the Appendix  to  the  Income  Tax  Rules  speak  of  plant  and machinery being installed and of building being erected. This again brings out the distinction clearly.  (iv) Section 32(i)(v)  unequivocally provides that a new building used as hotel is regarded as a building for purpose of depreciation. In  other words, a building which is specially designed  and constructed  for use as a hotel is nevertheless a  building, for the purpose of depreciation.  (v) Section 32(1)(iia) and Section  33(1)(b)(B)(ii) and the Appendix to the Income  Tax Rules  speak  of plant and machinery installed  in  premises used  as  a  hotel, thereby clearly, establishing  that  the hotel  premises  are not machinery or plant, but are only  a building.   The same principle would also apply to a theatre building.   Section  32(i)(iv)  makes  it  clear  that  even structures/buildings  which  are constructed  in  compliance with  the  requirements of the Factories Act and  Rules  are buildings for the purpose of depreciation.

     Mr.   B.B.  Ahuja and Mr.  Joseph Vellapally,  learned senior  counsel  for the assessee submitted:  (i)  From  the ratio of the various judgments of this Court and that of the House  of  Lords and Court of Appeal, it is clear  that  the words buildings, machinery, plant and furniture in S.  32(1) are  not  mutually exclusive.  It follows that a  particular item  could fall under both the heads, buildings as well  as plant  on functional test and the assessee would be entitled to  depreciation  under the head more beneficial to it.   In other words, buildings and structures can also be considered as  plant provided they fulfil the functional test, that is, they  are  part of whole apparatus with which the  trade  is carried  on  as opposed to the place or setting where it  is carried  on.   (ii) In the modern era, the theatre  building including auditorium, stage projection room etc.  are a tool of  the  trade, the theatre building is an integral part  of the  operation  of  theatre business and cannot be  said  to merely a setting in which the business is carried on.  It is their  contention that most of the High Courts in India have

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followed the functional test propounded while determining as to  whether  a structure is a building or plant.   The  High Courts  have taken the view that structures which forms part of  the apparatus with which the business is carried on  are not  mere  settings for the business and hence ought  to  be considered  as  plant  for the purposes  of  allowance  of depreciation  under  S.32(1).   According to them,  on  this functional  test,  a  modern theatre building  and  a  hotel building  will  qualify  as  a  plant.   (iii)  After  the judgments in Kanodia Cold Storage and S.K.Tulsi & Sons cases (supra)  following  the decision in Taj Mahal Hotels  case, the Legislature amended the definition of plant in Section 43(3)  of  the  Act by Finance Act of  1995.   The  amending section  clearly shows that the legislative intent was never to  exclude  cinema  and hotel buildings which  satisfy  the functional  test from the meaning of the word plant.  (iv) Use  of the word installed or erection has no bearing  on the  issue.   (v) The subject of determination   whether  a hotel building or a cinema theatre can be held to be a plant is  not  free from difficulty and it is difficult to draw  a clear  line  for plant or building in some  cases.   Despite this as legislature or Central Board of Direct Taxes adopted by  various has not issued any clarification on the subject, the  view High Courts requires to be accepted.They submitted that  cinema theatre or a hotel building is to be considered as  one  unit with all attendant apparatus for  running  the business and if they are construed as one unit it would be a plant.   Secondly, these buildings are to be considered  not on  their own but in relation to the business carried on  by the  assessee namely running of hotel or cinema.  In support of  this contention, the learned counsel heavily relied upon Inland  Revenue Commissioners v.  Barclay, Curle & Co.  Ltd. [(1969)  1  WLR 675also reported in (1970) 76 ITR  62]  and other decisions stated above.

     Hence,  the  controversial question for  consideration iswhether  building  used  for   running  hotel  or  cinema business  could be held a plant as provided under  Section 43(3) of the Act?

     We would first refer to the judgment in Barclay, Curle &  Co.  case (supra) upon which most of the judgments of the High  Courts  are based for arriving at the conclusion  that building  which  is used for running the hotel  business  or cinema  theatre  would  be a plant.  In the said  case,  the House  of Lords considered whether a dry dock constructed by a Company for use of shipbuilders, ship repairers and marine engineers incurring capital expenditure, which comprised the cost  of  excavating  a specially shaped new  basin,  having direct  access  to the Clyde and a floor below the level  of high  tide  to  enable ships to float in and  out  could  be considered  to  be a plant for the purpose of trade  of  the Company  within the meaning of Section 279 of the Income Tax Act,  1952.   Relevant  part of Section 279  as  applicable, which  was  considered,  reads  thus:  -  where  a  person carrying  on  a  trade  incurs capital  expenditure  on  the provision  of  machinery  or plant for the purposes  of  the trade,  there  shall  be  made  to  him,  for  the  year  of assessment  in the basis period for which the expenditure is incurred,  an allowance (in this Chapter referred to as  an initial   allowance)   equal  to   three  tenths   of   the expenditure.

     The matter was decided by the majority view and it was held  that the dry dock was a plant.  For this purpose, Lord

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Reid  considered the definition of the word plant given by Lindley   L.J.    in   Yarmouth  v.    France   [(1887)   19 Q.B.D.647,658].   This  definition  reads in  its  ordinary sense,  it  includes  whatever  apparatus   is  used  by   a businessman    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. Thereafter it was observed as under:  The dry dock was in our view not the  mere setting or premises in which ships were  repaired. It  was different from a factory which housed machinery, for in  the operation of the dock, the dock itself played a part in  the  control of water and enabled the valves, pumps  and electricity  generator,  which were an integral part of  its construction,  to perform their functions.  The dock was not a  mere shelter or home but itself played an essential  part in  the  operations which took place in getting a ship  into the  dock, holding it securely and then returning it to  the river."

     It  was further observed that plant was not  defined under  the  Income Tax Act and thereafter held  that  every part  of  this dry dock plays an essential part  in  getting large  vessels into a position where the 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 the plant with which, the operation is performed.

     Lord  Guest  agreed with the view taken by Lord  Reid. In  the  judgment  rendered by him it was observed  that  in order   to  decide  whether  a  particular  subject  is   an apparatus  it seems obvious that an inquiry is to be  made as to what operation it performs.

     Lord   Hodson  disagreed  with   the  above  view  and observed:   The  dock as a complete unit contained a  large amount  of  equipment without which the dry dock  could  not perform  its function.  This equipment admittedly  qualifies for  the  initial  allowance appropriate to  expenditure  on plant.   It  includes a dock gate and operating  gear,  cast iron  keel  blocks,  electrical   installation,  pipe   work installation,  pumping  installation  and  other  subsidiary equipment,  expenditure  on  which   clearly  qualifies  for initial  allowance  as  having been incurred in  paying  for machinery or plant.

