2001 PLP 1288 (PTD)

(See rule 5) Table of Rates at which depreciation is admissible Depreciation allowance as percentage of‑ Class of assets (i) actual cost in the case of Remarks ocean going ships; (ii) written down value in the case of any other asset. (1) (2) (3) I. Buildings: 5 'Buildings' include roads, bridges, cul verts, wells and tube wells (1) General rate (2) Special rate in 10 respect of factory buildings (excluding offices, godowns, officers and employees' quarters roads, bridges culverts, wells and tube wells) (3) Purely temporary 100 erections such as wooden structures. (4) In respect of any The percentage specified against structure or work in or in sub‑items 1, 2 or 3, as may be relation to a building appropriate to the class of referred to in subsec‑ building in or in relation to tion (IA) of section 32,‑‑ which the renovation or (a) where such structure is improvement is effected. constructed or such work is done by way of renovation or improvement to any such building (b) where the structure is The percentage specified against constructed or the works is sub‑items 1,2 or 3, as would be done by way of extension to appropriate if the structure of any such building work constituted a separate building. II. Furniture and fittings: (1) General rate 10 (2) Rate for furniture 15 and fittings used in hotels, restaurants and boarding houses; cinema houses, theatres and .... III. Machinery and plant (not being a ship): (i) General rate applicable 15 to machinery and plant (not being a ship) for which no special rate has been prescribed under item (ii) hereinbelow. (ii) Special rates: C.(I)Cinematograph films‑‑Machinery used in the production and exhibition of cinematograph films (N.E.S.A)‑‑ (a) Recording equipment, 20 reproducing equipment, developing machines, printing machines, editing machines, synchronisers and studio lights except bulbs (b) Projecting equipment of , film exhibiting' concerns... D. (1) Aeroplanes‑‑‑Air‑ 30 craft, aerial photographic. apparatus (N.E.S.A.) E. (1) Aeroplanes‑‑‑ 40 .ernengines (N.E.S.A.) F. (2) Cinematograph 100 Ims‑‑Bulbs of studio lights J . Ships: (i) Ocean going ships‑‑ 10 Fishing vessels with wooden hull: (ii) Dredgers, tugs, 7 barges, survey launches and ther similar ships used mainly for dredging purpose; (iii) Other ships 5 To be calculated on the actual cost (2) Vessels ordinarily 20 operating on inland waters‑‑ (i) speed boats

10" (ii) other vessels The aforesaid clauses of the section 32 deal with depreciation allowance in respect of assets of the specified description used for the purpose of business or profession. From a careful scrutiny thereof what 'merges 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 buildings, machinery, plant or furniture at prescribed percentage on the written down value thereof. The rates are prescribed under the 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. The meaning of 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 clause (v) of subsection (1) of section 32 specific provisions is made for a "new building", the erection of which is completed after March 31, 1967, which is "used as 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 headings (I) Buildings, (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) general rate, and (ii) rate for furniture and fittings used in hotels, restaurants and boarding houses, cinema houses, 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 equipment, 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 include 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 of granting depreciation allowance at specified rates depending upon fulfilment 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 the context of the 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 pet 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 (a) of the Import Control Policy formulated by the Government of India, this Court in the case of Deputy Chief Controller of Imports and Exports v. K.T. Kosalram (1970) 3 SCC 82; AIR 1.971 SC 1283 observed thus (page 1289): "In our opinion diction me ins however helpful in undern2 the general sense of the words cannot control where the scheme of the statute or the instrument considered as a whole clearly conveys s 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 those 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 pulse or 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 the 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 the 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. A higher rate of depreciation is granted to "machinery" and "plant", as against "building" which has more durability. In CIT v. Mir Muhammad 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 (page. 172): "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." For the words "plant" and "installed" the Court held (page 172): "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, accordingly to the Act, 20 percent. 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 sections 10(2)(vi) and 10(2)(via) of the Act of 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. A wider meaning to the word "plant" is given by including specified items mentioned above, that is, it includes ships, vehicles, books etc. In Taj Mahal Hotel's case (1971) 82 ITR 44, this Court specifically observed that it is well‑settled that where the definition 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, a 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 the 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 the business of a hotelier is carried on in a building or a premises and the 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. N. Sathyanathan & Sons (P.) Ltd. (2000) 242 ITR 514, wherein the Court observed that in the case of Taj Mahal Hotel (1971) 82 ITR 44 (SC), 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 the section specifically provides that buildings used as hotel would indicate that 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, Curie & Co. Ltd. (1970) 76 ITR 62 (HL); (1969) 1 WLR 675 (HL), would be of no assistance for holding that a building used for the purpose of a hotel or the theatre used for carrying on the business of cinema will be a "plant" because in the said case the majority view was that the dry dock was not the mere "setting" or the premises in which ships were repaired. It was not mere a 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 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, the 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 "theatre" 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 adopted to lectures, surgical demonstrations, etc; (4) Any place of semi‑circular form with seats rising by easy gradations; (5) Any place or region that is the scene of events; A theatre of operations in War." This would mean that cinema business. can be run in premises adapted for that purpose which may or may not be specially designed. Further, on the basis of the test laid down in the case of Barclay, Curie & Co. Ltd. (1970) 76 ITR 62; (1969) 1 WLR 675 (HL), such building or premises would be the place in which the operation of carrying on of business takes place and not that they are the means by which the operation is performed. Even the House of Lords in the case of Benson (1979) 1 WLR 347 (CA) arrived at the conclusion that a ship or a floating hulk 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 a mere shelter for carrying on such business activities. Therefore, even the 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 a structure would be a plant or not and it is stated that each case is required to be decided on the facts of that case. In Commissioners of Inland Revenue v. Scottish and Newcastle Breweries Ltd. (1982) 55 TC 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, the 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 & Co. Ltd. v. Attorney‑General (1944) 1 Ch. 281, 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; (1962) 40 TC 681 (CA). (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 Ltd.'s case (1963) 1 WLR 214; (1962) 40 TC 681 (CA). (iv) Something which is a structure or part of a structure may nevertheless be plant, if it fulfils the function of plant in the trader's operations (IRC v. Barclay, Curle & Co. Ltd. (1970) 76 ITR 62 (HL); (1969) SC (HL) 30; (1969) 45 TC 221 (HL); (v) Apparatus which has no functional purpose in the commercial process, even if it serves to attract custom, is not plant (Dixon v. Fitch's Garage Ltd. (1976) 1 WLR 215; (1975) 50 TC 509 (Ch. D), 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 haw, L.J. in Benson v. Yard Arm Club Ltd., (1979) 1 WLR 347, at page 58; 53 TC 67, at page 88 (CA), and relied upon the following observation at page 268 of (1982) 55 TC); "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." 