Commissioner of Income-tax Vs. C.T. Jacob (Kelachandra) and Sons - Court Judgment

SooperKanoon Citationsooperkanoon.com/723449
SubjectDirect Taxation
CourtKerala High Court
Decided OnAug-06-1996
Case NumberIncome-tax Reference Nos. 60 and 61 of 1992
Judge V.V. Kamat and; P.A. Mohammed, JJ.
Reported in[1998]231ITR227(Ker)
ActsIncome Tax Act, 1961 - Sections 32
AppellantCommissioner of Income-tax
RespondentC.T. Jacob (Kelachandra) and Sons
Appellant Advocate P.K.R. Menon and; N.R.K. Nair, Advs.
Respondent AdvocateParty in person
Cases ReferredHotel Srilekha (P.) Ltd. v. Third
Excerpt:
- - taj mahal hotel [1971]82itr44(sc) as well as the decision of the income-tax appellate tribunal, madras bench in hotel srilekha (p. in the process, we have also considered the decision of the apex court in taj mahal hotel's case [1971]82itr44(sc) ,as well as the decision of the madras appellate tribunal in hotel srilekha's case [1983] 5 itd 541. we have also considered that the centralised air-conditioning process would not go to determine the entire building as a plant.v.v. kamat, j.1. in both these references relating to the assessment years 1983-84 and 1984-85 the question is as to whether a hotel building can constitute a plant for the purpose of claim for depreciation under section 32 of the income-tax act, 1961. the questions are as follows :'1. whether, on the facts and in the circumstances of the case- (i) the appellate tribunal is right in law in holding that the hotel building constituted plant ? (ii) the assessee is entitled to higher depreciation and extra-shift allowance on the consideration that the hotel building is a plant ? 2. whether, on the facts and in the circumstances of the case, the appellate tribunal is right in law in holding that the mere fact that with effect from april 1, 1988, the income-tax rules have provided for higher depreciation on the hotel building as buildings will not derogate from the fact that the hotel building constituted a plant in the earlier years ?'2. the income-tax appellate tribunal has considered the question in the light of the decision of the supreme court in cit v. taj mahal hotel : [1971]82itr44(sc) as well as the decision of the income-tax appellate tribunal, madras bench in hotel srilekha (p.) ltd. v. third ito [1983] 5 itd 541.3. only yesterday (august 5, 1996), we had an occasion to consider the position on the basis of plain language of section 32 of the income-tax act, 1961. this was in our judgment in i. t. r. no. 155 of 1991, cit v. damodar corporation : [1997]225itr699(ker) . we have considered the statutory provision in detail to reach a conclusion that where the assessee owns and uses buildings, machinery, plant or furniture for the purposes of business of a hotel, the said assessee can claim depreciation with regard to these aspects, buildings, machinery, plant or furniture in accordance with the provisions of section 32 of the income-tax act, 1961. in view of this position, we have reason that it becomes unnecessary to consider the whole building as a plant in itself because the statute refers to the claim of depreciation with regard to buildings, machinery, plant or furniture leaving no need for exercise of an attempt to hold the entire building as a plant making it for a claim of depreciation at flat rate on the whole building. in the process, we have also considered the decision of the apex court in taj mahal hotel's case : [1971]82itr44(sc) , as well as the decision of the madras appellate tribunal in hotel srilekha's case [1983] 5 itd 541. we have also considered that the centralised air-conditioning process would not go to determine the entire building as a plant.4. we must state that the question and the factual matrix before us also relates to the same situation. the assessee here also is engaged in the hotel business with regard to the building owned and used by him as such. in fact it needs to be mentioned that in the order of the tribunalthere is a mention of the proceedings--the subject of i.t.r. no. 155 of 1991 cit v. damodar corporation : [1997]225itr699(ker) , decided by us yesterday. we adopt the same reasoning.5. in this situation, it would be really unnecessary to consider question no. 2 which relates to the provisions of the income tax rules for higher depreciation on the hotel buildings on the footing that the hotel building constituted a plant in the earlier year. this is also in view of the fact that every assessment year is independent of the other and remains intact with regard to the positions which are required to be governed by section 32 of the income-tax act.6. for the above reasons, we answer question no. 1 in the negative, in favour of the revenue and against the assessee, for the reasons in itr no. 155 of 1991 in cit v. damodar corporation : [1997]225itr699(ker) . we think it unnecessary to answer question no. 2.7. a copy of the judgment under the seal of this court and the signature of the registrar shall be sent to the income-tax appellate tribunal, cochin bench, for passing consequential orders.
Judgment:

