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Whether a hotel building can be considered a plant for the purpose of claiming depreciation under section 32 of the Income-tax Act, 1961. Analysis: The judgment delivered by the High Court of Kerala pertained to the assessment years 1983-84 and 1984-85, focusing on whether a hotel building could be classified as a plant for depreciation claims under section 32 of the Income-tax Act, 1961. The court considered two key questions: firstly, whether the Appellate Tribunal was correct in holding that the hotel building constituted a plant and if the assessee was entitled to higher depreciation and extra-shift allowance based on this classification. Secondly, whether the fact that Income-tax Rules provided for higher depreciation on hotel buildings from April 1, 1988, affected the classification of the hotel building as a plant in earlier years. The court referred to the decision of the Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44 and the decision of the Income-tax Appellate Tribunal, Madras Bench in Hotel Srilekha (P.) Ltd. v. Third ITO [1983] 5 ITD 541 while analyzing the matter. The court emphasized that the statutory provision allowed for depreciation claims concerning specific aspects like buildings, machinery, plant, or furniture used for business purposes, eliminating the need to treat the entire building as a plant for depreciation purposes. The court also highlighted that centralised air-conditioning processes did not warrant categorizing the entire building as a plant. The court noted that the factual scenario before them mirrored a previous judgment in CIT v. Damodar Corporation [1997] 225 ITR 699, where a similar conclusion was reached. Consequently, the court found it unnecessary to address the second question regarding the Income-tax Rules for higher depreciation on hotel buildings. Ultimately, the court answered the first question in the negative, favoring the Revenue and ruling against the assessee based on the reasoning in the aforementioned judgment. The court decided not to address the second question and directed the Income-tax Appellate Tribunal, Cochin Bench, to take appropriate actions based on the judgment. In conclusion, the court's decision clarified the classification of a hotel building as a plant for depreciation purposes under section 32 of the Income-tax Act, emphasizing the specific aspects eligible for depreciation claims and the independence of assessment years in such matters.
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