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 (1988) 61 TC 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 the "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 plant. 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 tiles can be classed as plant. 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. Considering the facts of this case and various decisions Fox.J., observed; "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 Lowry's 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 pot. The former are simply the precises in which the business is conducted. The distinction, however, needs to be, elaborated, for present purposes, by reference to Lord Lowry's further formulation, namely, that the fact that different things may perform the same function of creating atmosphere is hot 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 Lowry's 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. " Similarly, Lord Hoffmann 1. (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 Taxes) v. Sayer (65 TC 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 the 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 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 race horse 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 TC 401), the Court of Appeal dealt with a case where the 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 invironment 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 the 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 nuturing and preserving the plants while they were there could not transform it into something 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, Curie & Co.'s case (1970) 76 ITR 62 (HL) dealing with dry dockyard) and to hold that a hotel building or theatre would be plant on the 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 otter allowance in the 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. The suitability of such building is simply the reason why the business, is carried on there which may flourish, but the premises remain premises where business is carried on and are not something with which business is carried on. In Carr v. Sayer (65 TC 15 (Ch. D), 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 layout and other features was not held to be a plant by observing that a purpose‑built building is no more than the premises in which the business is conducted. Further, there are hotels of all kinds and hotel business can tie 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 residential accommodation including accommodation which is in the nature of a guest house. On occasions hotel buildings may be constructed with a special design and features so as to attract and accommodate a certain class of tourists. 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 "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 the case R.C. Chemical Industry (1982) 134 ITR 330, rightly observed that the 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 the Rajasthan High Court also in Lake Palace Hotels & Motels case (1997) 226 ITR 561, rightly observed that simply because some special fittings or controlling equipment is attached for the purpose of carrying on hotel business, it will not take it out of the category of building and make it plant. In our view special fittings or equipment to control atmospheric effects would be plant‑, but not the building which houses such equipment. Further, for running almost all industries or for carrying on any trade or business building is required. On occasions a building may .be designed and constructed to suit the requirement of a particular industry, trade or business. But that would not make such building plant. It only shelters running of such business. For each and every business, trade or industry, a building is required to carry on such activity. That means the 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 is securely and them returning it to the river. Building is more durable. If the contention of the assessee is accepted, virtually all such buildings would be considered to be a plant and the 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 the 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, depreciation as a general principle represents the diminution in value of a capital asset when applied to the purpose of making profit or gain. The object is to get a true picture of the 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 v. Alps Theatre (1967) 65 ITR 377; AIR 1967 SC 1437, the Court considered the question‑‑ whether the cost of land is entitled to depreciation under the schedule to the Income‑tax Act alongwith the cost of the building standing thereon? The Court observed (in para. 6) (page 1439) thus (page 380): "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 bookkeeping accounting etc.' (Webster's New World Dictionary). In that sense land cannot depreciate. The other words to notice are such buildings. We have noticed that in sub‑clauses (iv) and (v), building clearly means structures and does not include site. The Court also held (in paras. 7 and 8 (page 1439) that (page 380): "One other consideration is important. The whole object of section 10 is to arrive at the assessable 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 building and 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 in spite 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 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 the 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 the interpretation suggested by 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 include cinematograph films and other items and the building is further given a meaning to include roads, bridges, culverts, wells and tube‑wells. (2) In the case of Taj Mahal Hotel (1971) 82 ITR 44, this Court has observed that the business of a hotelier is carried on by adapting 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 whether the sanitary fittings used in bathroom 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 (1970) 76 ITR 62, decided by the House of Lords pertains to a dry dockyard 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 of 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 to 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, movable partitions, or even a dry dock was plant." (6) For the hotel building and hospital in the case of Carr v. Sayer 65 TC 15 (Ch.D.), 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 Civil Appeals Nos. 55 to 57 of 2000 filed by the assessee and Civil Appeals Nos. 4758, 5198, 5199, 5391 of 1998, 15, 2784 to 2786, 2787, 3690 of 1999 and Civil Appeals Nos. 3434 and 3435 of 2000 at S. L. P. (C) Nos. 4373 and 4374 of 1999 filed by the Revenue are disposed of, but in the circumstances of the case without costs. In Civil Appeals Nos. 241, 242, 243, 244, 245 and 246 to 248 of 1999, learned counsel for the respondents‑assessees has filed additional written submissions on May 4, 2000, stating that additional question is involved in those 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 the counsel finds that any other additional question which was raised and decided by the High Court, is left out, he may draw the attention by filing proper application within four weeks from today. Ordered accordingly. M.B.A./465/FC Order accordingly