K.S. VISWANATHAN, A.M. There are cross appeals by assessee and Department against certain findings of Commissioner (Appeals) in respect of asst. yr. 1981- 82. assessee is private limited company carrying on business of hotel. We take up assessee's appeal first. only point is whether assessee is entitled to investment allowance. At time of hearing Sri Ratnakar ld. counsel for assessee, admitted that no reserve has been created although there were profits during accounting year. In view of this position we hold that ITO is justified in refusing to grant investment allowance. assessee has also contested levy of interest under s. 217(1A). It is admitted position that in view of Andhra Pradesh High Court decision in case of M.G. Brothers vs. CIT (1985) 47 CTR (AP) 213: (1985) 154 ITR 695 (AP) this point cannot be appealed against. assessee appeal will stand dismissed. We now take up Department's appeal. assessee had in income-tax returns claimed depreciation on buildings at 21/2 per cent. written down value of building amounted to Rs. 7,17,898. During course of hearing, assessee claimed that depreciation should be at rate of 10 per cent plus another 10 for triple shift allowance as well as 5 per cent by way of additional allowance. These claim were based on submission that building in which hotel was run is to be treated as plant for purpose of s. 32. ITO did not accept assessee's contention and he granted depreciation at 25 per cent only. CIT(A), however, accepted assessee's contention. He based his findings mainly on ruling given by Madras Bench of Tribunal in case of Hotel Shrilekha Pvt. Ltd. vs. Third ITO (1983) 5 ITD 541 (Mad). Department is in appeal before us. Sri Padmanabhan submitted that under s. 32 building is treated separately as subject of depreciation apart from plant and machinery. Therefore if statute prescribes rate of depreciation for building, that should be applied. question here, according to Sri Padmanabhan is not whether building could be treated as plant. question here is whether asset in question could be treated as building. He submitted that legislature had treated hotel buildings only as building and not as 'plant' and this is evident from provisions of s. 32(1) (v). In this provision, special depreciation is being granted to hotels in respect of their investment in buildings. This would show that legislature considered buildings of hotel for purpose of depreciation only as building. He then referred to Explanations. to s. 80J(6), This Explanation refers to "any building which had been used as hotel previously." Here also building of hotel is not treated as plant. He also referred to depreciation rules where extra depreciation is granted for hotel building. All these would show that it was never intention of legislature to treat building of hotel as plant. Sri Ratnakar submitted that while it may be true that all buildings may not be plant, under certain circumstances building can be treated as plant. He than referred to decision of Supreme Court in case of CIT vs. Taj Mahal Hotel 1973 CTR (SC) 480: (1971) 82 ITR 44 (SC). In that decision, Supreme Court has treated sanitary fittings in hotel as plant. He submitted that hotel cannot function without sanitary fittings and it is part and parcel of hotel building itself. If sanitary fittings which are part of building can be treated as plant, he submitted, entire hotel building can also be treated as plant. He then submitted that building has been designed and build only for running hotel and it cannot be put to any other use without any drastic change in design. He then gave instances of cases where buildings are treated as plant. Sri Ratnakar then adverted to usual test to distinguish between 'plant' and 'building;'. test to consider whether article is plant is to find out whether it is tool of trade or setting in which business in conducted. If it was tool of trade then it is plant. If it is setting in which business is conducted, it will be building. He submitted that in case of hotel, building itself is tool. It is impossible to conduct hotel business without building. So without building there could be no business. Therefore, building is tool and so qualifies as plant. He than submitted that there are enough authorities to show that swimming pool, dry dock and silo are treated as 'plant'. We have considered submissions. assessee is running boarding and lodging hotel in city. Part of building consists of rooms, halls etc. Which are let out to customers. These rooms are well furnished and airconditioned. question is whether this part of building consisting of rooms which are to be let out should be considered as building of or plant for purpose of s. 32. At time of hearing, Sri Ratnakar had made it clear that his claim is only in respect of rooms and halls. rooms where office is situated or rooms where restaurant is run are not claimed to be part of plant. Thus, it would be seen that even on assessee's own admission part of structure is not claimed to be plant, extent of this structure will have to be ascertained by officer if in case assessee's claim is to be admitted. But, since our finding is against assessee, it is not necessary to go into this issue at this stage. provisions of s. 32 read as follows: "In respect of depreciation on buildings, machinery, plant or furniture owned by assessee and used for purpose of business or profession, following deductions shall subject to provisions of s. 34 be allowed." It will be seen that for purpose of s.32, depreciable assets are divided into four categories. They are building, machinery, plant and furniture. Now, assessee's case is that building in which hotel is housed should be treated as plant. Department's contention as put forward by Sri Padmanabhan is that since there is separate classification of building in s. 32, assets has to be treated only as building for purpose of this section. We quite agree that for certain purposes building could be considered as plant but building can be considered as plant for certain sections of Act and it need not hold good for other sections of Act. This has been made clear by Bombay High Court in their decision in case of CIT vs. Bank of India (1979) 8 CTR (Bom) 230: (1979) 118 ITR 809 (Bom). At page 