AI Drafter 
TaxTMI 
TaxTMI 
2016 (9) TMI 1004
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....and 1999-2000 respectively. 2. The assessee is a hospital. Contending that its hospital building is a plant, the assessee claimed depreciation at the rate of 25%. Insofar as the assessment years 1999-2000 and 2000-2001 are concerned, the Assessing Officer allowed depreciation at the rate of 25% as claimed by the assessee. However, the Commissioner assumed jurisdiction under Section 263 of the Income Tax Act, taking the view that the assessment orders were prejudicial to the interest of the Revenue. According to the Commissioner, that part of the building used for general purposes and that used for specific hospital purposes should be distinguished and depreciation at the rate of 25% can be allowed only for such portion of the building us....
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....e hospital building of the appellant is not eligible to be treated as a plant for the purpose of granting depreciation under the Income Tax Act, 1961? 2.Whether there were materials for the Appellate Tribunal to hold that the appellant's hospital building has to be classified as partly as plant and partly as general building in view of the decision of the Supreme Court in Dr. B. Venkata Rao's case and Karnataka Power Corporation's case? 3.Whether there were materials for the Appellate Tribunal to classify the appellant's hospital building partly as plant and partly as general in view of the fact that the building is to be used in tandem for the business of running the hospital? 5. We heard the learned counsel for th....
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....r depreciation at the rate of 25%; whereas that part of the hospital which is to be treated as a building shall be eligible for depreciation only at the rate of 10%. It is true that in Commissioner of Income Tax v. Dr. B. Venkata Rao 243 ITR 81, the Honourable Supreme Court considered the case of a Medical Practitioner running a nursing home. In that case, the Tribunal has held the nursing home to be a plant and the same was affirmed by the High Court. In the appeals, the Supreme Court held that since the nursing home is equipped to enable the sterilisation of surgical instruments and bandages to be carried on and it was reasonable to assume that nursing home was equipped with operation theater, the finding of the High Court should be accep....
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....e order of the Tribunal and since findings on facts are required we remand the matter to the Officer for deciding the matter afresh after calling for details from the assessee and the officer will decide the matter in the light of the decisions above referred and our above observations and grant depreciation at the rate applicable to plant only to so much of the area qualifying as 'plant'." 8. Subsequently, the Apex Court in Commissioner of Income tax v. Karnataka Power Corporation 247 ITR 268 referred to the judgment in Commissioner of Income Tax v. Anand Theaters 7 and held that where it is found as a fact that the building has been so planned and constructed so as to serve the assessee's special technical requirements, the....
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....ation is, in our view, limited to buildings that are used for the purpose of hotels or cinema theatres and will not always apply otherwise. The question, basically, is a question of fact, and where it is found as a fact that a building has been so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant for the purpose of investment allowance." 9. Similar view has been taken by the Alahabad High Court in its judgment in Commissioner of Income Tax, Ghaziabad v. Shri Shashi Nursing Home Ltd. 269 CTR 99 (Allahabad, in which it is held in paragraph 8 thus: "8. We have given our thoughtful consideration to the various pleas raised by the learned counsel for the par....
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....t case. The plea of Sri. Chopra that the decision of the Apex Court in the case of Anand Theaters (supra) which is a subsequent decision ought to have been applied cannot be applied for the reason that the case of Anand Theatres did not relate to nursing home whereas decision of the Apex Court in the case of Dr. B. Vankata Rao (supra) directly related to nursing home and therefore the principle laid down in case of Dr. B. Vankata Rao (supra) ought be applied in the present case. Moreover, we find that in the earlier assessment year and subsequent assessment year the Income Tax Officer has allowed the depreciation on the building treating it as part of plant and machinery." 10. A reading of the above judgments, therefore, show that the qu....