South India Tourist Home (P) Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The questions referred are :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the applicant is not entitled to investment

allowance u/s 32A of IT Act in respect of plant and machinery including pipes, sanitary fittings, lifts, A.C. plant and other mechanical, kitchen and

heat equipments ?

Whether, on the facts and in the circumstances of the case the Tribunal was right in law in its view that a hotel is not entitled to investment

allowance u/s 32A of IT Act?

The assessee is engaged in the business of providing boarding and lodging facilities, in other words, a hotel. This Court in the case of Adayar

Gate Hotels Ltd. Vs. Commissioner of Income Tax, , and the Supreme Court in the case of The Indian Hotels Company Ltd. and Others Vs. The

Income Tax Officer, Mumbai and Others, have held that investment allowance is not allowable for hotels, as there is no activity of manufacture

when food is cooked and served in the hotel or restaurant. It has also been held by the Supreme Court that the hotel does no carry on a

manufacturing activity, but a trading activity.

The questions are, therefore, answered against the assessee, and in favour of the Revenue.