S.A. Hakeem, J.—In these references made under section 256(1) of the Income Tax Act, 1961 ("the Act"), the Income Tax Appellate Tribunal, Bangalore Bench, has referred the following common questions of law for the opinion of this court :

"(1) Whether, on the facts and in the circumstances of the case, the entire cinema theatre comprising each and every part of the theatre, whether it is within the auditorium portion of it or outside it, including rolling shutters, fountains, mirrors, furniture and fixtures, etc., outside the auditorium is 'plant' for the purposes of the Act or only certain parts of the theatre are plant ?

(2) Whether, on the facts and in the circumstances of the case wall, ceiling, including wooden walls, false ceiling, and wooden panelling of the auditorium and furniture and fixtures including chairs in the auditorium could be treated as plant ?"

2. The brief facts giving rise to the above questions are as follows :

The assessee is a partnership-firm carrying on the business of exhibiting films in the cinema building owned by it. For the assessment years 1975-76 and 1976-77, the assessee claimed that the cinema building, furniture and fixtures, etc., should be considered as "plant" for the purposes of depreciation allowances and development rebate. This claim having been rejected by the Income Tax Officer, the assessee filed appeals before the Commissioner of Income Tax (Appeals), who held that the entire cinema building has to be treated as plant, and accordingly directed the allowance of development rebate and depreciation as claimed by the assessee. Aggrieved by the said order, the Revenue filed further appeals before the Tribunal. On a consideration of the matter the Tribunal has held (1) that the entire cinema theatre comprising each and every part of it cannot be considered to be a plant; (2) that the wooden walls, including false ceiling, wooden panelling, furniture and fixtures in the auditorium and false ceiling of the auditorium would fall within the definition of "plant"; and (3) the rolling shutters, fountains, mirrors and furniture and fixtures outside the auditorium will not be treated as plant. On the above findings both the assessee and the Revenue raised several questions for reference as arising out of the Tribunal's order and which, as modified by the Tribunal, have been referred as above.

3. The main question that really arises for determination in the case is regarding the interpretation of the term "plant". Under section 32 of the Act depreciation allowance is permissible only in respect of certain assets specified therein, viz., buildings, machinery, plant and furniture owned by the assessee and used for the purpose of business. Section 43(3) of the Act gives an inclusive definition of the term "plant" to include ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession. The question with which we are concerned is whether the cinema theatre as a whole or what parts of it fall within the definition of "plant".

4. The assessee's case is that the cinema building in question is a construction which cannot be used for any purpose other than the show business which necessitates the construction of a lounge, an auditorium with a false ceiling, screens, balconies and terraced floorings. The walls of the building have to be constructed using specific materials as to play a very active role in the exhibition of cinema and hence the whole cinema house including the entire structure with furniture and fittings and other material used therein constitutes plant. The plant and the building, according to the assessee, therefore, are not mutually exclusive. The auditorium with all the contents therein is the tool with which the show business of the assessee is carried on and not merely the premises in which the assessee's trade and business are carried on.

5. On the other hand, the contention of the Revenue appears to be that the cine