Law: Income Tax Act, 1961

Section: 32

Income-tax---Depreciation---Hotel building---Whether "plant"---Hotel Building though specially designed would not go out of category of building--­Hotel building not a "Plant"--Not entitled to higher rate of depreciation-­Subsequent amendment for assessment year 1988-89 and succeeding years allowing higher rate of depreciation for hotel buildings---Not a clarificatory amendment---Does not entitle assessee to claim higher rate of depreciation for hotels for earlier years---Indian Income Tax Act, 1961, Ss.32 & 43---[CIT v. Lawly Enterprises (P.) Ltd. (1997) 225 ITR 154 (Patna); CIT v. Venkata Rao (Dr.) (B.) (1993) 202 ITR 303 (Kar.); Hotel Banjara Ltd. v. CIT (1996).218 ITR 590 (AP); S.K. Tulsi & Sons v. CIT (1991) 187 ITR 685 (All) and .S. P. Jaiswal Estates (P.) Ltd. v. CIT (1995) 216 ITR 145 (Cal.) dissented from]. Hotel building though specially designed for use as a hotel building continues to be a building and does not cease to be a building because a hotel is being run therein or by reason of the fact that the building was designed for use as a hotel. Depending on the class of construction such hotel buildings are to be allowed depreciation with reference to the rates prescribed in the Appendix. The fact that the buildings mentioned in the schedule may have been specifically designed for a particular purpose had been taken note of by the Legislature when it provided for a higher rate of depreciation for factory buildings. Parliament, however, did not think it fit to provide for a higher rate of depreciation for hotel buildings specially designed for use as hotels. If a building is beyond dispute a building it must fall within the classification of building for the purpose of determining the rates of depreciation allowable on that asset and not under the category of "plant". The fact that a subsequent classification was created later under the classification "buildings" in the Appendix providing for a higher rate of depreciation in respect of the assets so specified, viz., "buildings used as hotels" cannot be regarded as a clarificatory amendment entitling assessees owning hotels to claim depreciation at the higher rate even for earlier assessment…

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