COMMISSIONER OF INCOME TAX Vs. HOTEL AMRITHA PRIVATE LIMITED

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Cochin Bench, which has sent up the following question of law for our opinion, viz.:

(2.) THE assessee, Hotel Amritha (P.) Ltd., Trivandrum, is a private limited company running a hotel. THE accounting year with which we are concerned is 1971-72, the assessment year being 1972-73. THE assessee's busines premises included a lodging establishment as well as a boarding section or restaurant. In the course of the year, the assessee had installed a lift at a cost of Rs. 80,604 and also certain other machineries and plants like cooking oven, refrigerators, air-conditioners, kitchen vessels, etc., at a total cost of Rs. 3,10,990. THE cost of the assets installed during the year was allocated between these two businesses. In respect of the lodging premises, the total cost of the assets installed and allocated came to Rs. 1,19,739. THE cost allocated to the restaurant came to Rs. 1,91,251. THE cost of the lift had been included in the restaurant premises. THE assessee claimed development rebate in respect of the entire cost of machinery and plant installed. THE ITO disallowed the claim in respect of the lift and allowed the claim in respect of the other assets. On appeal, the AAC held that the allowance of development rebate for any of the assets of the assessee was unjustified and wrong. Following an earlier order of the Tribunal, he took the view that the assessee would not be entitled to development rebate in respect of any of the items of plant and machinery, in view of the provisions of Section 33(6) of the I.T. Act. He issued a notice of enhancement of assessment, and after hearing the assessee, suitably enhanced the computation of income by disallowing the development rebate allowed by the officer. THE assessee appealed to the Tribunal. THE Tribunal noted that on a previous occasion it had taken the view that Section 33(6) was applicable to hotels also, However, the decision of the Karnataka High Court in Sri Durga Enterprises v. ITO [1976] 102 ITR 745 had been rendered since the earlier decision of the Tribunal. That decision had taken the view that Section 33(6) would not disentitle an assessee running a hotel business from claiming development rebate. Following the said decision, the Tribunal allowed-development rebate on all the items claimed including the lift. At the instance of the revenue, the Tribunal has referred the question of law for our determination.

(3.) WE are unable to agree with the view of the Tribunal that the scope of the proviso to Section 33(6) is only to allay apprehensions. WE see little room for any apprehension in the face of the comprehensive non-obstante clause with which Section 33(6) opens ; and we cannot regard the proviso as meant to discharge only the purpose of allaying apprehensions. WE would rather understand the proviso as fulfilling its usual and general role of taking out of the main provision a part or a portion of what is contained in it. Thus understood, we get another indication that a hotel is included within the scope of the main provision in Section 33(6) of the Act. There is the decision of the Karnataka High Court referred to by the Tribunal and reported as Sri Durga Enterprises v. ITO [1976] 102 ITR 745. Due account is to be taken of the said decision.