Commissioner of Income Tax vs Hotel Hiltop

By the Court

The Appellate Tribunal, Jaipur Bench, Jaipur has made the following reference to this court seeking opinion on the following substantial question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in allowing the claim of the assessee for investment allowance u/s 32A, treating the hotel as an industrial undertaking ?"

The respondent-assessee is engaged in the business of running hotel in the name of M/s Hotel Hiltop, Udaipur. The assessee claimed investment allowance on certain equipments classified as plant and machine. The Commissioner confirmed the assessment made by the assessing officer. However, the Tribunal held that hotel is a industrial undertaking and hence was entitled to the investment allowance. The Hon''ble Apex Court in Commissioner of Income Tax, Trivandrum Vs. M/s. Anand Theatres, has held that the theatre building and hotel building specially equipped for the purposes of business are still building and as such not entitled to depreciation at rate applicable to plant. Thus, the question referred has been answered by the decision of the Hon''ble Apex Court in Anand Theatres case (supra).

Accordingly, this reference is answered in favour of the revenue and against the assessee.

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