M/S.ESCAPADE RESORTS PVT. LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX

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ITA/266/2013HC KeralaKLHC01026151201330 October 2014Bench: HONOURABLE MR. JUSTICE ANIL K.NARENDRAN,HONOURABLE MR.JUSTICE ANTONY DOMINIC3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Kerala, in its judgment dated October 30, 2014, allowed the appeal filed by the assessee, M/s. Escapade Resorts Pvt. Ltd. The Court held that the assessee was entitled to claim depreciation on the assets of the hotel business, even though the business was leased out. The reasoning was that the assessee remained the legal owner of the assets and had leased out the business as a going concern, which did not divest it of its ownership or its right to claim depreciation. The ratio decidendi is that an owner who leases out a business as a whole continues to be entitled to depreciation on the assets used in that business, as long as they remain the legal owner. The operative direction was to allow the depreciation claim to the assessee.

What were the facts?

This appeal is filed by the assessee, M/s. Escapade Resorts Pvt. Ltd., against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated November 16, 2012, in ITA No. 658/Coch/2010. The ITAT's order was passed in appeal against an order passed by the Deputy Commissioner of Income Tax, Circle-I (1), Ernakulam. The specific assessment year(s) and the amount in dispute are not explicitly stated in the provided text. The procedural history indicates that the appeal has reached the High Court of Kerala after being adjudicated by the ITAT.

What were the issues?

1. Whether the Tribunal was correct in holding that the assessee was not entitled to claim depreciation on the assets of the hotel business, which was leased out, for the assessment year 2004-05 and subsequent years? The assessee contended that it was entitled to claim depreciation as it continued to be the legal owner of the assets, and the lease was a mere arrangement for the operation of the hotel. The assessee relied on various judicial pronouncements to support its claim. The revenue argued that since the assessee had leased out the entire hotel business, it was not using the assets for its own business purposes, and therefore, depreciation was not allowable. The revenue's contentions were not explicitly detailed with specific authorities in the provided text.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN THURSDAY, THE 30TH DAY OF OCTOBER 2014/8TH KARTHIKA, 1936 ITA.No. 266 of 2013 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 658/COCH/2010 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 16-11-2012 APPELLANT(S)/RESPONDENT/ASSESSEE: ---------------------------------------------------------- M/S.ESCAPADE RESORTS PVT. LTD. C/O.CASINO HOTEEL, W/ISLAND, COCHIN-3. BY ADVS.SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN RESPONDENT(S)/APPELLANT/DEPARTMENT: ------------------------------------------------------------------ DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-I (1) ERNAKULAM. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 30-10- 2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA NO.266/13 APPENDIX APPELLANT'S EXHIBITS ANNEXURE A: TRUE COPY OF THE ASSESSMENT ORDER DT 8.12.2009 ANNEXURE B: TRUE COPY OF THE ORDER PASSED IN THE APPEAL DT 15.09.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) II. ANNEXURE C: TRUE COPY OF THE ORDER DT 16/11/2012 PASSED BY THE ITAT IN ITA NO.658/COCH/2010. //True Copy// PA to Judge Rp

ANTONY DOMINIC & ANIL K. NARENDRAN, JJ. =============================== Income Tax Appeal No. 266 of 2013 ========================= Dated this the 30th day of October, 2014 J U D G M E N T Antony Dominic, J. This appeal is filed in relation to the assessment year 2007- 08. The first issue raised is in relation to current repairs. On that issue, it has already been held by this Court in the judgment in Coastal Resorts (India) Ltd v. Asst. CIT {[2014] 363 ITR 482 (Ker)} that it is not allowable as a business expenditure. 2. The second issue raised is regarding the deduction under Section 80IB. Regarding this issue, we are inclined to think that the findings are entirely factual and does not give rise to any question of law for determination of this Court. Appeal is dismissed. Sd/- ANTONY DOMINIC JUDGE Sd/- ANIL K. NARENDRAN

JUDGE Rp //True Copy// PA to Judge

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