Commissioner of Income Tax vs Vrindavan Hotels P. Ltd.

S. Sankarasubban, J.—This appeal is filed by the Commissioner of Income Tax, Cochin, against the judgment of the Income Tax Appellate Tribunal, Cochin Bench, in I. T. A. No 124/Coch. of 1993. The assessee is a company engaged in the business of running a hotel. For the assessment year 1988-89, the assessee-company claimed 100 per cent. depreciation on furniture items costing less than Rs. 5,000. While completing the assessment, the Assessing Officer disallowed this claim on the ground that these items cannot be considered as plant and machinery. In appeal, the Commissioner of Income Tax (Appeals) held against the assessee. In further appeal to the Tribunal, the Tribunal relying on the decision in Commissioner of Income Tax, Andhra Pradesh Vs. Taj Mahal Hotel, Secunderabad, , held that the assessee is entitled to 100 per cent. depreciation on the furniture in hotel as such furniture items constitute plant.

According to the appellant, the above decision is not correct. Learned counsel for the appellant brought to our notice Appendix I, Rule 5. This is with regard to the depreciation Table. The first item is buildings. The second item is furniture and fittings. The third item is machinery and plant. The argument of the appellant is that furniture is under a separate head and plant and machinery are also under a separate head. Furniture cannot come under plant. We agree with the argument of learned counsel for the appellant. Hence, we hold that the respondent is not entitled to 100 per cent. depreciation. The respondent is entitled to depreciation as per Appendix I. Questions of law are answered in favour of the Revenue and against the assessee.