JUDGMENT 1. - This Income-tax reference arising out of R.A. No. 200/ JP/93 is directed against the order of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, dated January 28, 1994, for the relevant assessment year 1986-87. 2. The following question of law under section 256(1) of the Income-tax Act, 1961, has been referred to by the Tribunal for consideration of this court : "Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the claim for investment allowance under section 32A on the ground that the preparation of food articles in a hotel may be treated as manufacturing of goods ?" 3. The brief facts as emerging on the face of the record are that the respondent-assessee is running a hotel at Jaipur in the name of Hotel Mansingh and at the relevant point of time, the hotel operation was managed by the ITC Ltd. in terms of the agreement, which was renewed from time to time. The short controversy is as to whether preparation of food articles in the hotel can be said to be manufacturing of goods and, consequently, as to whether the assessee is entitled for investment allowance under section 32A of the Act ; while the claim of the assessee was that it enures for investment allowance under section 32A of the Act as preparation of food articles and serving the same to the hotel guests and others is definitely manufacturing and in terms of section 32A the assessee is entitled to claim the investment allowance on the said articles. 4. However, the Assessing Officer was of the view that preparation of food articles does not justify that it is a manufacturing activity so as to enure for deduction under section 32A of the Act and, accordingly, disallowed the claim. 5. Dissatisfied with the said disallowance, an appeal came to be preferred before the Commissioner of Income-tax (Appeals), who also rejected the contention of the assessee. 6. The matter was further agitated before the Income-tax Appellate Tribunal, Jaipur, who, however, allowed the claim of the assessee on the basis of the order of the Income-tax Appellate Tribunal, Bangalore Bench, in the case of Hotel Navrathna v. Second ITO (1987) 27 TTJ (Bang) 234. 7. 6. The matter was further agitated before the Income-tax Appellate Tribunal, Jaipur, who, however, allowed the claim of the assessee on the basis of the order of the Income-tax Appellate Tribunal, Bangalore Bench, in the case of Hotel Navrathna v. Second ITO (1987) 27 TTJ (Bang) 234. 7. It is this order, which has been assailed before us and the Tribunal, as stated hereinabove, has forwarded the question of law for consideration of this court. 8. The counsel for the Revenue, Shri Anuroop Singhi, submitted that the issue is no more res integra as in the case of the assessee itself, so also this court has in a number of cases came to the said conclusion and also the Hon'ble apex court has held that a hotel cannot be held to be a plant. He relied upon the judgments of the Hon'ble apex court in the case of CIT v. Anand Theatres reported in (2000) 244 ITR 192 (SC) ; Indian Hotels and Co. Ltd. v. ITO reported in (2000) 245 ITR 538 (SC) ; CIT v. S.B. Properties and Enterprises Ltd. (2004) 190 CTR (Raj) 516 and CIT v. Indo Continental Hotel and Resorts and Hotel Man Singh reported in (2002) 125 Taxman 58 (Raj) and, therefore, submitted that the reference deserves to be allowed in favour of the Revenue and against the assessee. 9. Shri Vivek Singhal, learned counsel for the respondent-assessee, was unable to controvert the said authorities. 10. The Hon'ble apex court in the case of Anand Theatres (2000) 244 ITR 192 (SC) has held as under (page 222) : "Hence, to rely upon IRC v. Barclay, Curle and Co. Ltd. (1970) 76 ITR 62 (HL) (dealing with dry dock yard) 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 extra 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 court 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 some thing with which business is carried on. In Carr (H.M. Inspector of Taxes) 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 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 in 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 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 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 '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. 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 of R.C. Chemical Industries v. CIT (1982) 134 ITR 330 (Delhi) 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, the Rajasthan High Court also in Lake Palace Hotels and Motels' case (1997) 226 ITR 561 (Raj) 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 house 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 it securely and then 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 distinction which the Legislature has made between the 'building' and 'machinery' or 'plant' would be obliterated." 11. The Hon'ble apex court in the case of Indian Hotels Co. Building is more durable. If the 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." 11. The Hon'ble apex court in the case of Indian Hotels Co. Ltd. (2000) 245 ITR 538 (SC) has held as under (page 547) : "As against the aforesaid decision, it has been pointed out that some other High Courts have taken the view that (i) a hotel is merely a trading concern ; and (ii) the activity carried on for preparing food articles from raw materials in a hotel would not constitute manufacture or production of goods. In CIT v. Casino (Pvt.) Ltd. (1973) 91 ITR 289 (Ker) , the Division Bench of the Kerala High Court referred to section 2(6)(d) of the Finance Act, 1968, which defines an 'industrial company' and held that the activity carried on by the assessee in preparing articles of food from raw materials would not constitute 'manufacture or processing of goods' within the meaning of said section. Food stuffs prepared in the hotels using raw materials such as pulses, wheat, vegetables or meat and the like cannot be said to be manufacturing activity and such activity was trading activity. The Bombay High Court also took a similar view in CIT v. Berry's Hotels Pvt. Ltd. (1994) 207 ITR 615 (Bom) and held that the benefit of section 2(7)(c) of the Finance Act, 1973, can be given to manufacturing concerns and not to trading concerns. In Fariyas Hotels Pvt. Ltd. v. CIT (1995) 211 ITR 390 (Bom) , it held that investment allowance under section 32A is not available in respect of machinery installed for the purpose of business of the assessee which is engaged in the business of running a hotel as it is essentially a trading activity. In Fariyas Hotels Pvt. Ltd. v. CIT (1995) 211 ITR 390 (Bom) , it held that investment allowance under section 32A is not available in respect of machinery installed for the purpose of business of the assessee which is engaged in the business of running a hotel as it is essentially a trading activity. Similarly the Calcutta High Court in CIT v. S.P. Jaiswal Estates (P.) Ltd. (1992) 196 ITR 179 (Cal) , held that an assessee who claims investment allowance under section 32A of the Act has to be (1) an industrial undertaking carrying on the business of manufacturing or producing any article or thing, therefore, the business itself has to be that of manufacture or production ; (2) the processing of an article or thing is outside the scope of this provision ; and (3) the business of a hotel is essentially a non-manufacturing or non-producing or even non-processing concern and is a trading concern. The court observed that even if the incidental activity of processing food materials into edible products for service to clients in the restaurant is a necessary adjunct of the hotel business and is ultimate nature of the business of hotel-keeping, it is a trading activity. It cannot be held to be a business of manufacture or production of any article or thing." 12. The decision of this court as aforesaid in the case of CIT v. Lake Palace Hotels and Motels P. Ltd. (1997) 226 ITR 561 (Raj) was approved by the Hon'ble apex court in the case Anand Theatres (supra). 13. Consequently, in the light of the above authorities and in the case of the assessee itself, in our view, the Tribunal committed an error in treating the hotel building as a plant and, accordingly, we answer the question in the negative, i.e., in favour of the Revenue and against the assessee. The reference application stands disposed of accordingly. No costs. *******