Commissioner of Income Tax vs Hotel Ratnada International (P) Ltd.

On an application filed u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''), the Tribunal has referred the following questions for the opinion of this court :

"1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing to allow depreciation to the assessee on hotel building at the rate applicable to plant and machinery ?

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing to allow extra shift allowance on the hotel building including other plant and machinery of the hotel as the hotel is supposed to be running for 24 hours a day ?"

The assessee is a private limited company and runs a hotel. The assessing officer had allowed depreciation at the rate of 5 per cent. The assessee claimed the depreciation at the rate of 10 per cent claiming that hotel building is part of plant. The assessing officer has negatived the claim of the assessee. In appeal before the Commissioner (Appeals), the Commissioner (Appeals) has also confirmed the view taken by the assessing officer. In appeal before the Tribunal, the Tribunal has allowed the claim of the assessee holding that hotel building is part of plant and machinery and if hotel runs 24 hours a day, the hotel building is entitled for extra shift allowance.

None appeared for the assessee. Heard the learned counsel for the revenue, Mr. Singhi. The learned counsel for the revenue, Mr. Singhi, submits that whether hotel building is a plant or part of the plant, that has been concluded by their Lordships in the case of Commissioner of Income Tax, Trivandrum Vs. M/s. Anand Theatres, wherein their Lordships held that theatre building and hotel building are not part of plant and depreciation cannot be allowed on the hotel building or the theatre building as permissible in the case of plant and machinery.

Mr. Singhi further submits that this court in the case of Commissioner of Income Tax Vs. Lake Palace Hotels and Motels Pvt. Ltd., has held that in case of hotel building or any hotel business, the assessee is not entitled for extra shift allowance.

Following the view taken by their Lordships in the case of Anand Theatres (supra), the view taken by the Tribunal that hotel building is a part of plant and machinery is erroneous. Similarly, when building is not forming the part of the plant, no other specific machinery has been shown which is entitled for extra shift allowance. Thus, the Tribunal has again committed error in allowing extra shift allowance to the assessee.

In the result, we answer both the questions in the negative, i.e., in favour of the revenue and against the assessee.

The reference so made stands disposed of.