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CaseIQ

S.P. Jaiswal Estates (P.) Ltd. v. Commissioner Of Income Tax

Calcutta High Court

May 19, 1994

Judgment

Subsequent
References

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Structured Summary of the Provided Opinion

Factual and Procedural Background

The Tribunal referred several questions of law under Section 256(1) of the Income-tax Act, 1961 arising out of two Income-tax Appeals (Nos. 1298/(Cal) of 1983 filed by the assessee and 1575/(Cal) of 1983 filed by the Department). The assessment year involved was 1980-81. The assessee is a resident company operating a five-star hotel in Calcutta (Hotel Hindusthan International) and maintained accounts on the mercantile system. The relevant previous year ended on October 19, 1979 (Diwali 1979).

Key factual points that generated disputes:

The assessee claimed investment allowance of Rs. 2,28,886 for plant and machinery installed during the previous year; the Income-tax Officer disallowed it on the ground that the hotel business was not an industrial undertaking engaged in manufacture/production.
The Income-tax Officer allowed depreciation on the hotel building at 2.5% and treated the company as a non-industrial company, charging tax at 65%.
A retrospective municipal corporation re-assessment created an additional municipal tax liability of Rs. 6,57,867 (notice served 15-10-1979); the assessee made a provision and claimed it as a deduction, which was disallowed by the Income-tax Officer as relating to earlier years.
A new West Bengal multi-storeyed building tax Act (retrospective to 1-7-1975) led the assessee to provide Rs. 95,837 and claim it as a deduction; this too was disallowed by the Income-tax Officer on the ground that it related to earlier years.

The Commissioner of Income-tax (Appeals) confirmed the disallowances relating to investment allowance and building depreciation and the non-industrial classification, but allowed the deductions for corporation tax and multi-storeyed building tax on the basis that the liability arose (or came to the assessee's knowledge) in the instant previous year. Both the assessee and the Department appealed to the Tribunal. The Tribunal made findings (drawing on its earlier orders in related Income-tax Appeals Nos. 937/(Cal) of 1982 and 666/(Cal) of 1983) and answered most questions against the Revenue. Certain legal points were later referred to this Court under Section 256(1).

Legal Issues Presented

Whether the hotel building owned by the company and used for carrying on hotel business was a "plant" for the purpose of calculation of depreciation (i.e., whether the Tribunal was justified in holding it was not a plant)?
Whether the company was entitled to depreciation and extra-shift depreciation on the building applicable in the case of plant (i.e., whether the Tribunal was justified in holding it was not entitled)?
Whether the company was an industrial company mainly engaged in the manufacture of goods (i.e., whether the Tribunal was justified in holding it was not an industrial company)?
Whether the rate of income-tax applicable to the company should be that applicable to a non-industrial company (i.e., whether the Tribunal was justified in so holding)?
At the instance of the Department: Whether preparation of food in the hotel constituted manufacture or production of any article or thing within the meaning of Section 32A of the Income-tax Act, 1961?
At the instance of the Department (in a separate appeal): Whether the assessee was entitled to deduction of amounts relating to municipal corporation tax and multi-storeyed building tax for earlier years, notice of which the assessee received in the instant previous year, where the assessee maintained accounts on the mercantile system?

Arguments of the Parties

Assessee's Arguments

The assessee argued that "plant" is not confined to apparatus used for mechanical operations; the relevant test is whether the article fulfils the function of a "plant" in the assessee's trading activity — i.e., whether it is a tool of trade with which the assessee carries on its business.
Applying that test, the assessee maintained that the hotel building was an apparatus used in its business (the rooms had to be let out and the entire building was used to carry on the hotel business), and therefore the building should be treated as "plant" for depreciation purposes under Section 32.
With respect to investment allowance under Section 32A, the assessee contended that it need only show that the specific plant or machinery for which allowance was claimed was used for manufacture/production (e.g., in the restaurant division), and that the whole hotel need not be exclusively engaged in manufacture/production.

