9911796707
TMI Blog2000 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation thereon at the rate as admissible on the plant?" The assessee-firm derives income from hotel business. Its return of income for the assessment year 1980-81 was filed on July 29, 1979, declaring an income of Rs.10,01,840. Subsequently, the assessee revised its return on November 3, 1981, declaring net loss of Rs.9,96,806. In the revised return, the assessee claimed that the hotel building was plant and machinery and claimed depreciation on hotel building at a higher rate. The Income-tax Officer did not accept the assessee's claim on the plea that a building cannot be treated as plant and machinery. He, therefore, allowed depreciation as claimed by the assessee in his original return, treating the hotel building as a building and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and accordingly entitled to depreciation at the rate applicable to plant. The Karnataka High Court in CIT v. Hotel Rama P. Ltd. [1998] 233 ITR 235 and CIT v. Woodlands Hotel P. Ltd. [1998] 233 ITR 224 (Kar) also held that hotel building was a plant within the meaning of section 43(3) of the Act. The Andhra Pradesh High Court in Hotel Banjara Ltd. v. CIT [1996] 218 ITR 590 and the Patna High Court in CIT v. Lawly Enterprises P. Ltd. [1997] 225 ITR 154, held that it would depend upon the facts of each case whether a hotel building is a plant or not. Both these courts, however, held that depending upon the facts, in a given case, a hotel building might qualify as a plant. Contrary views were expressed by a Division Bench of the Kerala High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, there is no question of referring to the dictionary meaning of the word 'plant' which may or may not include building, for arriving at a conclusion that a building which is specifically designed and constructed as a hotel building would be a 'plant'. Further, in the context of the legislative scheme under section 32 stated above, which provides depreciation at different rates for building, machinery and plant, furniture and fixtures, ships, building used for hospital, aeroplanes, cinematograph films, machinery used in the production and exhibition of cinematograph films recording equipment reproducing equipment, developing machines, printing machines, synchronisers and studio lights except bulbs, projecting equipment of film exhibiting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elter or a home for the conduct of such business. The Supreme Court also referred with approval to the observation of the Chancery Division of England in Carr (H. M. Inspector of Taxes) v. Sayer [1992] 65 Tax Cas 15, that a hotel building remains a building even when constructed to a luxury specification. In view of the above decision of the Supreme Court in CIT v. Anand Theatres [2000] 244 ITR 192, the controversy whether hotel building can be construed as "plant" or not for the purpose of determining the rate of depreciation applicable thereto is no more res integra. Law is now settled that the building in which the business of a hotelier is carried on is not an apparatus for running such business. It is a shelter or a home for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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