High Court Of Rajasthan : Jaipur Bench
CIT vs. Smt. Geeta Devi Purohit
Section 32A
Asst. Year 1983-84
Y.R. Meena & A.C. Goyal, JJ.
IT Ref. No. 1 of 1988
26th February, 2002
Counsel Appeared : Anuroop Singhi, for the Applicant Judgment
BY THE COURT :
On an application under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for the opinion of this Court.
“1. Whether, on the facts and in the circumstances of the case the Tribunal was justified in holding that the hotel is an industrial undertaking and consequently the assessee is entitled to investment allowance on furniture and electric goods installed therein ?”
2. The assessee derives income from running a hotel. She claimed investment allowance under s. 32A of the Act on the furniture and electric goods. The relevant assessment year is 1983-84. ITO has referred the view taken by CIT in the case of this very assessee, in the order under s. 263 of the IT Act for asst. yr. 1981-82 and rejected the claim of the assessee. In appeal before the AAC, the AAC has followed the order of Tribunal in the case of Orient Express Co. (P) Ltd. vs. IAC (1985) 23 TTJ (Del) 597 : (1985) 14 ITD 506 (Del) and allowed the claim of the assessee. In appeal before the Tribunal, the Tribunal has relied on the decision of the Madras High Court in the case of CIT vs. Buhari Sons (P) Ltd. (1984) 38 CTR (Mad) 88 : (1983) 144 ITR 12 (Mad) and CIT vs. Casino (P) Ltd. (1973) 91 ITR 289 (Ker), wherein the Madras High Court has taken the view that hotel is a service industry and not an industrial undertaking engaged in the manufacture of articles and things. Even then following the view taken by the Tribunal in the case of Orient Express Co. (P) Ltd. vs. IAC (supra) the claim of the assessee was allowed. None appeared for the assessee. Heard learned counsel for the Revenue. Learned counsel for the Revenue submits that the latest decision on the issue in this case is of Madras High Court in the case of Adayar Gate Hotels Ltd. vs. CIT (2000) 158 CTR (Mad) 482 : (2000) 241 ITR 279 (Mad), wherein the Madras High Court has taken the view that hotel is not an industrial undertaking. It does not produce articles or things. Therefore, assessee is not eligible for investment allowance. While considering this issue the Madras High Court has considered its earlier decision in the case of CIT vs. Buhari Sons (P) Ltd. (supra) and CWT vs. P. Devasahayam (1998) 144 CTR (Mad) 313 : (1999) 236 ITR 885 (Mad) and also decision of Kerala High Court in the case of CIT vs. Damodar Corporation Hotel Pankaj (1997) 137 CTR (Ker) 574 : (1997) 225 ITR 699 (Ker), decision of Bombay High Court in the case of Fariyas Hotels (P) Ltd. vs. CIT (1995) 126 CTR (Bom) 363 : (1995) 211 ITR 390 (Bom), decision of Calcutta High Court in the case of CIT vs. S.P. Jaiswal Estates (P) Ltd. (1992) 196 ITR 179 (Cal). Sub-cl. (iii) of cl. (b) of sub-s. (2) of s. 32A provides that the plant and machinery referred in sub-s. (1) shall be the following which includes any new machinery or plant installed after the 31st day of March, 1976 : (i) for the purposes of business of generation or distribution of electricity or any other form of power. (ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing. (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule. Admittedly, assessee runs a hotel. It cannot be said that it engaged in construction work nor it can be said that by running hotel it manufactures any article or thing. Hotel is made for lodging and boarding. No plant and machinery exist in hotel, which is referred to in section for the purpose of benefit under s. 32A of the Act.
In the language of common parlance it can (not) be expected that by running a hotel the assessee should produce any article or thing. When assessee does not produce any article or thing nor engaged in construction business, nor engaged in the business of generating power, in our view the Tribunal has wrongly treated the assessee as industrial undertaking nor the hotel building can be treated as plant and machinery.
At the most assessee can claim that the assessee prepares the eatables for customers. Preparation of eatables cannot be tantamount to manufacturing of articles or things. When assessee is not manufacturing any articles or things, neither a building can be treated as plant and machinery nor the electric fittings or furniture in the hotel can be treated as plant and machinery for the purpose of investment allowance under s. 32A of the Act.
In the result we answer the question in negative i.e., in favour of the Revenue and against the assessee.
[Citation : 260 ITR 231]
