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TMI Blog1990 (7) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... ile declining to entertain the additional ground raised by the assessee the Tribunal had overlooked the fact that the assessee had raised a ground concerning depreciation before the CIT(A) to the effect that the ITO erred restricting the depreciation claim of the assessee at Rs. 39,81,002 as against its claim of Rs. 47,73,933. It is this recalled order which is now being disposed of. 3. In the course of the hearing of this appeal for the asst. yr. 1976-77 before us, the counsel for the assessee brought to our notice a decision of A-Bench of the Tribunal in the case of Indian Hotel Companies Ltd. vs. IAC reported at (1989) 34 TTJ (Bom) 526. In that case also, an additional ground was raised which reads as under. "49. By its letter dated 29th April, 1989 the assessee has also sought permission of the Tribunal to admit and decide the following additional ground: "On the facts and circumstances of the case the learned CIT (Appeals) legally erred in not allowing depreciation as per rules and law of the buildings used as a hotel, treating the same as plant". As regards the admissibility of the additional ground, both the parties made similar submissions as were advanced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise calculations. Provisions of depreciation are, therefore, in most cases matters of estimated based upon the available experience and knowledge, rather than of accurate determination." It is by applying these principles of allowance of depreciation as a part of recoupment of cost of a fixed asset and referring to the decisions of the Supreme Court in Taj Mahal Hotel's case and the provisions of section 56 of the IT Act, where the inseparability of the buildings from plant and machinery installed in it for the purpose of letting out was stationary required, the Bench held that building used in a hotel are to be regarded as plant. We are in agreement with this view and following which with respect, we direct the authorities below to regard the buildings used by the hotels as plant and allow depreciation appropriate rate of depreciation. But here we are to take note of a submission made by the Deptl. Rep. that if Hotel Srilekha's decision is to be followed. The entire complex of the building should not be treated as plant and that this treatment should be restricted to those buildings only which fall within the category of the decision in Hotel Srilekha's case. What he meant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation and not additional depreciation. Here again, the CIT(A) has followed his order for the asst. yrs. 1980-81 and 1981-82. This order was Tribunal has dealt with it in Para 3 of their aforementioned order. They have held that the assessee is entitled to extra depreciation and in that sense the issue stands decided in favour of the assessee and against the Revenue. We would, therefore, reject the second ground of appeal also. 6. The third ground in departmental appeal is that the CIT(A) erred in deleting the disallowance of Rs. 3,80,950 made by the ITO being additional telephone rent which has been disputed by the assessee and which is only a contractual and not a statutory liability. The CIT(A) has relied upon the order for earlier year and deleted this addition. We find that the assessee's counsel has filed a copy of the CIT(A)'s order for the asst. yr. 1981-82 in the paper book. On perusal of the order we find that he had followed his order for the asst. yr. 1980-81 on this issue. A copy of the order of the CIT(A) for the asst. yr. 1980-81 has also been filed. While dealing with this issue which was raised as ground No. 4 for the asst. yr. 1980-81, the CIT(A) has stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng before the Supreme Court in the connected case of Indian Hotel Co. Ltd. A copy of the order of the Supreme Court has been filed before us, from which it appears that certain appeals before the Tribunal, Bombay Benches, Bombay stand transferred to the Supreme Court for disposal. It was brought to our notice by the assessee's counsel that the issue regarding the grant of investment allowance is involved in these appeals. In view of this fact, we would set aside the order of the CIT(A) on this issue and restore the matter to the file of the ITO with a direction that he should dispose of the claim for investment allowance in conformity with the order of the Supreme Court as and when the same is received. The fifth ground will be treated as allowed for statistical purpose. 9. The sixth ground is that the CIT(A) erred in directing the ITO to set off the investment allowance relating to earlier years against profit of this year when assessee is not entitled to any investment allowance. The CIT(A) has dealt with this issue in Para 13 of his order. For the reasons stated in the preceding paragraph, this part of the CIT(A)'s order will also be set aside and the matter restored to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-83 in para-6 herein above. For the reasons stated in Para 6 herein above, this ground will have to be rejected and the order of the CIT(A) confirmed. In the result, the departmental appeal will be treated as allowed in part. 13. We will now deal with the assessee's appeal for the asst. yr. 1983-84 (ITA No. 4548(Bom/87). The first ground in the assessee's appeal is that the CIT(A) erred in holding that Rs. 16,14,086 collected by the assessee company as hotel receipts tax under the Hotel Receipts Tax Act, is a trading receipt and liable to tax. The CIT(A) has dealt with this issue in Para 2 of his order. We find that the Supreme Court in the case of Elel Hotels Investments Ltd. Anr. vs. Union of India (1989) 77 CTR (SC) 168 : (1989) 178 ITR 140 (SC) has upheld the constitutional validity of the Hotel Receipts Tax Act, 1980, and have held that the amount collected as hotel receipts tax is income and comes within the scope of taxable receipts. Therefore, the first part of this ground has to be rejected. The finding of the CIT(A) that hotel receipt tax collected from the customers is a trading receipt is confirmed. 13.1 The second part of the first ground is that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received Rs. 25,49,511 as fees from Muscat. Approval from the CBDT for claiming deduction under s. 80-0 had not been given. The CIT(A), therefore, rejected the ground for deduction. We would confirm the disallowance of the claim for deduction under s. 80-0 but would direct the Assessing Officer to allow such claims as and when approval from the Board in this regard is received. 15. The third ground in the assessee's appeal is that the CIT(A) erred in omitting to consider the claim of the assessee company to extra depreciation available on plant machinery installed in approved hotels as per Part I (III) of Appendix I of IT Rules, 1962. Similar issue had come in the departmental appeal for asst. yr. 1982-83. We have held while dealing with the departmental appeal for earlier year that the CIT(A)'s order for that year granting extra depreciation is correct. We would, therefore, modify the order of the CIT(A) in this regard and direct that extra depreciation claimed by the assessee be allowed on the same basis on which it was allowed for the earlier years. 16. The fourth ground in the assessee's appeal is that the CIT(A) erred in upholding the disallowance of weighted deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial Disputes Act, 1947." This agreement has been reached because the Union demanded 20 per cent bonus for the accounting year 1981-82 ended 30th June,1982 which is the relevant accounting year for the assessment year under appeal. Since this is a payment made consequent to an agreement reached, it falls within the second proviso to s. 36(1)(ii). It may be mentioned in this regard that the Kerala High Court in CIT vs. P. Alinkunju, M.A. Nazir Cashew Industries (1987) 62 CTR (Ker) 206 : (1987) 166 ITR 611 (Ker) has discussed the scope of s. 36(1)(ii) and has held that if bonus or commission is paid to an employee in excess of, or otherwise than, what is required to be paid under the Bonus Act, the amount so paid is not automatically allowable as a deduction, but will be allowed only upon the satisfaction of the officer that it is a reasonable payment when considered in the light of cls. (a) to (c) of the second proviso. After consideration of these clauses and after perusal of the agreement with the workers, we are satisfied that the Addl. bonus so paid satisfies the conditions in cls. (a) to (c) of the second proviso to s. 36(1)(ii). We would, therefore, modify the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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