Law: Income Tax Act, 1961

Section: 32

Income-tax----Depreciation---Rate of depreciation---Hotel---Hotel building cannot be treated as plant---Higher rate depreciation and extra shift allowance cannot be claimed---Indian Income Tax Act, 1961, S.32. 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 provision of section 32 of the Income Tax Act, 1961. 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. Held accordingly, that the hotel building did not constitute plant. The assessee was not entitled to higher depreciation and extra-shift allowance on the consideration that the hotel building was a plant. CIT v. Taj Mahal Hotel (1971) 82 ITR 44 (SC) ref. JUDGMENT V. V. KAMAT, J.----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?" 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) 82 ITR 44 as well as the decision of the Income-tax…

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