818 their Lordships were considering argument that wiring and fittings were considered as plant and machinery for purpose of depreciation and, therefore, they should be considered as plant and machinery for purpose of depreciation and, therefore, they should be considered as plant and machinery for purpose of development rebate also. High Court pointed out that two answers can be given to contention raised by assessee. In first place, if entire item in depreciation rate schedule is properly considered, it would appear that wiring and fittings electric light and fan installation are not dealt with as specific items for which separate rate of depreciation is provided but that these are considered as adjuncts to switchgears and instruments. Secondly, argument that inasmuch as ITO has allowed them depreciation at 10 per cent considering them as plant it must be held to be plant for purpose of development rebate, does not reflect, according to their Lordships correct approach Rejecting this contention High Court stated that they had to consider in first place whether such electric installations can be regarded as plant and machinery and whether they can be considered to be plant and machinery used by assessee in its business. various cases referred would show that what is plant and machinery on which development rebate is available for one assessee need not be plant and machinery for another. From above it will be clear that merely because for certain purposes, say capital allowance as in English cases referred to by Sri Ratnakar, building was treated as plant it does not follow that building has to be treated as plant even for s. 32. hotel building as we see, can be covered under s. 32, both by expression 'building' as well as expression 'plant' since expression 'plant' would include buildings of certain types that expression is wider expression that expression 'building', In other words, expression 'building' is special provision covering structures which would be treated as 'building whereas expression plant is general expression which would also include certain types of building. When building is covered by expression plant its identity as building is lost. question then is whether general provisions i.e. 'plant or special provision i.e. building will be applicable in these cases. There is no doubt at all that maxim generalia specialibus non derogant will be applicable in such cases. That being so when there are special provisions for buildings giving certain different rates of depreciation, that alone should be considered in as certain different rates of depreciation, that alone should be considered in as building even if such building for certain other purposes could be considered as plant. This is supported by Bombay High Court decision in passage referred it is page 10 of this order. It would appear to us from reading of provisions that legislature, for purpose of s. 32, considered hotel buildings only as buildings. There is special provision, as pointed out by Sri Padmanabhan, in s. 32(1) (v) which gives extra depreciation in respect of new building, erection of which was completed after 31st May, 1967 where building is owned by Indian company and used by such company as hotel and such hotels is for first time being approved by Central Government. If legislature had conceived hotel buildings at least under certain circumstances as plant there would have been no description of such assets only as building in s. 32. In our opinion, t h i s provision clearly decides issue in favour of Department. Sri Ratnakar's submission that s. 32(1)(v) gives additional incentive over and above that is available to hotel buildings as plant is not acceptable at all. In s.32. there is uniformity regarding classification of depreciable assets. particular asset cannot be plant under s. 32(1)(iii) and at same time be treated as building under s.32(1)(v). At least, within that section there should be uniformity in classification of asset. Let us now consider alternative ground, whether building in which hotel is housed can be considered as plant under any circumstances. main thrust of Sri Ratnakar's submissions is based on Supreme Court's decision in case of Taj Mahal Hotel (supra). He had submitted that sanitary fittings and pipelines are part of building and if such fittings could be treated as plant, building should also be treated as plants. As matter of fact, we find that Madras Bench of Tribunal in case of Hotel Srilekha (supra) had also based their finding on certain observations of Supreme Court in this case. At paragraph 8, they have extracted this question: "It can be denied that business of hotelier is carried on by adapting building or premises in suitable way to be used as residential hotel where visitors come and stay and where there is arrangement for meals and other amenities are provided for their comfort and convenience." Now careful reading of decision would show that Supreme Court d i d not consider sanitary fittings as part of building itself as Sri Ratnakar would want us to assume. In case before Supreme Court, issue was whether such fittings by themselves could be plant. It would appeals that Supreme Court had considered fittings as something severable from building itself had it will be clear from following passage. This passage occurs immediately after passage quoted by Madras Bench given above. "To have sanitary fittings, etc., in bath room is one of essential amenities or conveniences which are normally provided in any good hotel, in present times. If partition in Jarrold's case (1963) 1 WLR 214, 223 (CA) could not be treated as having been used for purpose of business of trader, it is incomprehensible how sanitary fittings can be said to have no connection with business of hotelier. He can reasonably expect to get more custom and earn larger profit by changing higher rates for use of rooms if bath rooms have sanitary fittings and similar amenities". It will be seen from above that Supreme Court visualised bath rooms without sanitary fittings and that is why they have said that having sanitary fittings would enable hotelier to get larger profit by charging higher rates. Therefore, Supreme Court was not considering sanitary fittings as part and parcel of