TaxTMI 
TaxTMI 
2010 (7) TMI 884
X X X X Extracts X X X X
X X X X Extracts X X X X
....he sake of convenience and for the purpose of referring to the documents and pleadings, Trade Tax Revision No. 41 of 2008 is taken as the leading case. The brief facts are that M/s. Jai Prakash Industries Limited carrying on the business relating to works contract and after constructing the hotel at Mussoorie known as "Residency Manor" with its movable and immovable assets leased out to M/s. Jay Pee Hotel, New Delhi at the quarterly lease rent of Rs. 95 lacs vide Memorandum of Understanding (hereinafter referred to as, the MOU) dated September 7, 1995 and lease agreement No. JIL/02/95 dated October 1, 1995. The lessor-company leased out various movable assets, viz., sanitary fittings and installations, electrical fittings, plant and machinery, kitchen equipments, air-conditioning and cold storage, lifts, furniture, fixture and other miscellaneous assets (hereinafter referred to as the movable assets) for the period of three years on the terms specified in the lease summary schedule annexed to the agreement. The assessing authority assessed the tax liability on the basis of the nature of the assets and the assets, which were movable, were taxed as per the assessment orders for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in equating the airconditioning plant with a water pump, which is attached to earth only for the purpose of operational efficiency. It is submitted that the compressor and boiler of the air-conditioning plant are permanently fixed at one place. It has further been argued that there is a difference between a water pump and the air-conditioning plant as the air-conditioning plant is permanently attached to the earth and there is no intention on the part of the revisionist to sever it from earth for sale or to use it for other place at any point of time as it is a part and parcel of the hotel building. The learned counsel for the revisionist further argued that there was no material with the assessing authority to show that the air-conditioning plant was to be severed or separated for sale or for installation to some other place and therefore, by no stretch of imagination it can be termed as movable property. In the absence of any such material on record the airconditioning plant, which is a part of the building and embedded to earth, should be considered as immovable property. The plant is used by the revisionist in the fixed condition at one place and it has no intention to r....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." In view of clause 4 of the MOU a separate agreement, i.e., lease agreement No. JIL/02/95 was executed between the parties on September 14, 1995, which was to be effective from October 1, 1995. The first paragraph of this agreement provides that the lessor had agreed to lease out the various moveable assets referred therein, the same is reproduced below: "Lease: The lessor hereby agrees to lease to the lessee and the lessee hereby agrees to take on lease from the lessor subject to the terms of this Lease Agreement No. JIL/ /95 (hereinafter referred to as "the Agreement") the various moveable assets: viz., sanitary fittings and installations, electrical fittings, plant and machinery, kitchen equipment, air-conditioning and cold storage, lifts, furniture and fixtures and other miscellaneous fixed assets hereinafter referred to as the moveable assets described, in the lease summary schedule annexed hereto on 'as is where is' basis." One of the clauses of the agreement is with regard to the "surrender", which provides that unless the lease is renewed as per the terms of the agreement, the lessee shall deliver to the lessor the moveable assets at the place at which it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property." On a careful consideration of the rival submissions made by learned counsel for the parties, we agree with the argument of learned counsel for the respondent. There is no doubt that if any article is immovable property, no tax can be levied in terms of section 3F of the Act. However, all the movable properties are leviable to tax. A perusal of the documents on record clearly shows that the revisionist had executed two separate agreements. The MOU to lease out hotel "Residency Manor" to Jaypee Hotels Limited was executed on September 7, 1995. In the opening paragraph of the agreement various movable assets are mentioned which include the air-conditioning p....