COMMISSIONER OF INCOME TAX Vs. CAMA HOTELS LTD

JUDGEMENT

(1.) IN these matters, at the instance of CIT, Gujarat-I, Ahmedabad has raised the following question of law for determination of this Court under s. 256(2) of the IT Act.

(2.) CAMA Hotels Ltd, an assessee-respondent herein, is a company engaged in hotel business. IN the present application we are concerned with asst. yrs. 1980-81, 1981-82 and 1982-83, respectively. The assessee claimed depreciation in respect of hotel building, furniture and fixtures as "plant" as per the provisions of IT Act and Rules. The ITO Ahmedabad by his order, dt. 1st Feb., 1983 (asst. yr. 1981-82) did not accept the claim of the assessee. According to him in the table of rates at which depreciation is admissible as per Appendix-I of the IT Rules, 1962, the assessee as regards building is concerned it is entitled to depreciation at the rates mentioned which is applicable to building and is not applicable to as "machinery and plant". Since the building, furniture and fittings, machinery and plant are separately classified in the said appendix the ITO held that the assessee's building was not entitled to depreciation at a higher rate as machinery and plant than that stipulated in the said appendix in respect of hotel, building, furniture and fixtures. According to him the assessee is entitled to depreciation on the building as per cl. 1 of Table of rates at which the depreciation is admissible as stated in Appendix-I (enacted under r. 5). According to the ITO the building is not entitled to depreciation as plant as stated under cl. 3 of the said Schedule and that building is not entitled to higher rate of depreciation as per cl. 3 to Appendix-I enacted under r. 5 of the IT Rules, 1962. Similar order was passed for the asst. yr. 1982-83 also.

(3.) BEFORE we discuss the problem raised in the reference, let us look at the relevant statutory provisions of the Act. Statutory background :