hotel premises. There is however direct evidence in that decision itself that Supreme Court considered hotel as setting in which hotel business is carried on. That is why they had to repeat that sanitary fittings have not to be treated as setting but as plant. At page 49 they have stated: It is however, unnecessary to dwell more on dictionary meaning because, looking to provisions of Act, we are satisfied that assets in question were required by nature of hotel business which assessee was carried on. They were not merely as part of setting in which hotel business was being carried on. (Emphasis, italicized in print, supplied). To repeat, Supreme Court says that sanitary fittings are not, repeat not, merely part of setting in which hotel business was being carried on. What is setting Supreme Court is referring is too oblivious. setting supreme Court is referring to is building in which hotel business is conducted. Since hotel building in Supreme Court's own observations is setting in which hotel business is conducted, it naturally follows that it cannot be considered as plant. Shri Ratnakar had submitted that in case of hotel, no business can b e carried on without hotel building. Therefore, building itself is tool with which business is carried on. Therefore it is plant. Now, similar submission was made before Bombay High Court in case of CIT vs. Sandvik Asia Ltd. (1983) 33 CTR (Bom) 128: (1983) 144 ITR 585 (Bom) at p. 588, report records submission of assessee thus: "According to Mr. Dastur, roads within factory premises must be treated as plant because road was essential for operation of whole factory as, without road, goods could not be taken from one part of factory to another". Bombay High Court did not accept this line of reasoning. submission of Sri Ratnakar is also similar. To put it differently what is submitted is that if asset is found to be essential for business, that asset must be treated as plant. We are unable to accept such widely worded submission. Merely because asset is indispensable for business, but which are necessary for carrying on business but which still cannot be plant. For example, in dairy, cows and buffaloes are essential and there could be no dairy business at all without them. Can it be said on that ground that cows are plant? correct that is not indispensability, but it is functional test, i.e. whether particular asset is apparatus or whether it is setting in which business is carried on. hotel building is setting in which business is carried on. It may be that hotel building divided into rooms is given on licence to customers. assessee gets his profit by charging for use of rooms. If assessee were to let out rooms on long term basis, then it would not be business but it would be income from house property. It is only because rooms are not let out on long term basis but for shorter periods, that letting out of rooms is being considered as business. That does not mean that building itself becomes apparatus. We may consider some of case law relied on. One decision which was considered to be to nearest to facts, referred to by Sri Ratnakar, is case of Cook vs. Beach Station Caravans Ltd. 49 Tax Cases 514. There, question was capital allowance under UK Act, and as per their statute such capital allowance was not available for buildings. It was available only for plant. Hence attempt of assessee to bring in cost of construction of swimming pool as expenditure for acquiring plant. case of IRC vs., Barclay Curle & Co. Ltd.(1970) 76 ITR 62 (HL). was also case for capital allowance which was not available for buildings. In this case assessee had constructed dry dock. In Schofield vs. R and H Hall Ltd. 49 Tax Cases 538 silos were considered to be plant. But all these cases were in respect of claim for capital allowance in statutory provision which did not contain expression 'building'. To import ratio of these cases into s. 32 which contains specific provisions for 'building' will amount to totally ignoring differences in statutory provisions. We are not prepared to do that. Sri Ratnakar had referred to decision of Allahabad High Court in case of CIT vs. Kanodia Cold Storage (1975) 100 ITR 155 (All) wherein building with insulated walls used as freezing chamber was found to be part of plant. This case had been considered by Delhi High Court in R.C. Chemical Industries vs. CIT (1981) 25 CTR (Del) 244: (1981) 134 ITR 330 (Del), wherein decision has been explained. Delhi High Court has pointed out that finding that particular building was part of air-conditioning plant was based on inspection and observations of Members of Tribunal that it was impossible for cold storage plant to function without freezing chamber with special cork insulated allys. That is, in other words, air-conditioning plant which is accepted to be plant cannot function without part of it which is in shape of building. It is on those facts that structure in shape of building, which is part of airconditioning plant, was considered as plant. decision in case of CIT vs. Yamuna Cold Storage (1981) 23 CTR (P&H) 15: (1981) 129 ITR 728 (P&H) cited by Shri Ratnakar, is not really relevant, because there they have decided that Thermocule insulation is plant. They were not considering structure like building as plant. As matter of fact, in that very case, cold storage building which has got better right for being considered as plant was only considered as factory building. Sri Ratnakar had also submitted that we will have to follow ratio of Madras Tribunal's decision in case cited above. In another case Progressive Hotels (P) Ltd. Hyderabad (ITA No. 846/Hyd/1984) very same matter had come up before us earlier. We have observed: "Though ordinarily, we are bound by precedent, we are of opinion that t h e precedent is not binding when it ignores patent provision of law and therefore we are not following Madras decision and having regard to section 32(1)(v) we have to hold that there is no scope to hold that hotel building should be considered as plant for granting depreciation". For above reasons, we allow departmental appeal and restore order of ITO on this point. In result, assessee's appeal is dismissed and Department's appeal allowed. *** HOTEL EMERALD P. LTD. v. INCOME TAX OFFICER