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Issues:
- Claim of investment allowance under section 32A of the IT Act, 1961 for a public limited company engaged in hotel business. - Interpretation of whether a hotel business qualifies as an industrial undertaking for investment allowance purposes. Analysis: The appeal was filed against the order of the CIT(A) which partly allowed the appeal against the ITO's decision regarding the investment allowance claim by the assessee, a public limited company engaged in hotel business. The ITO rejected the claim, stating that the machinery installed, such as water heater plant and kitchen equipment, did not qualify for investment allowance as they were not for the purpose of manufacturing any article or thing. The CIT(A) upheld this decision, citing precedents that investment allowance is not admissible unless a concern is manufacturing or producing articles or things. The assessee contended that it qualifies as an industrial undertaking under section 32A(1)(b)(iii) as it produces articles by serving food to clients. However, the Tribunal rejected this argument, relying on previous court decisions that clarified hotel businesses are mainly trading concerns and do not engage in manufacturing or producing goods for investment allowance purposes. The Tribunal further emphasized that the definitions and interpretations of terms in one Act cannot be automatically applied to another Act. Referring to the Madras High Court decision, it was established that hotel activities, such as preparing food, do not constitute manufacturing or processing of goods. The Tribunal also highlighted the distinction between processing and manufacturing, emphasizing that a new substance must come into existence for an activity to be considered manufacturing. Therefore, based on the precedents and legal interpretations provided, the Tribunal concluded that a hotel business does not qualify as an industrial undertaking for investment allowance under section 32A of the Act. In a related case, the Tribunal referenced a decision regarding a cold storage business where it was determined that processing goods did not equate to manufacturing or producing articles, thus not qualifying for investment allowance. The Tribunal's decision in this appeal aligned with the previous rulings, confirming that a hotel business primarily engaged in trading activities and preparing food for clients does not meet the criteria for investment allowance under section 32A. Consequently, the appeal was dismissed, upholding the disallowance of the investment allowance claim for the assets installed in the hotel.
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