Kerala H.C : Whether, on the facts and circumstances of the case, the Tribunal is right in law and fact in holding that the assessee is entitled to depreciation at the rate of 15 per cent on the furniture and fittings in the hospital on the view that hospital comes within the term “welfare centre” as appearing in Appendix-I, Part I (ii) of the IT Rules ?

Counsel Appeared

P.K.R. Menon with George K. George, for the Applicant : Kochunni Nair, for the Respondent

JUDGMENT

S. SANKARASUBBAN, J. :

This IT reference is at the instance of the Revenue. The question of law referred to is as follow : “Whether, on the facts and circumstances of the case, the Tribunal is right in law and fact in holding that the assessee is entitled to depreciation at the rate of 15 per cent on the furniture and fittings in the hospital on the view that hospital comes within the term “welfare centre” as appearing in Appendix-I, Part I (ii) of the IT Rules ?”

2. The assessee is a partnership firm, running a hospital and nursing home at Quilon. In the income-tax assessment for the year 1988-89, the assessee was allowed depreciation on furniture and fittings at 15 per cent. The CIT later passed an order under s. 263 of the IT Act on the view that granting depreciation at 15 per cent was not in order and that the correct rate of depreciation was 10 per cent only. Accordingly, he directed the AO to revise the assessment to restrict the allowance of depreciation at 10 per cent. The assessee took up the matter in appeal before the Tribunal. The Tribunal held as follows : “As per Appendix-I, Part I(ii) of the IT Rules, depreciation at the rate of 15 per cent is allowable on furniture and fittings used in hotels, restaurants, schools, colleges and other educational institutions, welfare centres etc. According to the assessee, hospital is a welfare centre and so in respect of the furniture and fittings used in the hospital, depreciation is allowable at the rate of 15 per cent. The expression “welfare centre” is not defined in the IT Act or Rules. Hence, we have to give to the term ‘welfare centre’ the meaning as commonly understood. If we attribute to the term “welfare” the meaning of employment of health, improving the conditions of living as appearing in the dictionary, it is not difficult to see that a hospital qualifies as a welfare centre”. Thus, the Tribunal held that hospital is welfare centre and hence is entitled to depreciation at 15 per cent.

3. Under Appendix-I, Part II (1), the rate applicable to furniture and fittings not covered by sub-item (2) is 10 per cent. For item (2), furniture and fittings used in hotels, restaurants and boarding houses; schools, colleges and other educational institutions; libraries; welfare centres; meeting halls; cinema house; theatres and circuses; and furniture and fittings let out on hire for use on the occasion of marriages and similar functions, the depreciation allowance is 15 per cent. According to the Tribunal, a hospital will come within the meaning of “welfare centre”. According to us, the interpretation given by the Tribunal is not correct. It is one of the principles of interpretation in the taxation law that the words of ordinary use should be given the meaning which is given by common people. Hospital is a place where sick is taken care of. When a person is taken to a hospital, nobody will say that he is taken to a welfare centre. Welfare centre is a centre for the well-being of the community. Hence, hospital will not come under item (ii). If that be so, only 10 per cent depreciation is available. Hence, we answer the question in negative and against the assessee.

[Citation : 250 ITR 78]