Revenue's (Department's) Contentions

The Department raised the question whether preparation of food in the hotel constituted "manufacture or production" within the meaning of Section 32A and whether, on that basis, the assessee could claim investment allowance on plant/machinery used in food preparation.
The Department also challenged the deduction of municipal corporation tax and multi-storeyed building tax provisions on the ground that the liabilities related to earlier years and therefore were not deductible in the instant previous year.
Implicit in the Revenue's appeals was insistence on the Tribunal's and the Income-tax Officer's view that the hotel was not an industrial undertaking and that the building was not a plant for depreciation or extra-shift depreciation purposes.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Scientific, Engineering House P. Ltd. v. CIT	Articulated the test whether an article is a "plant": whether it fulfils the function of a plant in the trading activity and is a tool of the trade.	The Court noted this principle and applied the test to hold that the hotel building was a tool of the assessee's trade and therefore a "plant" for depreciation under Section 32.
CIT v. Taj Mahal Hotel	Held sanitary and pipeline fittings fell within the definition of "plant" in Section 10(5) of the Indian Income-tax Act, 1922; discussed construing "plant" in a wide/popular sense and distinguished fixtures that are merely a setting.	The Court relied on this authority to support a wide understanding of "plant" and to distinguish between parts of an apparatus used in business and items that merely form the setting; this supported treating the hotel building as a plant.
J. Lyons and Co. Ltd. v. Attorney-General [1944] 1 Ch. 281	English authority discussing whether electric lamps and fittings in a tea shop were part of the apparatus of business or part of the setting (held to be the latter in that English decision as cited).	The Court noted that A.N. Grover (in the Taj Mahal case) distinguished this English decision; the Court used the distinction to emphasize that where the building is integral to carrying on the hotel business it is not merely a setting.
S. P. Jaiswal Estates P. Ltd v. CIT (Reference No. 74 of 1990) [1994] 209 ITR 298	Court's earlier decision treating the assessee (in respect of assessment year 1982-83) as an industrial company for relevant purposes.	The Court held that, by that decision, Questions Nos. 3 and 4 (about industrial status and tax rate) should be answered in favour of the assessee and accordingly treated the assessee as an industrial company.
CIT v. India Foils Ltd. [1993] 200 ITR 259	Relevant authority relied upon in concluding the issue about deductibility of retrospective municipal/multi-storeyed building tax.	The Court followed this decision to answer the Revenue's question on tax-deduction (Question No. 2 of Revenue) in the affirmative and in favour of the assessee.
Avery India Ltd. v. CIT [1993] 199 ITR 745	Another authority relied on for the rule concerning deductibility of tax liabilities arising after retrospective assessments/legislation.	The Court followed this authority alongside India Foils to conclude that the assessee was entitled to the deductions for municipal and multi-storeyed building taxes.
CIT v. Sky Room Pvt. Ltd.	Held that producing bread by using wheat and other ingredients constituted "manufacture or processing".	The Court acknowledged this decision as creating a difficulty for deciding whether preparation of food in a hotel is "manufacture or production" under Section 32A; it influenced the Court's decision to refer the point to a larger Bench.
CIT v. S. P. Jaiswal Estates (P.) Ltd. [1992] 196 ITR 179	Held that preparation of food in a hotel may be construed as manufacture or production but an assessee may still be ineligible for investment allowance under Section 32A where other non-manufacturing activities are present (entertainment and other services).	The Court treated this decision as a significant difficulty for the assessee's claim to investment allowance; it formed part of the rationale for referring the investment-allowance question raised by the Revenue to a larger Bench.
Tribunal orders in Income-tax Appeals Nos. 937/(Cal) of 1982 and 666/(Cal) of 1983 (orders dated March 21, 1983 and March 21, 1986)	Tribunal reasoning on entitlement to investment allowance only for plant/machinery used in manufacture/production of food; reasoning on non-industrial nature of hotel activity; reasoning on building not being a "plant".	The Court referred to the Tribunal's prior detailed reasoning (paragraphs cited) and either upheld or reversed Tribunal conclusions as appropriate (noting that it ultimately held the hotel building was a plant, differing from certain Tribunal conclusions on that specific issue).