     Further  with regard to building it was observed:   A building  or  structure  is normally to be regarded  in  the context  of  this  statute as something  more  durable  than machinery  or plant, hence the differentiation in favour  of the less durable.  The dock in question, it was found in the case  stated, might last for 80-100 years if reasonable  and timely repairs were carried out when requisite.

     The  learned Lord disagreed with the argument based on functional  test.   He  agreed with the reasoning  given  by Finlay  J.   in  Margrett  v.  Lowestoft  Water  &  Gas  Co. [(1887)  19  T.C.  481] wherein it was inter  alia  observed that:   Clearly,  if one takes the case of a  factory  with machinery  inside it, the machinery in all probability would be  plant,  but equally clearly the factory, the bricks  and mortar, would not be plant.

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     It  was  finally observed that to regard the  dock  as apparatus was wrong as it was something quite different from the generally accepted conception of plant.

     Lord  Upjohn also disagreed with the majority view  by observing  that  too much emphasis on a  functional  element ought  not  to have been given.  In a  modern  sophisticated factory purpose built for a particular manufacture without which  the  factory would be useless, makes the walls  of  a factory  part of the plant and that is not intended.  It was further  observed  that function is no more than an  element for deciding whether it is a plant or a building.

     We may mention at the stage that even in England House of  Lords has repeatedly commented that the word plant  is given  imprecise  application  because   of  the  artificial meaning  given  to it.  In Cole Brothers Ltd.  v.   Phillips (Inspector  of Taxes), [(1982 (1) WLR 1450], House of  Lords considered  the  question  whether expenditure incurred  in electric  lighting  installation and conduit and  cables  to socket  outlets, constituted expenditure on the provision of plant  so  as to qualify for capital allowance.   For  the expression Plant Lord Hailsham observed:  ..that the word plant  in  the relevant sense, although admittedly  not  a term  of  art,  and therefore part of  the  general  English tongue,  is not, in this sense, an ordinary word, but one of imprecise  application,  and, so far as I can see, has  been applied  to industrial and commercial equipment in a  highly analogical  and  metaphorical sense, borrowed, unless  I  am mistaken, from the world of botany.

     For  this  purpose,  the  Court quoted  the  words  of Buckley  L.J.   in Benson v.  Yard Arm Club Ltd.  [(1979)  1 WLR 347, 351]:  as a man who speaks English and understands English  accurately but not pedantically would interpret  it in  [the]  context,  applying it to the  particular  subject matter  in  question in the circumstances of the  particular case.

     The Court further observed:

     To  this  admirable precept Oliver L.J.   [1981]  STC 671, 682E in delivering the leading judgment in the Court of Appeal  in  the instant case, warily, and  perhaps  wearily, added the cautionary rider that the English speaker must, I think,  be  assumed to have studied the authorities.  These however,  as  he cautiously admitted in an  earlier  passage (p.676)  cannot be pretended to be at all easy to reconcile, and,  as he said in a still earlier passage, at p.675D:  it is  now beyond doubt that [the word plant] is used in  the relevant  section  in an artificial and  largely  judge-made sense.

     The  Court thereafter observed:   if plant is to be contrasted  with the place in which the business is  carried on,  the  line  must  be   drawn  somewhere.   There   must, therefore,  be a criterion (or criteria) by which the courts define the frontier between the two..

     But, on the special facts relating to these components carrying  electricity, they held that it was an  exceptional

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case  where  the  Commissioners were right  in  taking  each component  separately  as  each  was  serving  a  different purpose and held that each of them was not plant.

     In  Inland  Revenue  Commissioners   v.   Scottish   & Newcastle  Breweries  Ltd.  [(1982) 1 WLR 322] the  question was  whether  the  moneys   spent  on  electrical  rewiring, installation  of new electric light fittings and of  various categories  of  décor  and murals in the hotel was  on  the provision of plant.  Lord Wilberforce observed that:  The word  plant  has frequently been used in fiscal and  other legislation.   It is one of a fairly large category of words as  to  which no statutory definition is provided  (trade, office,  even income are others), so that it is left  to the  court to interpret them.  It naturally happens that  as case  follows case, and one extension leads to another,  the meaning  of the word gradually diverges from its natural  or dictionary  meaning.  This is certainly true of plant.  No ordinary man, literate or semi- literate, would think that a horse,  a  swimming  pool, moveable partitions,  or  even  a dry-dock was plantyet each of these has been held to be so: so  why  not  such equally improbable items  as  murals,  or tapestries, or chandeliers?

     The House of Lords observed that even the functional test  was inconclusive.  Therefore, the Court suggested that each  case  must  be resolved by considering  carefully  the nature  of  the particular trade being carried on,  and  the relation  of the expenditure to the promotion of the  trade. Applying  that  test  the  Court held:  I do  not  find  it impossible  to  attribute  to  Parliament  an  intention  to encourage  by  fiscal  inducement the improvement  of  hotel amenity.

     In  the said case, Lord Lowry also considered the case of  Benson  v.   Yard  Arm Club Ltd.  [(1979) 1  WLR  347  : (1979)  2 All ER 336], in which ship, or floating hulk, used as a restaurant was held not to be plant and observed:  the Crown  relied on the case because of the fact that the  ship was  used to create a shipboard feeling, in other words, a certain  kind  of  atmosphere, among the patrons.   But  the distinction  is  that the ship, although a chattel, was  the place  in  which the trade was carried on and was  therefore the  equivalent of the various premises in which the present taxpayer  company  carry  on  their trade  and  not  of  the apparatus  used  as  an adjunct of the trade carried  on  in those  premises. It was further observed that the dry dock in  Barclay  Curle & Co.  Ltd.  (supra) was a  structure  as well as plant.

     RELEVANT  PROVISIONS  UNDER  THE   ACT  FOR  GRANT  OF DEPRECIATION

     Before  dealing  with the rival contentions, we  would refer  to the relevant parts of Sections 32 and 43(3) of the Act:

     Section   32.    Depreciation(1)   In   respect   of depreciation  of  building,  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

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     (i)  in the case of ships other than ships  ordinarily plying  on inland waters, such percentage on the actual cost thereof  to  the  assessee as may, in any case or  class  of cases or in respect of any period or periods, be prescribed:

     Provided  that different percentages may be prescribed for  different  periods  having  regard   to  the  date   of acquisition of the ship.

