Income-tax--

‑‑‑‑Depreciation‑‑Hotel business‑‑‑Hotel building‑‑‑"Plant"‑‑‑Entitled to depreciation at 15 per cent.‑‑Indian Income Tax Act, 1961, S.32‑‑‑Indian Income‑tax Rules, 1962.

The assessee derived income from hotel business and claimed depreciation for the hotel building at 15 per cent. at the rate admissible for plant and machinery. The Income‑tax Officer rejected but the Tribunal upheld the claim. On a reference:

Held, that hotel was a plant and hence entitled to depreciation allowance at the rate of 15 per cent. admissible for plant and machinery.

CIT v. Taj Mahal Hotel (1971) 82 ITR 44 (SC) fol.

V.K. Tankha for the Commissioner.

Nemo for the Assessee.

JUDGMENT

This is a reference under section 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal for answer by this Court:‑‑

"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the premises used as a hotel can be treated as a plant for the purposes of depreciation at higher rate?"

The brief facts giving rise to this reference are these: The assessee derives income from hotel business by providing lodging, boarding, restaurant and bar facilities. It claimed depreciation on building claiming it to be a plant, at 15 per cent. as per the schedule provided under the Income‑tax Rules. The Income‑tax Officer allowed depreciation at 2.5 per cent. on building treating it as a first class .building. On appeal, the Commissioner of Income‑tax (Appeals) directed depreciation on hotel building at the rate admissible for plant and machinery at the rate of 15 per cent. Aggrieved by the decision of the Commissioner of Income‑tax (Appeals), an appeal was preferred by the Department before the Tribunal which affirmed the order of the Commissioner of Income‑tax (Appeals) relying on the decisions of the other Benches of the Tribunal. Hence, the Revenue moved the Tribunal for making a reference to this Court and‑the aforesaid reference has been made by the Tribunal.

We have heard Shri Tankha, learned counsel for the applicant, and perused the record. The Tribunal, in a detailed order, has discussed all the relevant case‑law on the subject and held that hotel was in the definition of a plant and, therefore, the assessee is entitled to depreciation allowance to the maximum extent. Suffice it to say that in the case of CIT v. Taj Mahal Hotel (1971) 82 ITR 44 (SC), a somewhat similar question came up for consideration before their Lordships of the Supreme Court with regard to Taj Mahal Hotel and the question was whether the installation of sanitary and pipeline fittings, in one of the branches can be granted depreciation allowance under the head "furniture and fittings". Their Lordships, after considering the matter, held that (headnote) "the sanitary and pipeline fitting fell within the definition of "plant" in section 10(5) and the respondent was entitled to development rebate in respect thereof under section 10(2)(vib). The fact that the respondent claimed depreciation on the basis that the sanitary and pipeline fittings fell' under "furniture and fittings" in rule 8(2) of the Income‑tax Rules, 1922, did not detract from this position. The intention of, the Legislature was to give the word "plant" a wide meaning.

Hence, in view of the decision of the Supreme Court, the Tribunal has rightly come to the conclusion that hotel is a plant and accordingly decided the matter in favour of the assessee. We are of the opinion that the view taken by the Tribunal appears to be justified and needs no interference.

We answer the question in favour of the assessee and against the Revenue.

M. B.A./582/FC?????????

Reference answered.