Court's Reasoning and Analysis

The Court proceeded through the issues by applying the statutory language and established judicial tests as follows:

On the meaning of "plant" the Court adopted the test reflected in Scientific, Engineering House P. Ltd. v. CIT: ask whether the article fulfils the function of a "plant" in the assessee's trading activity — i.e., whether it is a tool of the trade with which the business is carried on.
The Court considered the Supreme Court's decision in CIT v. Taj Mahal Hotel, particularly the observation that where no statutory definition exists, the ordinary/popular sense attributed by those conversant with the subject should be used, and that the term "include" in interpretation clauses widens meaning. The Court also noted that even in Taj Mahal the English decision in J. Lyons was distinguished where lamps/fittings were held to be part of the setting rather than the apparatus.
Applying the above tests and distinctions to the facts, the Court examined whether the hotel building was a tool of the assessee's trade or merely the setting in which the trade was carried on. The Court observed that the hotel rooms had to be let in the course of the business and that the entire building was used to carry on the hotel business; given the nature of the business, the building performed the function of a tool of the trade rather than merely forming the setting.
On that basis the Court concluded the hotel building was an apparatus with which the assessee's hotel business was carried on and thus constituted "plant" for the purposes of depreciation under Section 32.
With respect to the assessee's two initial questions (whether the Tribunal was justified in holding the building was not a plant, and whether the company was not entitled to depreciation and extra-shift depreciation), the Court answered both in the negative — i.e., it found the Tribunal was not justified and in consequence the assessee was entitled to the treatment appropriate to plant.
Questions 3 and 4 (industrial company status and tax rate) were answered in favour of the assessee by reference to this Court's earlier decision in S. P. Jaiswal Estates P. Ltd v. CIT (Reference No. 74 of 1990), which had held the assessee to be an industrial company for related assessment year(s).
Regarding the Revenue's question about deductibility of municipal and multi-storeyed building taxes, the Court followed the decisions in CIT v. India Foils Ltd. and Avery India Ltd. v. CIT and held that the assessee was entitled to deductions because the liabilities, though pertaining to earlier years, came to the assessee's knowledge in the instant previous year.
The remaining Revenue question — whether preparation of food in the hotel constituted manufacture or production under Section 32A — presented a complex and unsettled issue. The Court noted conflicting authority: CIT v. Sky Room Pvt. Ltd. (treating bread production as manufacture) and CIT v. S. P. Jaiswal Estates (1992) (holding that while preparation of food may be manufacture, presence of other non-manufacturing activities can preclude investment allowance). Given these conflicting authorities and the substantial legal question involved, the Court declined to answer that question and directed that it be referred to a larger Bench (to be constituted by the Chief Justice).

Holding and Implications

Core rulings:

First two assessee questions: Answered in favour of the assessee. The Court held that the hotel building is a "plant" for purposes of depreciation under Section 32 and that the Tribunal was not justified in holding otherwise; consequently the company is entitled to depreciation (and the implication is that plant-related depreciation treatment applies).
Questions Nos. 3 and 4 (industrial status and tax rate): Answered in favour of the assessee. The Court held the assessee is to be treated as an industrial company, relying on this Court's earlier decision in S. P. Jaiswal Estates P. Ltd v. CIT (Reference No. 74 of 1990).
Revenue's question on deductibility of retrospective municipal/multi-storeyed building taxes: Answered in favour of the assessee. The Court followed authorities (India Foils and Avery India) and allowed deductions because the liabilities were recognised in the instant previous year.
Revenue's question on whether hotel food preparation amounts to "manufacture or production" under Section 32A: Not finally answered; referred to a larger Bench. The Court declined to decide this question because of conflicting precedents and directed that the question be placed before the Chief Justice for constitution of a larger Bench.

Implications and direct effects:

The direct consequence for the parties is that the assessee succeeds on the building-as-plant issue (entitling it to plant-based depreciation treatment) and on the questions of industrial status and tax rate for the years in question (per the cited earlier decision).
The assessee also succeeds on the claim for deductions in respect of retrospective municipal and multi-storeyed building taxes, following the cited authorities.
No definitive, new settled law was laid down on whether preparation of food in a hotel constitutes "manufacture or production" under Section 32A — that issue is reserved for a larger Bench, so its broader legal impact remains undecided by this Court in the present opinion.

Judge: Bhagabati Prasad Banerjee, J. — with concurrence indicated ("I agree.")

Show all summary ...

