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2014 (5) TMI 193

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..... he business is conducted. For each and every business, trade or industry, a building is required to carry on such activity - the building plays some role and its function is to shelter the business, but it has no other function except in some rare cases such as dry dock where it plays an essential part in the operations which take place in getting a ship into the dock, holding it securely and then returning it to the river - the Tribunal has committed error in treating the hotel building as a plant – Decided in favour of Revenue. - D. B. Income Tax Reference No. 70/1995 - - - Dated:- 3-1-2014 - Ajay Rastogi And J. K. Ranka,JJ. For the Appellant : Mr. Anuroop Singhi For the Respondent : Mr. Vivek Singhal ORDER By T .....

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..... . 4. However, the Assessing Officer was of the view that preparation of food articles does not justify that it is a manufacturing activity so as to enure for deduction under Section 32A of the Act and accordingly disallowed the claim. 5. Dis-satisfied with the said disallowance, an appeal came to be preferred before the CIT (A), who also rejected the contention of the assessee. 6. The matter was further agitated before the Income Tax Appellate Tribunal, Jaipur, who however allowed the claim of the assessee on the basis of the order of Income Tax Appellate Tribunal, Banglore Bench in the case of Hotel Navrathana Vs. Second ITO (1987) 27 ITJ (Bang) 234. 7. It is this order, which has been assailed before us and the Tribunal, as st .....

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..... depreciation allowance on building, machinery, plant or furniture and also for extra allowance in the case of new machinery or plant installed in premises other than the premises used as office or any residential accommodation and also for new building erected and used as a hotel. As against that, the aforesaid decisions by Courts in England are based upon Section 41 of the Finance Act, 1971, which provide for allowance for capital expenditure incurred on the provisions of machinery or plant for the purposes of the trade and the Court were only dealing with general meaning of the word plant . Even there, as quoted above, Courts have specifically held that creation of atmosphere in a hotel by beautiful buildings and gardens would not make s .....

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..... is specially designed and constructed for running a hotel or cinema would be covered by plant and other buildings used for the same purpose would not get depreciation as plant , even though such business is carried on in such premises. In our view, the Delhi High Court has in the case of R.C. Chemical Industry, (1982) 134 ITR 330 rightly observed that mere fact that manufacture of saccharine would be better carried on in a building having atmospheric controls would not convert the building from the setting to the means for carrying the business. Similarly, the Rajasthan High Court also in Lake Palace Hotels and Motels's case, 1997 226 ITR 561 rightly observed that simply because some special fittings or controlling equipments is .....

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..... l is merely a trading concern; and (ii) the activity carried on for preparing food articles from raw materials in a hotel would not constitute manufacture or production of goods. In CIT v. Casino (Pvt.) Ltd. (1973) 91 ITR 289 the Division Bench of the Kerala High Court referred to Section 2(6)(d) of the Finance Act, 1968, which defines an 'industrial company' and held that the activity carried on by the assessee in preparing articles of food from raw materials would not constitute 'manufacture or processing of goods' within the meaning of said Section. Foodstuffs prepared in the hotels using raw materials such as pulses, wheat, vegetables or meat and the like cannot be said to be manufacturing activity and such activity was .....

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