V.V. Kamat, J.

1. In both these references relating to the assessment years 1983-84 and 1984-85 the question is as to whether a hotel building can constitute a plant for the purpose of claim for depreciation under Section 32 of the Income-tax Act, 1961. The questions are as follows :

'1. Whether, on the facts and in the circumstances of the case-

(i) the Appellate Tribunal is right in law in holding that the hotel building constituted plant ?

(ii) the assessee is entitled to higher depreciation and extra-shift allowance on the consideration that the hotel building is a plant ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the mere fact that with effect from April 1, 1988, the Income-tax Rules have provided for higher depreciation on the hotel building as buildings will not derogate from the fact that the hotel building constituted a plant in the earlier years ?'

2. The Income-tax Appellate Tribunal has considered the question in the light of the decision of the Supreme Court in CIT v. Taj Mahal Hotel : [1971]82ITR44(SC) as well as the decision of the Income-tax Appellate Tribunal, Madras Bench in Hotel Srilekha (P.) Ltd. v. Third ITO [1983] 5 ITD 541.

3. Only yesterday (August 5, 1996), we had an occasion to consider the position on the basis of plain language of Section 32 of the Income-tax Act, 1961. This was in our judgment in I. T. R. No. 155 of 1991, CIT v. Damodar Corporation : [1997]225ITR699(Ker) . We have considered the statutory provision in detail to reach a conclusion that where the assessee owns and uses buildings, machinery, plant or furniture for the purposes of business of a hotel, the said assessee can claim depreciation with regard to these aspects, buildings, machinery, plant or furniture in accordance with the provisions of Section 32 of the Income-tax Act, 1961. In view of this position, we have reason that it becomes unnecessary to consider the whole building as a plant in itself because the statute refers to the claim of depreciation with regard to buildings, machinery, plant or furniture leaving no need for exercise of an attempt to hold the entire building as a plant making it for a claim of depreciation at flat rate on the whole building. In the process, we have also considered the decision of the apex court in Taj Mahal Hotel's case : [1971]82ITR44(SC) , as well as the decision of the Madras Appellate Tribunal in Hotel Srilekha's case [1983] 5 ITD 541. We have also considered that the centralised air-conditioning process would not go to determine the entire building as a plant.

4. We must state that the question and the factual matrix before us also relates to the same situation. The assessee here also is engaged in the hotel business with regard to the building owned and used by him as such. In fact it needs to be mentioned that in the order of the Tribunalthere is a mention of the proceedings--the subject of I.T.R. No. 155 of 1991 CIT v. Damodar Corporation : [1997]225ITR699(Ker) , decided by us yesterday. We adopt the same reasoning.

5. In this situation, it would be really unnecessary to consider question No. 2 which relates to the provisions of the Income tax Rules for higher depreciation on the hotel buildings on the footing that the hotel building constituted a plant in the earlier year. This is also in view of the fact that every assessment year is independent of the other and remains intact with regard to the positions which are required to be governed by Section 32 of the Income-tax Act.

6. For the above reasons, we answer question No. 1 in the negative, in favour of the Revenue and against the assessee, for the reasons in ITR No. 155 of 1991 in CIT v. Damodar Corporation : [1997]225ITR699(Ker) . We think it unnecessary to answer question No. 2.

7. A copy of the judgment under the seal of this court and the signature of the Registrar shall be sent to the Income-tax Appellate Tribunal, Cochin Bench, for passing consequential orders.