1. The Tribunal has referred the following questions of law under Section 256(1) of the Income-tax Act, 1961 :

2. The questions, at the instance of the assessee, arising out of Income-tax Appeal No. 1298/(Cal) of 1983 filed by the assessee are :

" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the hotel building owned by the company and used for the purposes of carrying on hotel business was not a 'plant' for the purpose of calculation of depreciation ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the company was not entitled to depreciation and extra-shift depreciation on building applicable in the case of plant ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the company was not an industrial company mainly engaged in the manufacture of goods ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the rate of income-tax applicable to the company will be that applicable to a non-industrial company ?"

2. The question, at the instance of the Department, arising out of Income-tax Appeal No. 1298/(Cal) of 1983 is :

" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that preparation of food in the hotel constituted manufacture or production of any article or thing within the meaning of Section 32A of the Income-tax Act, 1961 ?"

3. The question, at the instance of the Department, arising out of Income-tax Appeal No. 1575/(Cal) of 1983 filed by the Department is :

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to deduction of the amounts relating to municipal corporation tax and multi-storeyed building tax for the earlier years notice of which the assessee received in the instant previous year, while the assessee maintained accounts in the mercantile system ?

4. The year of assessment involved is 1980-81. The assessee is a resident company. It runs a five-star hotel in Calcutta styled as Hotel Hindusthan International. It maintained accounts in mercantile system. Its previous year relevant to the assessment year 1980-81 ended on Diwali of 1979 corresponding to October 19, 1979. The relevant facts out of which the questions arise are these :

(A) The assessee claimed investment allowance of Rs. 2,28,886 on plant and machinery said to have had been installed during the previous year. The Income-tax Officer did not allow investment allowance under section 52A of the Act, since, according to him, the business of the hotel which was being carried on by the assessee was not in the nature of industrial undertaking as it did not manufacture or produce any article or thing.

(B) The Income-tax Officer allowed depreciation on the hotel building at 2.5 per cent.

(D) There was fresh assessment by the Municipal Corporation, Calcutta, with retrospective effect from the fourth quarter of 1975-76. Consequently, a notice for the additional liability of Rs. 6,57,867 was served upon the assessee on October 15, 1979. The assessee made provision for the said additional liability of municipal tax and claimed deduction thereof. The Income-tax Officer did not entertain the claim made by the assessee on the ground that the liability for the said taxes related to the earlier years. The West Bengal Multi-Storeyed Building Tax Act, levying a tax on mutli-storeyed buildings, was enacted in the instant previous year, but it created the liability to pay the tax with retrospective effect from July 1, 1975. The assessee, therefore, made a provision of Rs. 95,837 on account of multi-storeyed building tax and claimed deduction therefor. The claim was turned down by the Income-tax Officer on the ground that the taxes levied were in respect of the earlier years. The assessee filed an appeal against the assessment order before the Commissioner of Income-tax (Appeals).

(A) The Commissioner of Income-tax (Appeals) held that the business of the hotel carried on by the assessee-company was not in the nature of an industrial undertaking. He, therefore, confirmed the disallowance of Rs. 2,28,886 made by the Income-tax Officer on account of investment allowance.

(B) The Commissioner of Income-tax (Appeals) did not agree with the contention of the assessee that the assessee was engaged in the manufacture and production of goods and as such the building was a factory building. He, therefore, confirmed the order of the Income-tax Officer retaining the depreciation on the building at 2.5 per cent.

(C) The Commissioner of Income-tax (Appeals) also confirmed the finding of the Income-tax Officer that the assessee-company was not an industrial company and as such was chargeable to tax at 65 per cent.

(D) The Commissioner of Income-tax (Appeals), however, accepted the claim to deductions of Rs. 6,57,867 and Rs. 95,837 on account of corporation tax and multi-storeyed building tax, respectively, on the ground that the liability, though pertained to the earlier years arose in the instant previous year.

5. The assessee and the Department both went up in appeal before the Tribunal to the extent they were aggrieved by the order of the Commissioner of Income-tax (Appeals).

