COMMISSIONER OF INCOME TAX Vs. HOTEL AYODYA

JUDGEMENT

(1.) IN respect of the assessment year 1981 - 82, the following question has been referred for our consideration under section 256(1) of the INcome-tax Act, 1961 :

(2.) THE assessee is a hotelier. In respect of certain new machinery installed, the assessee claimed investment allowance under section 32A of the Act. THE claim of the assessee was not accepted by the Income-tax Officer and the said view was affirmed by the Appellate Assistant Commissioner. However, the Appellate Tribunal followed its view expressed in another case and held that hotel is an industry entitled to investment allowance.

(3.) THE Kerala High Court held that a hotel is a trading concern as it is mainly intended for trading and not for production or manufacture