AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1994 (6) TMI 3
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.... not an industrial company mainly engaged in the manufacture of goods ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the rate of income-tax applicable to the company will be that applicable to a non-industrial company ? The question, at the instance of the Department, arising out of Income-tax Appeal No. 1298/(Cal) of 1983 is : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that preparation of food in the hotel constituted manufacture or production of any article or thing within the meaning of section 32A of the Income-tax Act, 1961 ? " The question, at the instance of the Department, arising out of Income-tax Appeal No. 1575/(Cal) of 1983 filed by the Department is : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to deduction of the amounts relating to municipal corporation tax and mult-storeyed building tax for the earlier years notice of which the assessee received in the instant previous year, while the assessee maintained accounts in the mercantile system ? " The year of ass....
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....ce. (B) The Commissioner of Income-tax (Appeals) did not agree with the contention of the assessee that the assessee was engaged in the manufacture and production of goods and as such the building was a factory building. He, therefore, confirmed the order of the Income-tax Officer retaining the depreciation on the building at 2.5 per cent. (C) The Commissioner of Income-tax (Appeals) also confirmed the finding of the Income-tax Officer that the assessee-company was not an industrial company and as such was chargeable to tax at 65 per cent. (D) The Commissioner of Income-tax (Appeals), however, accepted the claim to deductions of Rs. 6,57,867 and Rs. 95,837 on account of corporation tax and multi-storeyed building tax, respectively, on the ground that the liability, though pertained to the earlier years, arose in the instant previous year. The assessee and the Department both went up in appeal before the Tribunal to the extent they were aggrieved by the order of the Commissioner of Income-tax (Appeals). (A) It was claimed by the assessee in appeal that it was entitled to investment allowance under section 32A on the reasoning that in the hotel articles of food were prepared fro....
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....article had to have some degree of durability. The test to be applied was : Did the article fulfil the function of a "plant" in the assessee's trading activity ? Was it a tool of his trade with which he carried on his business ? If the answer was in the affirmative, it would be a "plant". It was contended by the assessee that the aforesaid principle was laid down by the Supreme Court in the case of Scientific Engineering House P. Ltd. v. CIT [1986] 157 ITR 86. It was argued that if this test was applied then the hotel building was an apparatus used by the assessee in its business and had to be treated as "plant" for the purpose of calculation of depreciation. We were also referred to the decision of the Supreme Court in the case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44. In that case the Supreme Court held that the sanitary and pipeline fittings fell within the definition of "plant" in section 10(5) of the Indian Income-tax Act, 1922, and the assessee was entitled to development rebate in respect thereof under section 10 (2)(vib). The fact that the assessee had claimed depreciation on the basis that the sanitary and pipeline fittings fell under "furniture and fittings" in rule 8....
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....used for the purpose of carrying on its hotel business was an apparatus with which the assessee's hotel business was carried on. It cannot be treated as a setting, within which or a canopy under which, the assessee carried on its business. Having regard to the nature of the assessee's business it is to be held that the hotel building is to be treated as a "plant" for the purpose of depreciation allowance under section 32. In that view of the matter, the first two questions are answered in the negative and in favour of the assessee. Questions Nos. 3 and 4 are answered in favour of the assessee by holding that the assessee is to be treated as an industrial company in view of the decision of this court in the assessee's own case in Reference No. 74 of 1990 (S. P. Jaiswal Estates P. Ltd. v. CIT (No. 1) [1994] 209 ITR 298) in which the judgment was delivered on September 22, 1993, in respect of the assessment year 1982-83. Apart from the questions dealt with, there are two other questions raised by the Revenue. Question No. 2 is concluded by the judgments of this court in the cases of CIT v. India Foils Ltd. [1993] 200 ITR 259 and Avery India Ltd. v. CIT [1993] 199 ITR 745. Followi....