(A) It was claimed by the assessee in appeal that it was entitled to investment allowance under Section 32A on the reasoning that in the hotel articles of food were prepared from raw materials and as such there was manufacturing activity. The Tribunal, for the reasons contained in paragraphs 2 to 6 of the order dated March 21, 1986, in Income-tax Appeals Nos. 937/(Cal) of 1982 and 666/(Cal) of 1983 in the assessee's own case, reached the finding that the assessee was entitled to investment allowance only on such machinery and plant as were required for the manufacture or production of food. The Tribunal also held that the activity in the business of the hotel was not primarily an industrial undertaking, (B) In the original grounds of appeal, the objection of the assessee ' was restricted to non-allowance of depreciation on the building of the hotel at five per cent. By way of additional ground, the assessee sought to claim that the entire building of the hotel should be allowed. In that context, the assessee further claimed extra-shift depreciation for three shifts. For the reasons stated in paragraphs 7 and 8 of the order dated March 21, 1983, of the Tribunal in Income-tax Appeal No. 937/(Cal) of 1982 and 666/ (Cal) of 1983, the Tribunal held that the building of the hotel cannot be treated as a plant. The Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) that the assessee was entitled to depreciation at the ordinary rate applicable to buildings.

(C) For the reasons stated in paragraph 18 of the order dated March 21, 1986, in Income-tax Appeals Nos. 937/(Cal) of 1982 and 666/ (Cal) of 1983, it has been held by the Tribunal that the assessee is not mainly engaged in the manufacture of goods and, as such, it is not an industrial company. The finding of the Commissioner of Income-tax (Appeals) charging tax at 65 per cent. has, therefore, been upheld.

(D) As to the allowances of Rs. 6,57,867 and Rs. 95,837 in respect of provision for corporation tax and multi-storeyed building tax, the Tribunal, vide paragraph 10 of the order, held that the assessee was entitled to deduction of the said amounts since the liability for those taxes, though pertained to the earlier years, came to the knowledge of the assessee in the instant previous year.

6. On the first question raised by the assessee, it has been contended that "plant" was not necessarily confined to an apparatus which was used for mechanical operations or process or was employed in mechanical or industrial business. In order to qualify as "plant", the particular article had to have some degree of durability. The test to be applied was :

Did the article fulfil the function of a "plant" in the assessee's trading activity ? Was it a tool of his trade with which he carried on his business ? If the answer was in the affirmative, it would be a "plant".

7. It was contended by the assessee that the aforesaid principle was laid down by the Supreme Court in the case of Scientific, Engineering House P. Ltd. v. CIT . It was argued that if this test was applied then the hotel building was an apparatus used by the assessee in its business and had to be treated as "plant" for the purpose of calculation, of depreciation. We were also referred to the decision of the Supreme Court in the case of CIT v. Taj Mahal Hotel . In that case the Supreme Court held that the sanitary and pipeline fittings fell within the definition of "plant" in Section 10(5) of the Indian Income-tax Act, 1922, and the assessee was entitled to development rebate in respect thereof under Section 10(2)(vib). The fact that the assessee had claimed depreciation on the basis that the sanitary and pipeline fittings fell under "furniture and fittings" in Rule 8(2) of the Indian Income-tax Rules, 1922, and did not detract from the position. Referring to the meaning of the expression "plant", the Supreme Court observed (at page 47) :

" Now, it is well-settled that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. Popular sense means 'that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it'. In the present case, Section 10(5) enlarges the definition of the word 'plant' by including in it the words which have already been mentioned before. The very fact that even books have been included shows that the meaning intended to be given to 'plant' is wide. The word 'includes' is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import, but also those things which the interpretation clause declares that they shall include. The word 'include' is also susceptible of other constructions which it is unnecessary to go into."

8. It must, however, be noted that in that judgment A. N. Grover, distinguished the English decision in the case of J. Lyons and Co. Ltd. v. Attorney-General [1944] 1 Ch. 281 by pointing out that electric lamps and fittings in a tea shop were not parts of the apparatus used for carrying on the business but were part of the setting in which the business was carried on, and, therefore, were not "plant".

