COMMISSIONER OF INCOME TAX Vs. EAST INDIA HOTELS LTD
LAWS(CAL)-1994-2-33
HIGH COURT OF CALCUTTA
Decided on February 25,1994

COMMISSIONER OF INCOME-TAX Appellant
VERSUS
EAST INDIA HOTELS LTD. Respondents




JUDGEMENT

Ajit K.Sengupta, J. - (1.)In this reference under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that Assessing Officer's order in respect of the following claims was not erroneous in so far as it was prejudicial to the interests of the Revenue and thereby vacating the order of the Commissioner under Section 263 of the Income-tax Act, 1961 : (i) Extra depreciation of Rs. 40,59,139 on plant and machinery used in hotel. (ii) Benefit under Section 80J of the Income-tax Act on flight catering unit at Palam Airport, New Delhi."

(2.)The question is one but has two distinct and separate limbs, the first one relating to the admissibility of the claim of extra depreciation on plant and machinery and the second one relating to eligibility for the benefit under Section 80J.
(3.)The facts as found by the Tribunal relating to the extra depreciation allowance are that the assessee-company is a public limited company mainly carrying on the business of running hotels, popularly known as Oberoi Hotel. The assessment year involved is 1982-83. In its return, the assessee claimed extra depreciation allowance of Rs. 40,59,139 on plant and machinery used in its business of hotels and the Assessing Officer allowed the claim in the assessment order. The Commissioner on examination of the records of assessment took the view that the claim was wrongly allowed and, therefore, the assessment order was erroneous in so far as it is prejudicial to the interests of the Revenue within the meaning of Section 263 of the Act. He was of the view that in the wake of withdrawal of development rebate with effect from June 1, 1974, "there would not be any approval by the Central Government to the assessee's hotels for its purpose". He rejected the contention of the assessee that grant of depreciation allowance should not be linked up with the grant of development rebate under Section 33 of the Act and that the approval of the Central Board remains effective for the purpose of extra depreciation allowance despite the withdrawal of development rebate. The Commissioner, however, took a different view as aforesaid and set aside the assessment directing the Assessing Officer to withdraw the extra depreciation.


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