COMMISSIONER OF INCOME-TAX vs. M/S.CAMA HOTELS LTD.

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ITA/26/1998HC GujaratGJHC24024064199825 March 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the two questions of law raised by the Revenue arose for consideration. Consequently, the Tribunal was directed to forward a statement of case in respect of these questions. The Court did not decide the merits of the disallowance of Rs. 11,66,033/- for hotel renovations or the allowability of depreciation on the swimming pool. The principle derived from this judgment is that if a High Court finds that substantial questions of law arise from an ITAT order, it will direct the Tribunal to state a case for the High Court's adjudication. The operative direction was to make the rule absolute and direct the Tribunal to forward the statement of case. No issue was expressly left undecided, as the Court's role was procedural – to facilitate the High Court's hearing of the substantial questions of law.

What were the facts?

The Commissioner of Income-tax (Revenue) sought a direction from the High Court of Gujarat to the Income-tax Appellate Tribunal (ITAT) to forward a statement of case concerning two questions of law under Section 256(2) of the Income-tax Act, 1961. The assessee is M/s. Cama Hotels Ltd. The assessment years are not specified. The ITAT had previously passed an order that is the subject of the Revenue's grievance. The dispute involves a disallowance of Rs. 11,66,033/- related to hotel renovations and a direction to allow depreciation on a swimming pool. The High Court considered the record and found that these questions of law arose for consideration.

What were the issues?

The High Court was asked to decide whether the ITAT was correct in law and on facts in two specific matters. 1. Whether the Appellate Tribunal was right in law and on facts in deleting the disallowance of Rs. 11,66,033/- representing expenditure incurred to renovate hotel rooms, conference halls, etc. This issue turns on the interpretation of provisions related to the allowability of such expenditure as a revenue or capital expense. 2. Whether the Appellate Tribunal was right in law and on facts in directing the Assessing Officer to allow depreciation on a swimming pool by treating it as plant. This issue concerns the classification of a swimming pool for depreciation purposes under the Income-tax Act. The Revenue contended that the ITAT's decisions on these points were erroneous. The judgment does not record any specific contentions from the assessee, M/s. Cama Hotels Ltd., regarding these issues.

Which sections of the Income-tax Act were involved?

Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No 26 of 1998

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question 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?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus M/S.CAMA HOTELS LTD. -------------------------------------------------------------- Appearance: MR B B Naik for Mr. MANISH R BHATT for Petitioner MR JP SHAH for the Respondent

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

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 25/03/98

ORAL JUDGEMENT (Per R.K.Abichandani,J)

Rule. Learned counsel Mr. J.P.Shah for the respondent waives service of Rule. The Revenue has suggested the following two questions seeking a direction on the Income-tax Appellate Tribunal to forward statement

of case in respect thereof under section 256(2) of the Income-tax Act, 1961. "1.Whether, the Appellate Tribunal is right in law and on facts in deleting the disallowance of Rs. 11,66,033/- being expenditure incurred to renovate the hotels room, conference hall etc.?

2.

Whether, the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to allow depreciation on Swimming Pool treating it as a plan ?"

2.

On going through the record, it appears that these questions of law arise for consideration of this Court. We therefore, direct the Tribunal to forward statement of case in respect of these two questions. Rule is made absolute accordingly with no order as to costs.

... ***darji

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