Hotel premises treated as plant for depreciation when the building functions as an essential business tool.

A hotel building used for lodging, boarding, restaurant and bar facilities can be treated as "plant" for depreciation purposes under the Income-tax Act, 1961 where the asset functions as an essential tool of the business. Applying the broad meaning of "plant", the hotel premises were held to fall within that concept, and higher-rate depreciation was available to the assessee.

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Issues: Whether a hotel building used for lodging, boarding, restaurant and bar facilities can be treated as a plant for the purpose of claiming depreciation at the higher rate.

Analysis: The reference turned on the character of the hotel premises in the context of depreciation under the Income-tax Act, 1961. The Tribunal had held, on the strength of relevant case law, that a hotel falls within the concept of plant. The governing principle applied was that the expression "plant" is to be given a wide meaning where the asset forms an essential tool of the business.

Conclusion: The hotel premises were rightly treated as plant and the assessee was entitled to depreciation at the higher rate.

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