     (ii)  in  the case of buildings, machinery,  plant  or furniture,  other  than  ships covered by clause  (I),  such percentage  on the written down value thereof as may in  any case or class of cases be prescribed:

     Provided  that where the actual cost of any  machinery or plant does not exceed seven hundred and fifty rupees, the actual  cost  thereof  shall be allowed as  a  deduction  in respect  of  the  previous year in which such  machinery  or plant  is first put to use by the assessee for the  purposes of his business or profession:

     Provided  further  that no deduction shall be  allowed under  this clause or clause (iii) in respect of any  motor- car  manufactured  outside  India, where such  motor-car  is acquired  by  the assessee after the 28th day  of  February, 1975, and is used otherwise than in a business of running it on hire for tourists;

     (iia) in the case of any new machinery or plant (other than  ships and aircraft) which has been installed after the 31st  day  of  March 1980 but before the 1st day  of  April, 1985,  a  further  sum  equal  to  one-half  of  the  amount admissible  under clause (ii) (exclusive of extra  allowance for  double  or multiple shift working of the  machinery  or plant  and  the extra allowance in respect of  machinery  or plant  installed in any premises used as a hotel) in respect of  the  previous year in which such machinery or  plant  is installed  or, if the machinery or plant is first put to use in the immediately succeeding previous year, then in respect of that previous year:

     Provided that no deduction shall be allowed under this clause in respect of

     (a)  any  machinery or plant installed in  any  office premises or any residential accommodation:

     (b)  any office appliances or road transport vehicles; and

     (c)  any  machinery or plant, the whole of the  actual cost  of which is allowed as a deduction (whether by way  of depreciation   or  otherwise)  in   computing   the   income chargeable  under the head profits and gains of business or profession of any one previous year.

     Explanation  :   For the purpose of this clause,-  (a) new  machinery or plant shall have the meaning assigned to it  in  clause (2) of the Explanation below clause  (vi)  of this sub-section:

     (b) residential accommodation includes accommodation in the nature of a guest house but does not include premises used as a hotel;

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     (iii) in the case of any building, machinery, plant or furniture  which is sold, discarded, demolished or destroyed in  the previous year (other than the previous year in which it  is  first  brought into use), the amount  by  which  the moneys payable in respect of such building, machinery, plant or  furniture,  together with the amount of scrap value,  if any, fall short of the written down value thereof:

     Provided....

     Explanation  (iv) in the case of any building  which has  been  newly erected after the 31st day of March,  1961, where  the  building  is  used solely  for  the  purpose  of residence of persons employed in the business and the income of  each such person chargeable under the head Salaries is ten  thousand rupees or less, or where the building is  used solely  or  mainly  for  the welfare of such  persons  as  a hospital,  creche,  school,  canteen,  library  recreational centre,  shelter,  rest-room or lunch-room, a sum  equal  to forty  percent  of  the actual cost of the building  to  the assessee  in respect of the previous year of erection of the building;   but  any  such sum shall not  be  deductible  in determining  the  written  down value for  the  purposes  of clause (ii) of sub-section (1);

     (v)  in the case of any new building, the erection  of which  is completed after the 31st day of March, 1967, where the  building is owned by an Indian company and used by such company  as  a  hotel and such hotel is for the  time  being approved  in  this behalf by the Central Government,  a  sum equal  to twenty-five percent of the actual cost of erection of  the building to the assessee, in respect of the previous year  in which the erection of the building is completed or, if such building is first brought into use as a hotel in the immediately  succeeding  previous year, then in  respect  of that  previous  year;   but  any   such  sum  shall  not  be deductible  in  determining the written down value  for  the purposes of clause (ii);

     (vi)  in  the  case  of new ship  or  a  new  aircraft acquired  after  the 31st day of May, 1974, by  an  assessee engaged in the business of operation of ships or aircraft or in  the  case of new machinery or plant (other  than  office appliances  or road transport vehicles) installed after that date  for  the  purposes  of   business  of  generation   or distribution of electricity or any other form of power or of construction,  manufacture or production of any one or  more of  the articles or things specified in items 1 to 24  (both inclusive)  in the list in the Ninth Schedule or in the case of  new machinery or plant (other than office appliances  or road  transport  vehicles)  installed after that date  in  a small-scale  industrial  undertaking  for  the  purposes  of business  of manufacture or production of any other articles or  things, a sum equal to twenty percent of the actual cost of  the ship, aircraft, machinery or plant to the  assessee, in  respect  of  the  previous year in  which  the  ship  or aircraft is acquired or the machinery or plant is installed, or if the ship, aircraft, machinery or plant is first put to use  in  the immediately succeeding previous year, then,  in respect  of that previous year;  but any such sum shall  not be  deductible in determining the written down value for the purposes of clause (ii):

     Provided

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     Provided  further  that no deduction shall be  allowed under this clause in respect of

     (a)  any  machinery or plant installed in  any  office premises  or  any  residential accommodation  including  any accommodation in the nature of a guest-house;

     (b)  (c)

     Explanation

     (1A) Where the business or profession is carried on in a building not owned by the assessee but in respect of which the  assessee holds a lease or other right of occupancy  and any  capital expenditure is incurred by the assessee for the purposes of the business or profession after the 31st day of March,  1970, on the construction of any structure or  doing of  any work in or in relation to, and by way of  renovation or  extension of, or improvement to, the building, then,  in respect  of  depreciation  of such structure  or  work,  the following  deductions  shall, subject to the  provisions  of section 34, be allowed

     (i)  such percentage on the written down value of  the structure  or  work as may in any case or class of cases  be prescribed;  (ii)

     Provided

     Explanation

     (2)..

     Section 43 In sections 28 to 41 and in this section, unless the context otherwise requires

     (1)  (2)

     (3)   Plant   includes   ships,   vehicles,   books, scientific  apparatus  and surgical equipment used  for  the purposes of the business or profession.

     Rule  5  of  the Income Tax Rules, 1962  provides  for calculation  of depreciation at the percentages specified in second  column  of the Table in Part I of Appendix I to  the Rules.  Appendix I to Rule 5 is as under:  -

     TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE

     Class  of  assets Depreciation allowance as %age  of-- Remarks  (i) actual cost in the case of ocean- going  ships; (ii) written-down value in the case of any other asset.  1 2 3 I.BUILDINGS

     [(1) General rate 5 Buildings include (2)Special rate in  respect  of factory building roads, bridges,  (excluding offices,   godowns,  officers  and   culverts,  wells   and employees  quarters, roads, bridges, culverts,  tube-wells] wells and tube-wells] 10

     (3)  Purely  temporary  errections such  as  wood-  en structures.  100

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     (4)  In  respect  of any structure of work  in  or  in relatiion  to a building referred to in sub-section (1A)  of section  32,--  (a) where such structure is  constructed  or such  The  percentage work is done by way of  renovation  or specified  against  sub- improvement to any  such  building. Items (1,2 or 3], as may be approximate to the

     class of building in or in

     relation to which the

     renovation or improvement is effected.

     (b)   where  the  structure  is  constructed  or   The percentage  specified  work  is  done by  way  of  extension against sub-items [1,2 or 3] to any such building.  As would be appropriate if the structure of work

     constituted a separate

     building.

