Cit Vs. Indian Hotels Co. Ltd.

counsels: r.v. desai, p.s. jetly and j. p. deodhar, for the revenue .p. j. pardiwala and n.s. joshi, for the assessee in the bombay high court s.h. kapadia & v.c. daga, jj. - bombay stamp act, 1958. schedule 1, article 36: [y.r. meena, cj & d.a. mehta & a.s. dave, jj] deed of mortgage liability to pay stamp duty held, any instruments in respect of transactions, relating to loans and advances, loans and mortgages, cash credit or overdraft bonds, agreements of pawn or pledge and letters of hypothecation executed by farmers for agricultural and land development purposes in favour of all commercial bank etc. are entitled to remission of entire duty chargeable under the stamp act with effect on and from 1.4.1979 under government notification dated 23.3.1979. thus, where loan was granted by bank of india under agricultural finance scheme towards purchase of air compressors, drilling rods and other accessories. use of the air compressors, drilling rods and other accessories in case of applicant who is a farmer can only be for purpose of drilling a bore-well for purpose of irrigation in process of carrying on agricultural activities. thus, it is apparent that loan was availed of by applicant-farmer for agricultural and land development purposes because a bore-well would go to increase the utility of agricultural land by ensuring round the year irrigation. the instrument in question would therefore fall within scope of complete remission granted to instrument of mortgage under government notification dated 23.3.1979 and hence not liable to stamp duty under article 36 of schedule i of the act. .....by the department on the ground that the hotel building was not a plant and, therefore, the assessee was not entitled to claim depreciation thereon. the tribunal held in favour of the assessee.2. under the above circumstances, the following two questions have been referred to this court under section 256(1) of the act for its opinion. (qs. at pg. 5)' whether, on the facts and in the circumstances of the case, the tribunal was right in holding that section 40(c) instead of section 40a(5) was applicable in respect of employee-director for the purpose of disallowances out of remuneration and perquisites 2.whether, on the facts and in the circumstances of the case, the tribunal was right in law in directing to treat the hotel building as plant for the purpose of granting depreciation ?'findings3. in view of the judgment of the supreme court in the case of cit v. indian engg. & commercial corpn. (p.) ltd. : [1993]201itr723(sc) and particularly in view of the fact that payments were made to director employee, question no. 1 is answered in the affirmative, i.e., in favour of the assessee and against the department. therefore, section 40(c) is applicable in respect of employee- director for the purposes of disallowances in respect of remuneration and perquisites paid to such employee director. this answer is given on the basis of the law as it stood at the relevant time.4. in view of the judgment of the supreme court in the case of cit v. anand theatres : [2000]244itr192(sc) the above question no. 2 is answered in the negative, i.e., in favour of the revenue and against the assessee. hence, the assessee was not entitled to depreciation in respect of the hotel building at the rates applicable to plant because the hotel buildings are held by the supreme court only to be buildings and not plants.5. reference is, accordingly, disposed of.