CHANDRAWATI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Allahabad has referred the following questions of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court: 1. Whether, on the facts and in the circumstances of the case, the nursing home of the assessee could be treated to be a plant for the purposes of depreciation?

(2.) WHETHER , on the facts and in the circumstances of the case, the nursing home of the assessee could be treated as a hotel for the purposes of depreciation? 2. The reference relates to the asst. yr. 1989 -90. Briefly stated, the facts giving rise to the present reference are as follows: The applicant's source of income is salary and profession. She is running a nursing home, called 'Krishna Medical Centre', at Lucknow. The applicant claimed depreciation on the building of the nursing home at the rate of 20 per cent, the rate applicable to a hotel. The assessee's claim before the AO was that the nursing home provided lodging to the patients on daily rent and, therefore, it was like a hotel. The AO rejected the claim holding that the nursing home could not be treated as a hotel or as a boarding house and allowed the depreciation only at the rate of 10 per cent applicable to a building. Being aggrieved, the assessee filed appeal to the first appellate authority. Earlier, before the first appellate authority it was argued that the nursing home was a plant and it was entitled to depreciation applicable to a plant. The CIT(A), after going through the case laws, held that the AO had rightly allowed depreciation at the rate of 10 per cent and he rejected the contentions raised on behalf of the assessee. In appeal filed by the assessee before the Tribunal, the pleas raised before the first appellate authority were repeated. The Tribunal after hearing the rival submissions and after going through the material placed on record, noted that the assessee had not taken the plea of the nursing home being treated as a plant before the AO and even before the first appellate authority, the plea was probably raised only orally. The Tribunal took note of the decision of the Hon'ble Karnataka High Court in this regard and negatived the contention of the assessee. The Tribunal further held on whatever equipments the claim of depreciation applicable to plant was made before the first appellate authority, the same having been dealt with by the first appellate authority and the point was allowed by it. On beds and operation theatre equipments installed in the nursing home, which was fitted with special surgical beds, the first appellate authority allowed depreciation applicable to plant. That having been allowed by the first appellate authority, whatever remained of the nursing home, was nothing but rooms of bricks and stones, which could not be called, by any stretch of imagination, to be a plant. The Tribunal also held that the ratio laid down by the apex Court in the case of Addl. CIT v. Gurjargravures (P) Ltd. : [1978]111ITR1(SC) , was also applicable and, therefore, at that stage it was considered to be in the interest of justice to allow the assessee to take up a new ground of the entire nursing home being treated as a plant. The assessee's appeal was, therefore, dismissed.

(3.) THE learned Counsel submitted that the applicant was running a nursing home and, therefore, it has to be treated as a plant for the purpose of depreciation under the Act. According to him, the Tribunal in subsequent assessment years had held the nursing home run by the applicant to be a plant and allowed the depreciation accordingly. He further submitted that the apex Court in the case of CTT v. Dr. B. Venkata Rao : [2000]243ITR81(SC) . has held the nursing home to be a plant. Relying upon a decision of the apex Court in the case of Jute Corporation of India Ltd. v. CTT and Anr. 0044/1991 : [1991]187ITR688(SC) , he submitted that the applicant was perfectly justified in raising the plea that the nursing home was to be treated as a plant for the purpose of depreciation before the Tribunal as the Karnataka High Court in the case of CTT v. Dr. B. Venkata Rao : [1993]202ITR303(KAR) (Km), had already declared the law on that issue.