     II.  FURNITURE AND FITTINGS

     (1) General rate 10

     (2)  Rate  for furniture and fittings used in  Hotels, restaurants   and   boarding   houses;  15   Cinema-houses; theatres and

     III.    MACHINERY  AND  PLANT   (not  being  a   ship) (i)General rate applicable to machinery and plant (not being a  ship) for which no special rate has been prescribed under Item (ii) herein below.

     (ii) Special rates:  15

     C(I)   Cinematograph  filmsMachinery   used  in   the production  and exhibition of cinematograph films (N.E.S.A.) (a)  Recording equipment, reproducing equipment,  developing machines, printing machines, synchronisers and studio lights except   bulbs.   20  (b)   Projecting  equipment  of   film exhibiting concerns.

     D.(1)   AeroplanesAircraft,     Aerial   photographic Apparatus (N.E.S.A.) 30

     E.(1) AeroplanesAero-engines[N.E.S.A.] 40

     F.(2) Cinematograph filmsBulbs of studio lights.  100

     IV.   SHIPS  (1)  Ocean going ships  10  (i)  Fishing vessels with wooden hull (ii) Dredgers, tugs, barges, survey launches  7 And other similar ships used mainly for Dredging purpose.  5 (iii) Other Ships To be calculated on the actual cost.

     (2) Vessels ordinarily operating on Inland waters (i) speed boats 20 (ii) Other vessels 10

     Aforesaid   clauses  of  the   Section  32  deal  with depreciation allowance in respect of assets of the specified

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description  used for the purpose of business or profession. From a careful scrutiny thereof what emerges is:  -

     (1)  The scheme of Section 32 is to provide  different rates  of  depreciation  for building, machinery,  plant  or furniture,  ships, buildings used for hotels, aeroplanes and other  items  mentioned therein.  Clause (ii) of Section  32 specifically   provides  for  grant   of  depreciation   for building,  machinery,  plant  or   furniture  at  prescribed percentage on the written down value thereof.  The Rates are prescribed under Income Tax Rules.

     (2)  Under  clause  (iia) of  Section  32(1)  specific provision  is made for new machinery or plant which has been installed  and  it provides for additional sum equal to  one half  of the amount admissible as depreciation under  clause (ii)  if  the  conditions mentioned therein  are  fulfilled. Further,  the proviso carves out an exception to the  effect that  no  deduction  shall  be allowed  in  respect  of  any machinery  or  plant  installed in office premises  or  any residential  accommodation.  That means the Legislature has divided  building  into  different categories,  namely,  (i) buildings  used for office premises or (ii) for  residential accommodation;   or (iii) premises used for other  purposes. Meaning  to  the phrase residential accommodation is  also given  under the Explanation which includes accommodation in the  nature  of a guest house and it  specifically  excludes premises  used  as a hotel.  So, the Legislature  has  not considered  hotel building by itself as a plant.  The phrase is  premises  used as a hotel where machinery or plant  is installed.

     (3)  Under sub-clause (v) of clause (1) of Section  32 specific  provision  is  made  for  a  new  building,  the erection  of  which is completed after 31.3.1967,  which  is used  as a hotel.  If the conditions mentioned therein are satisfied  then for a building which is used for a hotel,  a sum  equivalent  to  25 per cent of the actual cost  of  the erection  of  the  building  is  granted  as   depreciation. Further, the Legislature has considered building as separate from  the hotel business and building is not considered as a plant  for  running the hotel.  Therefore, building and  the use of such building as a hotel are considered distinct.

     (4)  All  throughout  Section 32 for  building  it  is specifically  mentioned that whenever it is erected, while for  machinery and plant, the words used are whenever it is installed  and there is no question of installing building. Section  32(1)(iia)  uses the phrase machinery or  plant installed  in  any  premises  used as a  hotel  and  Section 33(1)(b)(B)(ii)  provides in case of machinery or plant is  installed  for the purposes of business or  construction etc.   which  indicates that plant is to be installed  and there is no question of erection.

     (5)  Under  the Rules as quoted above, separate  rates are  prescribed  under the Heading (I) Buildings,  and  (II) Furniture  and fittings, (III) Machinery and Plant and  (IV) Ships.   These  headings  have   been  further   sub-divided providing  different rates.  Like, Building is divided  into (i)  building  generally,  (ii) special rate in  respect  of factory  building  and  (iii) temporary  erections  such  as wooden  structures.  In the remarks column (3) it is  stated that  buildings include roads, bridges, culverts, wells  and tube-wells.  Furniture and Fittings is also divided into (i)

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general  rate and (ii) rate for furniture and fittings  used in  hotels,  restaurants and boarding houses,  cinema  house theatres  etc.  Similarly, Machinery and Plant are under one heading  and  are  divided into two parts(i)  general  rate applicable  to  machinery and plant and (ii) special  rates, which  includes machinery and plant for cinematograph films, recording  equipments,  reproducing  equipments,  developing machines, printing machines, synchronisers and studio lights and  projecting  equipments  of  film  exhibiting  concerns. Further,  special  rates are provided for machinery used  in production  and exhibition of cinematograph films being  (a) recording  equipment,  reproducing   equipment,   developing machines, printing machines, editing machines, synchronisers and  studio lights except bulbs and (b) projecting equipment of  film exhibiting concerns.  Further different rates  have been  provided  for machinery for cinematograph  films  that includes  studio  lights  except  bulbs  under  the  heading C(1)(b)  and  for bulbs of studio lights under  the  heading F(2).

     From the aforesaid discussion, it is apparent that for a building used as a hotel there is a specific provision for granting depreciation allowance at specified rates depending upon  fulfillment  of  the   conditions  mentioned  therein. Hence,  there  is  no question of  referring  to  dictionary meaning  of  the word plant which may or may  not  include building,  for arriving at a conclusion that building  which is specifically designed and constructed as a hotel building would be a plant.

     Further,  in  context  of   legislative  scheme  under Section  32  stated  above, which provides  depreciation  at different rates for building, machinery and plant, furniture and fixtures, ships, building used for hospital, aeroplanes, cinematograph  films,  machinery used in the production  and exhibition  of  cinematograph  films,  recording  equipment, reproducing   equipment,  developing    machines,   printing machines,  synchronisers  and  studio lights  except  bulbs, projecting  equipment  of  film  exhibiting  concerns,  even though the word plant may include building or structure in certain  set of circumstances as per the dictionary meaning, but  to  say that building used for running the business  of hotel or a cinema would be plant under the Act appears, on the  face  of  it,  to be inconsistent  with  the  aforesaid provisions.   Such  meaning  would be  clearly  against  the legislative intent.

