JUDGMENT 1. - This is a reference under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the IT Act') at the instance of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur and the Tribunal has referred the following common question of law in the case of assessee for the assessment years 1986-87 and 1987-88 for answer by this Court: Whether on the facts and in the circumstances of the case the ITAT is legally justified in allowing depreciation and extra depreciation on hotel building by treating it as a plant? 2. The facts giving rise to this reference, in short, are as follows: The assessee is a Company running hotels at Udaipur. The hotels of the assessee-Company were being operated by the Indian Hotels Company Limited and 50% of the net operating profits were paid as operation fees. The assessee-Company claimed depreciation on the hotel building at the rate of 15% treating the same as Plant., However, the Dy. Commissioner of Income-tax (Assmt). Special Range, Udaipur vide his order dated 28.2.1989 did not accept the claim of the assessee and, as such, depreciation of building was restricted to 5% only and accordingly, extra depreciation was disallowed. Aggrieved from the said order dated 28.2.1989 passed by the Dy. Commissioner of Income-tax (Assmt). Special Range, Udaipur, an appeal was filed by the assessee before the Commissioner of Income Tax (Appeals), Jodhpur Camp: Udaipur and that appeal was decided vide judgment dated 13.2.1990. The Commissioner, Income Tax (Appeals), Jodhpur Camp: Udaipur, after due consideration of the fact that Income Tax Appellate Tribunal, Jaipur Bench, Jaipur has earlier accepted the plea of the appellant-assessee in regard to treating the said hotel as a Plant, came to the conclusion that the claim of the appellant-assessee should have been accepted and accordingly, it was directed that depreciation be allowed on hotel building by treating it as Plant as per the provisions of law.Aggrieved from the judgment of the Commissioner of Income Tax (Appeals), Jodhpur Camp: Udaipur dated 13.2.1990, an appeal was preferred by the Dy. Commissioner of Income Tax (Assmt) Special Range, Udaipur before the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur and the Tribunal vide judgment dated 30.9.1994 dismissed the appeal by holding that the issue involved in the case stands covered in favour of the assesses by the earlier decision of the Tribunal in assessee's own case for the assessment year 1985-86 (ITA No. 571/JP/89) and thus, confirmed the judgment dated 13.2.1990 passed by the Commissioner Income Tax (Appeals), Jodhpur, Camp: Udaipur.Thereafter, the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur was of the opinion that findings recorded by it give rise to a question of law fit for reference to the High Court and in these circumstances, the question of law, as quoted above, has been referred by the Tribunal on 15.12.1995 for answer by this Court. 3. The law relating to depreciation allowance has been mentioned in Section 32 of the IT Act. The assets in respect of which depreciation allowance is claimed must be either buildings, machinery, plant or furniture. The words 'machinery' and 'plant' bear the same meaning in various Sections of the IT Act. The word 'plant' is defined by Section 43(3) of the IT Act as including ships, vehicles, books, scientific apparatus and surgical equipment. It would not include, for the purpose of IT Act, animals or the human body. Plant in its ordinary sense includes whatever apparatus is used by a businessman for carrying on his business; not his stock-in-trade which he buys or makes for sale, but all goods and chattels, fixed or movable, which he keeps for employment in his business with some degree of durability. 4. In deciding whether a building or structure is plant, a functional test is to be applied is it an apparatus with which the business is carried on or is it the setting or part of the premises in which the business is carried on; if the former, it is a plant; if the latter, it is not. 5. The question which is involved in this reference thus is whether building which is used as a hotel 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? 6. 5. The question which is involved in this reference thus is whether building which is used as a hotel 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? 6. A Division Bench of this Court in C.I.T. v. Lake Palace Hotels & Motels (P) Ltd. (1997) 226 ITR 561 while considering the similar question, held that hotel or cinema building cannot be treated as Plant and, therefore, hotel and cinema building are entitled to depreciation at the rate applicable to building and not at the rate applicable to Plant. 7. The learned counsel for the petitioner brought to our notice a recent judgment of the Hon'ble Supreme Court in Commissioner of Income-tax, Trivandrum v. M/s Anand Theatres 2000 AIR SCW 2487 and submitted that the controversy involved in the present case is squarely covered by the said judgment of the Hon'ble Supreme Court. 8. In M/s. Anand Theatres's case (supra), the Hon'ble Supreme Court has categorically held that building, which is used as a hotel or cinema theatre cannot be given depreciation as plant, because: The Scheme of Section 32 clearly envisages separate depreciation for a building, machinery and plant, furniture and fittings etc. The word 'building 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, walls and tube wells. 9. The learned counsel for the respondent is not in a position to controvert the above proposition of law. 10. Thus, the question of law which was referred by the Tribunal for answer by this Court stands very well answered by the Hon'ble Supreme Court in the case of M/s Anand Theatres (supra). 11. The question referred is, therefore, answered in the negative as under: In the facts and circumstances of the case, we are of the opinion that the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur was not legally justified in holding that the hotel building belonging to the assessee-Company should be treated as "Plant" and depreciation should be allowed at the rate applicable to a Plant. The reference stands answered accordingly in favour of the Revenue and against the assesses.The reference is returned to the Tribunal for passing appropriate order in the light of this answer. There is no order as to costs.Reference Answered Accordingly *******