9. The question, therefore, is whether having regard to the assessee's business of hotel, the building can be treated as a "plant". In other words was the building a tool of the assessee's trade or the setting in which the assessee's business was carried on. The assessee's hotel rooms had to be let out in the course of the assessee's business. The entire building has to be used by the assessee for carrying on its hotel business. The business of the assessee is of a nature where the building has to be treated as a tool of his trade. The building is not a setting or a canopy under which the assessee carries on its business. Therefore, in view of the principles laid down in the aforesaid cases, it must be held that the hotel building, owned by the assessee and used for the purpose of carrying on its hotel business was an apparatus with which the assessee's 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. Having regard to the nature of the assessee's business it is to be held that the hotel building is to be treated as a "plant" for the purpose of depreciation allowance under Section 32.

10. In that view of the matter, the first two questions are answered in the negative and in favour of the assessee.

11. Questions Nos. 3 and 4 are answered in favour of the assessee by holding that the assessee is to be treated as an industrial company in view of the decision of this court in the assessee's own case in Reference No. 74 of 1990 (S. P. Jaiswal Estates P. Ltd v. CIT (No. 1) [1994] 209 ITR 298) in which the judgment was delivered on September 22, 1993, in respect of the assessment year 1982-83.

12. Apart from the questions dealt with, there are two other questions raised by the Revenue. Question No. 2 is concluded by the judgments of this court in the cases of CIT v. India Foils Ltd. [1993] 200 ITR 259 and Avery India Ltd. v. CIT [1993] 199 ITR 745. Following the aforesaid decisions, question No. 2 is answered in the affirmative and in favour of the assessee.

13. So far as question No. 1, raised by the Revenue, is concerned, there is a little difficulty. A view was taken in the case of CIT v. Sky Room Pvt. Ltd in which if was held that if the assessee was producing bread by using wheat and other ingredients, the activity of the assessee had to be regarded as "manufacture or processing".

14. Mr. Poddar has fairly invited our attention to another judgment of this court in the case of CIT v. S. P. Jaiswal Estates (P.) Ltd. [1992] 196 ITR 179 in respect of the assessment year 1981-82 in which it was held that preparation of food in the hotel may be construed as manufacture or production of any article or thing but the assessee was not entitled to get investment allowance under Section 32A in view of the fact that the assessee had other activities which were not in the nature of manufacture or production of any article or thing; for example, the assessee was offering entertainment and other services. This was a formidable difficulty in the way of the assessee's claim in respect of investment allowance. It was pointed out that the preparation and supply of food by a restaurant and the same act by a hotel-keeper did not stand on the same footing.

15. Mr. Poddar has invited our attention to the language of Section 32A. The relevant portion of the said section is as follows :

" 32A. (1) In respect of a ship or an aircraft or machinery or plant specified in Sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was 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, of a sum by way of investment allowance equal to twenty-five per cent. of the actual cost of the ship, aircraft, machinery or plant to the assessee. . . .

(2) The ship or aircraft or machinery or plant referred to in Sub-section (1) shall be the following, namely : --

(a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft ;

(b) any new machinery or plant installed after the 31st day of March, 1976,--

(i) for the purposes of business of generation or distribution of electricity or any other form of power ; or

(ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing ; or

(iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule."

16. It is clear that the allowance is to be given "in respect of a ship or an aircraft or machinery or plant specified in Sub-section (2)". So, there is no dispute that plant or machinery in question was owned by the assessee and was wholly used for the purpose of the assessee's business. Now, in order to qualify for investment allowance, it is to be seen whether the plant or machinery was utilised for the purpose of the business of "manufacture or production of any article or thing". There is no dispute that the plant or machinery in respect of which the investment allowance is being claimed was being utilised in the restaurant division of the assessee's business. It was being utilised for the manufacture or production of articles or things as mentioned in that sub-section.

17. Mr. Poddar has contended that the assessee does not have to establish that the entire hotel was engaged in the manufacture or production of articles or things in order to qualify for this allowance. The only thing that has to be established is that the plant or machinery in respect of which investment allowance is being claimed was being utilised for the manufacture or processing of any article or thing, as the case may be.

18. There is considerable force in the contention advanced by Mr. Poddar, but since there is already a judgment to the contrary we are of the view that this matter must go to the larger Bench. We direct the matter to be placed before his lordship, the Chief Justice, for constituting a larger Bench for considering this question. So, at this stage, we decline to answer question No. 1 raised by the Revenue. This question is referred to the larger Bench.

Bhagabati Prasad Banerjee, J.

19. I agree.