     While  interpreting  the   words  consumption,  raw material and utilised in clause (c) of the Import Control Policy  formulated by the Government of India this Court  in the  case  of Dy.  Chief Controller of Imports and  Exports, New  Delhi  v.  K.T.  Kosalram and others, [1970(3) SCC  82] observed  thus:   -  In our  opinion  dictionary  meanings, however  helpful  in understanding the general sense of  the words  cannot control where the scheme of the statute or the instrument  considered as a whole clearly conveys a somewhat different  shade of meaning.  It is not always a safe way to construe a statute or a contract by dividing it by a process of  etymological dissection and after separating words  from their  context to give each word some particular  definition given   by  lexicographers  and   then  to  reconstruct  the instrument  upon  the  basis  of  these  definitions.   What particular  meaning should be attached to words and  phrases in  a  given instrument is usually to be gathered  from  the context,  the  nature of the subject matter, the purpose  or

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the intention of the author and the effect of giving to them one  or  the other permissible meaning on the object  to  be achieved.   Words are after all used merely as a vehicle  to convey  the idea of the speaker or the writer and the  words have  naturally, therefore, to be so construed as to fit  in with the idea which emerges on a consideration of the entire context.

     (Emphasis added)

     Applying  the said test, we have to gather the meaning of  words  building  and plant in context of  Scheme  of Section  32  and it is not necessary that we should adopt  a judge  sense  meaning, which is artificial and imprecise  in application,  given  to  the  word  plant  in  context  of different  statutory  provisions.  The Scheme of Section  32 unequivocally  leads  to the conclusion that building  and plant  are treated separately for the purpose of grant  of depreciation.   Higher  rate of depreciation is  granted  to machinery  and plant as against the building which has more durability.

     In  C.I.T.   v.  Mir Mohammad Ali [(1964) 53 ITR  165] this  Court  considered the meaning of the word  machinery and  observed  that the word machinery is an ordinary  and not  a  technical word and unless there is something in  the context  in  the  Act, the ordinary meaning  would  prevail. Thereafter,  the  Court  observed:  According to  the  above definition, a diesel engine is clearly machinery.  Indeed, rule   8  of  the   Income-tax  Rules  treats   aero-engines separately  from aircraft.  It is true that this rule cannot be used to interpret the clauses in the Act but it does show that  components of an aircraft, which are machinery, can be treated separately.

     held:   -  For the words plant and  installed  the Court  Further,  when  the assessee  purchased  the  diesel engines,  they were not plant or part of a plant:  because they  had  not  been installed in any vehicle.   They  were, according  to  the  definition given by the  Privy  Council, machinery.   They  were  not  yet  part  of  a  plant,  and, according  to the Act, 20% of the cost thereof was allowable of the assessee.  All the conditions required by the Act are satisfied.   If we look at the point of time of purchase and installation,   what  was  purchased   and   installed   was machinery.

     Thereafter,  the  Court considered the meaning of  the expression  install and held that when an engine is  fixed in  a vehicle it is installed within the meaning of  Section 10(2)(vi)  and  10(2)(via) of the Act, 1922.  Similarly,  in the  present  case the word plant is given  meaning  under Section  43(3) to include ships, vehicles, books, scientific apparatus  and  surgical equipment used for the purposes  of the  business or profession, but this would not mean that it includes building which is treated separately from machinery and  plant.   Wider  meaning  to word plant  is  given  by including  specified  items  mentioned above,  that  is,  it includes ships, vehicles, books etc.

     In  Taj  Mahal Hotel (supra) this  Court  specifically observed  that it is well settled that where the  definition

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of  the word has not been given it must be construed in  its popular  sense if it is a word of every day use.  The  Court also observed that even books have been included in the word plant,  therefore, wider meaning should be given so as  to include  those  things  which   the  interpretation   clause declares  that  they  shall include.  Further, it is  to  be stated  that  Section  43 itself provides that  unless  the context  otherwise requires the word plant is to be given wider  meaning  as stated therein.  This wider meaning  does not  include  building.  But in any case even for  the  time being  presuming  that  the judge-made meaning of  the  word plant  includes building in certain set of  circumstances, in  context of Section 32 such wider meaning cannot be given and plant would not include building in which hotel business is  run  or a theatre building in which cinema  business  is carried  on.  Further, the Court specifically observed 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.

     These observations clearly indicate that business of a hotelier  is  carried  on in a building or  a  premises  and building  is not an apparatus for running such business.  It is  a  shelter  or  a home for  conduct  of  such  business. Learned  counsel also pointed out the decision of the Madras High  Court  in.  CIT v.  (1) N.  Sathyanathan And  Sons  P. Ltd.   [(2000) 242 ITR 514] wherein the Court observed  that in  case  of Taj Mahal Hotel [(1971) 82 ITR 44]  even  after noticing  the fact that the dictionary definition of plant includes  buildings, the court did not proceed to hold  that the  building  in which the hotel was run, and  wherein  the sanitary  fittings were used was itself plant, and on that ground  sanitary fittings used in the hotel were part of the plant  and  emphasised  that Section  specifically  provides buildings used as hotel would indicate hotel building cannot be  construed as a plant.  We agree with this view of  the Madras High Court.

     Next, it is to be stated that the judgment in the case of  Barclay,  Curley  & Co.  would be of no  assistance  for holding  that a building used for the purpose of a hotel  or the theatre used for carrying the business of cinema will be a  plant  because in the said case majority view was  that the  dry dock was not the mere setting or the premises  in which  ships were repaired.  It was not mere shelter or home but  itself  played  an essential part in  the  operations which took place in getting a ship into the dock, holding it securely  and  then  returning it to the river.   It  was  a complete  unit  by  itself,  therefore, it  was  a  plant. Against  that, for a hotel premises, under the Act, building is  not considered to be an apparatus for running the  hotel business but is merely a shelter or home or setting in which business  is  carried out.  In our view, same would  be  the position  with regard to a theatre in which cinema  business is   carried   on.      Webster   Comprehensive   Dictionary (International  Edition) gives meaning to the word theater that:   (1)  A  building especially  adapted  to  dramatic, operatic,  or spectacular representations;  playhouse;   (2) The  theatrical world and everything relating to it;  (3)  A room  or  hall arranged with seats that rise as they  recede from  a  platform, especially adapted to lectures,  surgical demonstrations,  etc.;   (4) Any place of semicircular  form with  seats  rising  by easy gradations;  (5) Any  place  or region that is the scene of events:  a theater of operations

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in  war. This would mean that cinema business can be run in a  premises adapted for that purpose which may or may not be specially designed.  Further, on the basis of test laid down in  the case of Barclay, Curle & Co.  Ltd., such building or premises  would be the place in which operation of  carrying on  of  business takes place and not that they are means  by which  the operation is performed.  Even the House of  Lords in  case of Benson (supra) arrived at the conclusion that  a ship  or  a  floating hulks used as a restaurant was  not  a plant,  even though the ship was used to create a  shipboard feeling  and certain kind of atmosphere, among the  patrons. In  our  view such buildings cannot be termed as  tools  for running  business but are mere shelter for carrying on  such business activities.  Therefore, even functional test, which is  followed  and  which  according  to  us  would  not   be conclusive in all cases, is also not satisfied.

