2007 (3) TMI 202 - HC - Income Tax

Issues:
1. Whether the nursing home could be treated as a plant for the purpose of depreciation?
2. Whether the nursing home could be treated as a hotel for the purpose of depreciation?

Issue 1: Nursing Home as a Plant for Depreciation:
The case involved a dispute regarding the classification of a nursing home for depreciation purposes. The applicant claimed depreciation on the building of the nursing home at the rate applicable to a hotel, arguing that it provided lodging to patients like a hotel. However, the Assessing Officer allowed depreciation at a lower rate applicable to a building, rejecting the claim that the nursing home could be treated as a hotel or a boarding house. The Commissioner of Income-tax (Appeals) upheld this decision, allowing depreciation only on specific equipment. The Tribunal noted that the applicant had not raised the plea of the nursing home being treated as a plant before the lower authorities. The Tribunal, citing relevant case law, dismissed the appeal, emphasizing that the building lacked the characteristics of a plant, and it was not justifiable to consider the entire nursing home as a plant.

Issue 2: Nursing Home as a Hotel for Depreciation:
The applicant's counsel argued that the nursing home should be treated as a plant for depreciation based on subsequent assessments and relevant case law. However, the Revenue's counsel contended that the claim for depreciation as a plant was raised for the first time before the Tribunal and was not presented before the assessing authority or the first appellate authority. The Tribunal rightly declined to entertain this plea, citing previous court decisions. The High Court analyzed the facts and legal precedents, concluding that the Tribunal's decision to reject the claim regarding depreciation at the rate applicable to a plant was justified. The High Court also noted that no arguments were presented on whether the nursing home could be treated as a hotel for depreciation purposes.

In conclusion, the High Court held that the plea regarding depreciation on the nursing home as a plant was not entertained by the Tribunal, and thus, did not arise from its order. Regarding the second question, the High Court agreed with the Tribunal's findings that the nursing home could not be treated as a hotel for depreciation purposes, ruling in favor of the Revenue and against the assessee.