TaxTMI 
TaxTMI 
1994 (2) TMI 33
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.... company ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the company was not entitled to extra shift depreciation ?" Questions at the instance of the Revenue: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the preparation of food in a hotel was manufacture or production of article of the nature as envisaged in section 32A of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding the hotel building as plant when the Tribunal itself viewed in Income-tax Appeals Nos. 937/ (Cal) of 1982 and 666/(Cal) of 1983 in the assessee's own case that no building or structure used as premises in which the business is carried on can be ex facie taken as plant unless it is established that it is impossible for the manufacturing equipment in the hotel to function without the particular type of structure and the building of the hotel had no such particular structure ?" This reference relates to the income-tax assessments of the assessee-company for the previous year....
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....engaged in the processing of goods and is liable to be assessed at a concessional rate of income-tax of 60 per cent. as laid down in the Finance Act, 1983, in respect of the assessment year 1983-84. Question No. 4 in the assessee's reference is covered against the assessee by the decision of this court in the assessee's own case as in S. P. Jaiswal Estates Pvt. Ltd. v. CIT [1991] 188 ITR 603. We, accordingly, answer question No. 4 in the assessee's reference as above in the affirmative and in favour of the Revenue. Question No. 1 raised in this reference at the instance of the Revenue is also covered against the assessee-company by the decision of this court as in CIT v. S. P. Jaiswal Estates Pvt. Ltd. [1992] 196 ITR 179. Following the said decision, we answer question No. 1 referred at the instance of the Revenue in the negative and in favour of the Revenue. The issues for our consideration are question No. 1 in the assessee's reference and question No. 2 in the Revenue's reference. These two questions are now considered hereunder: Question No. 1 in the assessee's reference relates to the issue whether the assessee-company is entitled to claim depreciation in respect of the pr....
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....therefore, held that the higher rate of depreciation of 40 per cent. will not be available to the assessee since such higher rate was made effective only on July 24, 1980. The particular issue which is involved in this case did not arise for consideration before this court in Burrakur Coal Co. Ltd. v. CIT [1982] 135 ITR 804. Of course, at page 809 of the reports, this court did observe, as rightly pointed out by Mr. Poddar, that depreciation or allowance of expenditure must be determined with reference to the law prevalent in the year of assessment. It was sought to be argued by Mr. Poddar that the Kerala High Court in S. A Wahab's case [1990] 182 ITR 464, considered several decisions of the Supreme Court, wherein it was pointed out that the provisions of the Income-tax Act as they stand on April 1 of a financial year must apply for that year. But, this cannot be applied universally for the Income-tax Rules as well. Rules are generally procedural in nature. In this context, Mr. Poddar drew our attention to the decision of this Court in Smt. Manjushree Biswas v. CWT [1988] 171 ITR 348. In that case, while dealing with rule 1BB of the Wealth-tax Rules, 1957, which had come into forc....
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....he Income-tax (Fourth Amendment) Rules, 1983, in the assessment year 1983-84. Such higher rates will be applicable only from the assessment year 1984-85. Accordingly, we answer question No. 1 in the assessee's reference in the affirmative and in favour of the Revenue. The second question raised in this reference at the instance of the Revenue is concerned with the short issue whether the hotel building is plant or not for the purpose of allowing depreciation. In this respect, Mr. Poddar, learned counsel for the assessee, referred to the decision of the Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44. The Supreme Court in that case was considering the meaning of the expression "plant" in the context of a hotel business. The question before the court was whether the sanitary and pipeline fittings in a hotel fell within the definition of "plant" in the context of section 10(5) of the Indian Income-tax Act, 1922, corresponding to section 32(1) of the Income-tax Act, 1961. Their Lordships referred to the decision of the Court of Appeal in Jarrold (Inspector of Taxes) v. John Good and Sons Ltd. [1963] 1 WLR 214, 223. There, the nature of the assessee's business required that it....
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....at in R. C. Chemical Industries v. CIT [1982] 134 ITR 330 (Delhi), the assessee carried on the business of manufacture of saccharine and other allied chemicals. The assessee erected a factory comprising many buildings. In one of the buildings, the assessee installed machinery and plant for the manufacture of saccharine for which certain atmospheric controls, e.g., moisture, temperature and provision for filtered air, were required. The building was constructed with particular specifications and standards, the installed machinery and plant and portions of the building had to be built with fire-bricks and lined with asbestos sheets and also made air-tight to conserve the temperature and preserve filtered air so that saccharine could be manufactured properly. The question before the court was whether the building in question was a plant. In this context, the court laid down the following principles: (a) The definition of "plant" in section 43(3) of the Income-tax Act, 1961, should be given a wider meaning as it was an inclusive definition. (b) All buildings are not "plant" but a building or structure is not per se to be excluded from the ambit of "plant". (c) If the concrete constr....
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....rrying on the business. Looked at from that angle, even the structure or building which houses the plant and machinery of a manufacturing unit can be said to be plant because the building used as the house for installation of plant and machinery and the functioning of such machinery for the purpose of manufacture or production with the aid of power and labour is not the same building which is used for human habitation. Therefore, if we are to come to the conclusion that wherever a building or structure requires particular arrangements, ramifications, special alignments, it would cease to be a building and not factory building and, if we take, as Mr. Poddar would have us take a hotel building as a plant simply by reason of its having special division into multiple rooms in a particular setting and arrangements to be fit to be used as hotel, then we shall have to also wipe out the classification of depreciable assets into buildings, factory buildings, plant and machinery and so on. The building which is used as a factory can also claim the same attributes of having special features completely unlike other buildings. Yet the Legislature has treated factory buildings as buildings thoug....