     In  England  also,  there  are  conflicting  decisions involving the question whether structure would be a plant or not  and  it  is  stated that each case is  required  to  be decided  on facts of that case.  In Commissioners of  Inland Revenue  v.   Scottish & Newcastle breweries Ltd.   (55  Tax Cases  252)  (decided  by the House of Lords) the  Court  of Appeal observed that though there is no statutory definition of plant for the purpose of Section 41 of the Finance Act, 1971,  from a series of cases decided, following  principles emerge to be settled law:  (i)Something which is properly to be  regarded  as part of the setting in which a business  is carried  on  and  not  as part of  the  apparatus  used  for carrying  on  the business is not plant:  see J.  Lyons  and Co.  Ltd.  v.  Attorney-General {(1944) Ch 287}.

     (ii)  Something  which forms part of the setting of  a trade  may nevertheless be plant if it is more a part of the apparatus  than part of the setting {Jarrold v.  John Good & Sons Ltd.  [(1963) 1 WLR 214 :  40 TC 681]}.

     (iii)  The  term  plant  is not  apt  to  cover  the permanent  structure  of a building in which a  business  is carried on [John Good & Sons Ltds case].

     (iv)  Something  which  is a structure or  part  of  a structure  may  nevertheless  be plant, if it  fulfills  the function    of   plant   in    the   traders    operations. {Commissioners  of  Inland Revenue v.  Barclay, Curle &  Co. Ltd.  [1969 SC (HL) 30 :  45 TC 221]}.

     (v)  Apparatus which has no functional purpose in  the commercial  process, even if it serves to attract custom, is not  plant {Dixon v.  Fitchs Garage Ltd.  [(1976) 1 WLR 215 :   50 TC 509], in this case the apparatus in question was a canopy  constructed  over  the  pumps of  a  petrol  filling station  to provide shelter while the commercial process  of delivering fuel was carried on}.

     In  the said case, Lord Stott adopted the  distinction made by Shaw L.J.  in Benson v.  Yard Arm Club Ltd., [(1979) 1  WLR 347, at p.  358 :  53 TC 67 at p.88.] and relied upon following  observation:- A characteristic of plant  appears to  me  to be that it is an adjunct to the carrying on of  a business  and not the essential site or core of the business itself.

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     Applying  the aforesaid characteristic of plant,  in our  view, building for hotel or cinema cannot be stated  to be  adjunct, that is to say, (as per the dictionary  meaning of  the word adjunct) something added to another, or it is in a subordinate, auxiliary or dependent position.

     Further,  in Wimpy International Ltd.  v.  Warland and Associated  Restaurants Ltd.  v.  Warland [61 Tax Cases 51], the  Court of Appeal dealt with a case where the  appellants owned  and operated fast food restaurants and expended money on  improving  and  modernising their restaurants  i.e.   by spending on shop fronts, floor and wall tiles, wall finishes and  other  non-  decorative  items which was  held  by  the Special  Commissioners  as part of setting or premises  in which trades were carried on.  The appellants contended that all  the items were installed to improve the ambience of the restaurant  and  to attract customers and were  thus  plant. The Court held that they were not plants.  The Court took up each  and every item of decoration separately for  analysing whether it constituted a plant or not.  Like for shop fronts or  doors,  the  Court agreed with the observations  of  the Chancery  Division  that  none of the shop fronts  or  doors qualifies  as plant by holding that their principal function is  to  form a necessary part of the premises and doors  are needed  for  ingress and egress.  None of the floor or  wall titles  can be classed as plants.  They are chosen so as  to create  an  attractive  setting in which customers  will  be      pleased to sit for the short time required to consume a fast  food meal, but their function in the trade does not go beyond  that.  Fox L.J.  observed:  Considering the facts of this  case  and  various  decisions In  the  light  of  the authorities the position appears to me to be this.  There is a  well-established  distinction, in general terms,  between the  premises  in which the business is carried on  and  the plant  with which the business is carried on.  The  premises are  not plant.  In its simplest form that is illustrated by Lord  Lowrys  example  of the creation of atmosphere  in  a hotel by beautiful buildings and gardens on the one hand and fine  china,  glass and other tableware on the  other.   The latter  are  plant;   the former are not.   The  former  are simply the premises in which the business is conducted.

     The  distinction, however, needs to be elaborated, for present  purposes,  by  reference to  Lord  Lowrys  further formulation,  namely that the fact that different things may perform  the  same  function of creating atmosphere  is  not relevant:   one  thing may function as part of the  premises and  the other as part of the plant.  Thus, something which becomes  part of the premises instead of merely embellishing them is not plant except in the rare case where the premises are themselves plant.

     I  do  not think that what Oliver L.J.  was saying  in Cole Brothers is at variance with Lord Lowrys approach.  It is  proper to consider the function of the item in  dispute. But  the  question  is  what does it  function  as?   If  it functions as part of the premises it is not plant.  The fact that  the building in which a business is carried on is,  by its  construction particularly well- suited to the business, or  indeed  was specially built for that business, does  not make it plant.  Its suitability is simply the reason why the business  is carried on there.  But it remains the place  in which  the business is carried on and is not something  with which the business is carried on.

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     Similarly,  Lord  Hoffmann  J.   (Chancery   Division) observed:   the  question  is  whether  it  would  be  more appropriate  to  describe the item as part of  the  premises rather  than  as  having retained a separate  identity.   It seems  to  me that items such as fixed floor tiles and  shop fronts  are  more  naturally to be regarded as part  of  the housing of the business than as mere embellishments having a separate identity.

