Commissioner of Income Tax vs Narang Hotels (P.) Ltd.

S.K. Desai, J.—By its appellate order, the Tribunal dealing with the assessee''s claim to be treated as an industrial company has remanded the matter back to the ITO to ascertain, if necessary, the quantum of income of the assessee''s activity as a flight kitchen. However, the basic question is whether the flight kitchen is an activity entitling the assessee to be treated as an industrial company even on the assumption that the income from such activity is more than 50 per cent of the total income. The Tribunal has directed the ITO to follow the Tribunal''s decisions in certain matters where such claim was being considered. If the decision was in favour of the assessee, then only the ITO was directed to go into the question of computation of income, namely, whether the percentage is more than 50 or less than 50. Shri Jetley, on behalf of the Commissioner, points out that in Anjali Hotels Private Ltd. Vs. Commissioner of Income Tax, , the Kerala High Court has decided that a hotel is not an industrial company. In our opinion, apart from the decisions of the Tribunal, the ITO should also consider the aforesaid decision in Anjali Hotels (P.) Ltd.''s case (supra) which appears to us prima facie to have relevance and applicability to the question put under consideration by the Tribunal. On considering the Tribunal''s decisions and the aforesaid decision, the ITO should decide, in the first place, whether the activity of the flight kitchen can be considered to be an activity which should entitle the assessee to be classified as a manufacturing company. It is only thereafter that he will take the exercise of computing the income from such activity and not otherwise. If we give this clarification as an addendum to the direction given by the Tribunal, there is no necessity of issuing rule in the matter. This is because, in our opinion, the ITO is bound in this matter as in other matters to take into account decisions of the High Courts or of the Supreme Court given or reported subsequent to the appellate decision of the Tribunal remanding the matter back. We give this clarification so that the ITO is properly guided.

In this view of the matter, the application is directed to stand rejected.