COMMISSIONER OF INCOME TAX vs. KASTURBHAI MAYABHAI PVT. LTD.

PDF · subscribers
ITR/11/1987HC GujaratGJHC24011744198716 January 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Appellate Tribunal was not right in law in treating the theatre building as 'plant' and allowing depreciation at the rate applicable to plant. The Court relied on the Supreme Court's decision in Commissioner of Income-tax v. Anand Theatres, (2000) 244 ITR 192, which established that the nature of plant and building is distinct. The Supreme Court had ruled that even specially equipped buildings like theatres or hotels remain buildings and are not eligible for depreciation at the higher rate applicable to plant. Therefore, the High Court answered the reference in favour of the Revenue and against the assessee. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

The assessee, Kasturbhai Mayabhai Pvt. Ltd., claimed depreciation on a cinema building at 5% for Assessment Year 1982-83. Previously, depreciation was claimed at 2.5%. The Income-tax Officer rejected the claim, and this was confirmed by the Commissioner of Income-tax (Appeals). However, the Income-tax Appellate Tribunal (ITAT) held that the theatre building should be treated as 'plant' and allowed depreciation at the rate applicable to plant. The Commissioner of Income-tax (CIT) has referred a question of law to the High Court of Gujarat at Ahmedabad regarding this decision of the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the theatre building should be treated as plant, and the assessee should be given depreciation at the rate applicable to plant? (Question of law, concerning the interpretation of provisions related to depreciation on buildings versus plant). Assessee's Contention: The ITAT held that the theatre building should be treated as plant and depreciation should be applied accordingly. (No specific arguments or authorities are recorded for the assessee in the judgment). Revenue's Contention: The learned counsel for the Revenue stated that the controversy is concluded in favour of the Revenue by the Supreme Court's judgment in Commissioner of Income-tax v. Anand Theatres, (2000) 244 ITR 192. This judgment held that theatre buildings are still buildings and not entitled to depreciation at the rate applicable to plant, as the nature of plant and building is different.

Which sections of the Income-tax Act were involved?

No specific sections of the Income-tax Act are explicitly mentioned in the provided text, other than general references to depreciation provisions.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 11 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus KASTURBHAI MAYABHAI PVT. LTD. -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 16/01/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of Commissioner of Income-tax, Gujarat-I, Ahmedabad, the Income-tax Appellate Tribunal, Ahmedabad Bench 'C' has referred following question of law for the opinion of this Court with regard to Assessment Year 1982-83 :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the theatre building should be treated as plant, and the assessee should be given depreciation at the rate applicable to plant ?"

2.

The assessee claimed depreciation on a cinema building at 5% for the year under consideration. Previously the assessee had claimed depreciation at the rate of 2 1/2% on the cinema building. The Income-tax Officer had rejected the claim of the assessee and the view taken by the Income-tax Officer was confirmed by the Commissioner of Income-tax (Appeals). However, the Appellate Tribunal held that the theatre building should be taken as plant and the rate of depreciation should be applied accordingly.

3.

Though the respondent is duly served, no one appears on behalf of the respondent.

4.

We have heard the learned counsel for the Revenue. The learned counsel for the Revenue states that the controversy raised in the present Reference is concluded in favour of the Revenue by judgment of the Supreme Court in Commissioner of Income-tax v. Anand Theatres, (2000) 244 ITR 192. In the above referred to decision, the Supreme Court has held that nature of plant and building is different and theatre building as well as hotel building specially equipped for the purposes of business are still buildings and are not entitled to depreciation at the rate applicable to plant. In view of the principle laid down by the Supreme Court, we are of the opinion that on the facts and in the circumstances of the case, the Appellate Tribunal was not right in law in holding that the theatre building should be treated as plant and the assessee should be given depreciation atthe rate applicable to plant. The Reference, therefore, is answered in favour of the Revenue and against the assessee. The Reference accordingly, stands disposed of, with no order as to costs.

(J.M.Panchal,J.)

( M.S.Shah, J.)

(patel)

Recent GST High Court judgments

Search GST case law →