     In  Carr (H.M.  Inspector of Taxes) v.  Sayer [65  Tax Cases 15], the Chancery Division considered a case where the taxpayers  carried  on  business   of  providing  quarantine kennels  and  transport services for dogs and  cats  brought into  the  United Kingdom from abroad.   Quarantine  kennels were  constructed  at their premises.  Some of  the  kennels were movable.  The permanent kennels comprised a flat-roofed structure  which  consisted principally of a series of  pens divided  from  each other by walls and with bars  and  metal mesh  across  the front.  The Court held that those  kennels were not plant;  they were purpose-built permanent buildings or  structures, used as such, and were the premises in which business  was  conducted;   while   they  were  specifically designed  for  quarantine purposes, the particular roof  and walls  were building design features and no more, which  did not  result  in structures being characterised  as  anything other  than  buildings or lead to the end result having  the character  of equipment or apparatus.  For this purpose, the Court  referred to various principles in context of  Section 41(1)  of  the  Finance  Act 1971  which  is  applicable  to machinery  or plant.  In the context of that section,  the Court  observed that plant carries with it a connotation  of equipment  or  apparatus, either fixed or unfixed.  It  does not  convey  a meaning wide enough to include  buildings  in general.  The Court pertinently observed that building would not  normally  be  regarded as a plant, do not cease  to  be buildings   and  become  plant   simply  because  they   are purpose-built  for  a particular trading activity.   Such  a distinction  would  make  no sense.  Thus the stables  of  a racehorse  trainer are properly to be regarded as  buildings and  not  plant.  A hotel building remains a  building  even when  constructed to a luxury specification.  Similarly with a  hospital  for  infectious diseases.  This  might  require special layout and other features, but this does not convert the buildings into plant.  A purpose-built building, as much as  one  which is not purpose-built, prima facie is no  more than the premises on which the business is conducted.

     In Gray v.  Seymours Garden Centre [67 Tax Cases 401], the  Court  of  Appeal  dealt with  a  case  where  assessee expended  on the construction of planteria which was a fixed structure  designed  to  maintain plants of  many  different kinds  moved from nurseries, in an environment in which they would  remain in good condition until sale.  It was designed so  that  an appropriate mini-climate could be  provided  in different  parts  of  the planteria suitable  for  different varieties  of plant, and so as to be open to the public  who could  walk  around it and choose from the plants on  offer. The  Court of appeal held that the true and only  reasonable conclusion  from the facts found was that planteria was part of  the  premises in which the business was carried on.   It was  a structure to which plants were brought which required special  treatment.   However,  the   fact  that   planteria provided the function of nurturing and preserving the plants while  they were there could not transform it into something

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other  than  part  of  the premises in  which  business  was carried  on;   the  highest  it could be  put  was  that  it functioned  as  a purpose-built structure, but that was  not enough to make the structure plant.

     Hence,  to  rely  upon Barclay Curle  and  Co.s  case (dealing with dry dock yard) and to hold that hotel building or  theatre  would  be a plant on functional test  would  be unjustified and unreasonable in the context of Section 32 of the  Act which deals with grant of depreciation allowance on building,  machinery, plant or furniture and also for  extra allowance  in  case of new machinery or plant  installed  in premises  other  than  the premises used as  office  or  any residential  accommodation and also for new building erected and  used  as  a  hotel.  As  against  that,  the  aforesaid decisions  by Courts in England are based upon Section 41 of the  Finance  Act,  1971  which provide  for  allowance  for capital  expenditure incurred on the provisions of machinery or  plant for the purposes of the trade and the Courts  were only dealing with general meaning of the word plant.  Even there,  as quoted above, Courts have specifically held  that creation of atmosphere in a hotel by beautiful buildings and gardens   would   not  make   such  buildings   as   plants. Suitability  of  such building is simply the reason why  the business  is  carried on there which may flourish,  but  the premises  remains  as premises where business is carried  on and is not some thing with which business is carried on.  In Carr  v.   Sayer  (supra), the Court observed that  a  hotel building  remains  a  building even when  constructed  to  a luxury  specification  and  also  a  hospital  building  for infectious  diseases which might require special lay-out and other  features was not held to be a plant by observing that a  purpose-built  building is no more than the  premises  on which the business is conducted.

     Further,  there  are  hotels of all  kinds  and  hotel business can be carried on in all kinds of buildings, may be pucca  or  kacha constructions.  A building intended  to  be used  or  in  fact  used earlier  either  as  a  residential accommodation  or  business  purpose can  be  converted  for running  hotel business.  Section 32 itself contemplates,  a hotel   business   being  carried  on   in   a   residential accommodation  including  an accommodation which is  in  the nature  of guest house.  On occasions hotel buildings may be constructed  with  a  special design and features so  as  to attract and accommodate certain class of tourist.  Similarly with  regard  to cinema business, it can be carried on in  a specially  designed  and  constructed building and  also  in other  buildings.  Still, however, it would be difficult  to draw  a  distinction  and differentiate by  holding  that  a building  which  is specially designed and  constructed  for running  a hotel or cinema would be covered by a plant and other  buildings  used  for the same purpose would  not  get depreciation  as  plant,  even  though  such  business  is carried  on  in such premises.  In our view, the Delhi  High Court has in case of R.C.  Chemical Industry (supra) rightly observed that mere fact that manufacture of saccharine would be  better  carried  on  in a  building  having  atmospheric controls  would not convert the building from the  setting to  the  means  for  carrying  the  business.   Similarly, Rajasthan  High Court also in Lake Palace Hotels and  Motels (supra)  rightly  observed that simply because some  special fittings  or  controlling  equipments are attached  for  the purpose  of carrying on hotel business, it will not take  it out of the category of building and make it a plant.  In our

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view  special fittings or equipments to control  atmospheric effects  would  be plant, but not the building  which  house such equipments.

     Further  for  running  almost all  industries  or  for carrying  on any trade or business building is required.  On occasions  building may be designed and constructed to suite the requirement of a particular industry, trade or business. But  that  would  not make such building a plant.   It  only shelters  running  of  such business.  For  each  and  every business,  trade or industry, building is required to  carry on  such activity.  That means building plays some role  and in other words, its function is to shelter the business, but it  has no other function except in some rare cases such  as dry  dock where it plays an essential part in the operations which take place in getting a ship into the dock, holding it squarely  and  then returning it to the river.  Building  is more  durable.   If contention of the assessee is  accepted, virtually  all  such buildings would be considered to  be  a plant and distinction which the legislature has made between the   building  and  machinery  or  plant   would   be obliterated.

     Learned  counsel  for the assessee submitted that  the words  plant  and building are not  mutually  exclusive. Plant may include building in certain set of circumstances and, therefore, applying the functional tests assessee would be  entitled  to  depreciation under the head  it  is  more beneficial  to  it.  He submitted that in the  modern  era, theatre  building  and hotel building are integral  part  of operation  for  carrying out such business  and,  therefore, such building should be considered as a plant.

