Law: Income Tax Act, 1961

Section: 32

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. 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…

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