TaxTMI 
TaxTMI 
1996 (9) TMI 109
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....purpose of answering these questions are : The assessee is running a hotel at Guwahati under the name and style " Hotel Belle Vue (P.) Ltd." The assessee is a company incorporated under the Companies Act. During the assessment years 1982-83 and 1987-88, the assessee claimed that running of a hotel is an industrial undertaking eligible for deduction of investment allowance under section 32A of the Act. The Assessing Officer held that the assessee was not entitled to investment allowance and claim for such deduction was disallowed. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. On further appeal by the assessee before the Income-tax Appellate Tribunal, the Tribunal allowed the appeal holding that the assessee was an industrial undertaking and therefore entitled to get investment allowance on the hotel run by the assessee. Accordingly, the Assessing Officer was directed to grant investment allowance to the assessee under section 32A of the Act. At the request of the Revenue, the above mentioned two questions have been referred for opinion of this ....
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....r. Joshi has also drawn our attention to the provisions contained in sections 80-I, 80J and 80HH and tried to distinguish by saying that hotel business is a separate undertaking from manufacturing or producing articles or things, therefore, the assessee is not entitled to get investment allowance. Besides, Mr. Joshi submits that preparation of foodstuffs is not commonly known as manufacturing of foods. Dr. A. K. Saraf, learned counsel appearing for the assessee, on the other hand, vehemently opposes the submissions of Mr. Joshi. According to him, if it is an industrial undertaking and engaged in the business of manufacture or production of articles or things which is used for his business then the assessee is entitled to get the investment allowance. Dr. Saraf further submits that the decision relied on by Mr. Joshi in CIT v. Casino (Pvt.) Ltd. [1973] 91 ITR 289 (Ker) is not applicable in this case, inasmuch as, in the said case the Kerala High Court had the occasion to decide the question of industrial company in a different Act. Dr. Saraf has tried to distinguish the case by saying that the decision of the said case was based on the expression of " industrial company " in a diff....
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....ance. This provision was inserted by the Finance Act, 1976, and it came into force with effect from April 1, 1976. This provision has been incorporated in the Act with the sole view to give benefit to certain industries in respect of investment allowance, however, there is a proviso to this section. As per the proviso certain investments are totally excluded, such as, any machinery or plant installed in any office premises or any residential accommodation, including any accommodation in the nature of a guesthouse ; any office appliances or road transport vehicles ; any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33 and any machinery or plant, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head " Profits and gains of business or profession " of any one previous year, etc. Therefore, looking into the section of the Act all investment other than the investment mentioned in the proviso are taken into consideration, where investment allowance is entitled. As per section 32A, in respect of a ship or an aircraft or....
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.... principle of law that when a raw material is converted to a finished product definitely a new product is prepared and it is known in a different name and it becomes a manufactured product. Therefore, in our opinion, under the sub-clauses (ii) and (iii) of clause (b) of sub-section (2) of section 32A the assessee's hotel is an industrial undertaking. Now the only question is whether under section 32A the assessee is entitled to get investment allowance. Various activities are carried on in a hotel. Composite activities of a hotel makes a hotel business. It is not the bed alone which is the part of the main business of a hotel. All other benefits a guest normally requires should also be made available. As per Black's Law Dictionary, Fifth edition, " hotel " means " a building held out to the public as a place where all transient persons who come will be received and entertained as guests for compensation and it opens its facilities to the public as a whole rather than limited accessibility to a well-defined private group ". As per the Webster's New Twentieth Century Dictionary, " hotel " means " an establishment or building providing a number of bed rooms, baths, etc., and usually ....
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....bit of section 32A(1) of the Act. Therefore, this proviso makes the position very clear that whatever may be the business, for manufacture or production, if a machinery is wholly used for the purposes of the business carried on by him as required under sub-section (2) of section 32A of the Act, investment allowance will be given to him. On a plain reading of section 32A, it is now clear that the business of manufacture or production of goods has to be carried on by the assessee for getting the benefit of section 32A of the Act. The plant and machinery referred to in sub-section (2) of section 32A are used in manufacture or processing of goods and such manufactured goods are used in the business of the assessee wholly owned by him, then the assessee shall be entitled to benefit of section 32A of the Act. A reading of section 32A(1) and (2) at least indicates the same. However, if the manufactured goods or articles are partly used for running the business then the assessee is not entitled to get the benefit. That is what we understand from section 32A of the Act. Therefore, we respectfully disagree with the decision of the Calcutta High Court in CIT v. S. P. Jaiswal Estates (P.) Ltd.....