     As discussed above, the aforesaid contention cannot be accepted.   Firstly,  it would be difficult to draw  a  line between a building which is specifically constructed for the aforesaid  purposes  and  buildings which are used  for  the aforesaid purposes by converting a residential accommodation or  industrial  premises for such purposes.   Secondly,  the depreciation   as  a  general   principle   represents   the diminution  in  value of capital asset when applied  to  the purpose of making profit or gain.  The object is to get true picture  of  real income of the business.  Hence, it can  be inferred  that  the Legislature never intended to give  such benefit  of  depreciation to a building which  is  usually more  durable than machinery or plant.  In CIT,  Punjab, J&K, and Himachal Pradesh Patiala v.  M/s Alps Theatre, [AIR 1967  SC  1437], Court considered the  questionwhether  the cost  of land is entitled to depreciation under the schedule to  the  Income-tax Act along with the cost of the  building standing thereon?  The Court observed (in para 6) thus:- It would  be  noticed that the word used is depreciation  and depreciation means:

     a  decrease  in  value  of  property  through   wear, deterioration, or obsolescence;  the allowance made for this in  book-keeping,  accounting,  etc.  (Websters  New  Word Dictionary).

     In that sense land cannot depreciate.  The other words to  notice  are such buildings.  We have noticed  that  in sub-clause (iv) and (v), building clearly means structures and does not include site.

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     The Court also held (in para 7 and 8) that:  -

     One  other  consideration  is important.   The  whole object  of  S.10 is to arrive at the asessable income  of  a business   after   allowing    necessary   expenditure   and deductions.

     Depreciation   is  allowable  as   a  deduction   both according  to  accountancy principles and according  to  the Indian  Income  Tax Act.  Why?  Because otherwise one  would not  have a true picture of the real income of the business. But  land  does  not  depreciate, and  if  depreciation  was allowed it would give a wrong picture of the true income.

     Under  the new Act also for the building and machinery or  plant depreciation is allowed probably after taking into consideration  its  life  and decrease in the value  of  the property through wear and tear.

     Learned  counsel for the assessee vehemently submitted that even though the line between the building and the plant in  some cases is absolutely thin yet the legislature or the Central  Board  of  Direct  Taxes (Revenue  Board)  has  not clarified  the  same  at  any   point  of  time  inspite  of conflicting  judgments  of the High Courts on  the  subject. Learned counsel for the assessee further submitted that even though  the  legislature was alive to the issue and  amended Section  43(3)  of  the Act by the Finance Act  of  1995  by excluding tea bushes and livestock with retrospective effect from  1962, it has not excluded the buildings which are used for  running hotel or cinema business.  It has not clarified or  carried  out  any  amendment   in  the  provision   and, therefore,  it  should be held that interpretation given  by the  High  Courts  was  accepted  by  the  revenue  and  the legislature.  We do not know that Revenue Board was alive to the  said  controversy.   If  that was  so,  it  would  have clarified  either  way  and   litigations  could  have  been avoided.  But that is no ground for accepting interpretation suggested  by  the learned counsel for the  assessees  which would be inconsistent with scheme of Section 32.

     In  the result, it is held that the building used  for running  of a hotel or carrying on cinema business cannot be held to be a plant because:

     (1)  The  scheme  of Section 32, as  discussed  above, clearly  envisages  separate  depreciation for  a  building, machinery  and plant, furniture and fittings etc..  The word plant is given inclusive meaning under Section 43(3) which nowhere includes buildings.  The Rules prescribing the rates of  depreciation specifically provide grant of  depreciation on  buildings,  furniture and fittings, machinery and  plant and ships.  Machinery and plant includes cinematograph films and other items and the building is further given meaning to include roads, bridges, culverts, wells and tube- wells.

     (2) In the case of Taj Mahal Hotel (supra), this Court has  observed  that business of a hotelier is carried on  by adopting  building  or  premises in suitable  way.   Meaning thereby building for a hotel is not apparatus or adjunct for running  of a hotel.  The Court did not proceed to hold that a  building  in which the hotel was run was itself a  plant, otherwise  the  Court would not have gone into the  question

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whether the sanitary fittings used in bath room was plant.

     (3)  For  a  building  used   for  a  hotel,  specific provision  is  made granting additional  depreciation  under Section 32 (1)(v) of the Act.

     (4)  Barclay, Curle & Co.s case decided by the  House of  Lords  pertains  to  a dry dock yard  which  itself  was functioning  as  a plant, that is to say, structure for  the plant  was  constructed  so that dry dock can  operate.   It operated  as an essential part in the operations which  took place  in getting a ship into the dock, holding it  securely and  then returning it to the river.  The dock as a complete unit contained a large amount of equipment without which the dry dock could not perform its function.

     (5)  Even in England, Courts have repeatedly held that the  meaning to the word plant given in various  decisions is  artificial and imprecise in application, that is to  use the  words of Lord Buckley, it is now beyond doubt that the word  plant  is  used  in   the  relevant  section  in  an artificial  and largely judge-made sense. Lord  Wilberforce commented  by  stating  that no ordinary man,  literate  or semi-literate,  would  think that a horse, a swimming  pool, moveable partitions, or even a dry-dock was plant.

     (6) For the hotel building and hospital in the case of Carr  v.   Sayer (supra), it has been observed that a  hotel building  remains  a  building even when  constructed  to  a luxury  specification and similarly, a hospital building for infectious diseases which might require a special layout and other features also remains a premises and is not plant.  It is  to be added that all these decisions are based upon  the interpretation  of  the  phrase machinery or  plant  under Section 41 of the Finance Act, 1971 which was applicable and there  appears no such distinction for grant of allowance on different  heads as provided under Section 32 of the  Income Tax Act.

     (7)   To  differentiate  a   building  for  grant   of additional depreciation by holding it to be a plant in one case   where   the  building  is  specially   designed   and constructed  with  some  special  features  to  attract  the customers and a building not so constructed but used for the same  purpose,  namely,  as  a hotel  or  theatre  would  be unreasonable.

     Hence,  the  question  is answered in  favour  of  the revenue  and  against the assessee by holding that  building which is used as a hotel or a cinema theatre cannot be given depreciation as plant.

     Accordingly,  the  Civil  Appeal Nos.  55-57  of  2000 filed by the assessee and Civil Appeals Nos.  4758, 5198-99, 5391  of  1998,  15, 2784-86, 2787, 3690 of 1999  and  Civil Appeal Nos._________ of 2000 @ S.L.P.(C) Nos.4373-74 of 1999 filed   by  the  Revenue  are   disposed  of,  but  in   the circumstances of the case, without costs.

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     .....J.  (A.  P.  MISRA)

     New Delhi;  .J.  May 12, 2000.  (M.B.  SHAH)

     In  Civil Appeal Nos.  241, 242-243, 244, 245,  246-48 of  1999,  the learned counsel for the  respondents-assessee has filed additional written submissions on 4.5.2000 stating that additional question is involved in these matters and it is  required to be heard.  Accordingly, in these appeals, we fix  the hearing of the said question in the Month of August 2000.  If a counsel finds that any other additional question which was raised and decided by filing proper the High Court is left out, he may draw the attention by application within four weeks from today.

     Ordered accordingly.