1993 (1) TMI 50 - HC - Income Tax

Summary

Issues:
- Entitlement to extra depreciation and extra shift depreciation allowances for a hotel business under the Income-tax Act, 1961.
- Interpretation of item No. III(iii) and III(iv) of Part I of Appendix I to the Income-tax Rules, 1962.
- Applicability of shift working concept to a hotel.
- Whether an approved hotel can claim both extra depreciation and extra shift allowances.

Analysis:

The judgment from the High Court of CALCUTTA addresses the issue of entitlement to extra depreciation and extra shift depreciation allowances for a hotel business under the Income-tax Act, 1961. The court refers to a previous decision where it was held that a hotel is only entitled to extra depreciation allowance and not extra shift depreciation allowance. The court emphasizes that the concept of shift working in a hotel is not applicable for granting extra shift allowance, as hotels operate 24 hours continuously. A special provision for extra depreciation allowance for hotels approved by the Central Government is outlined in item No. III(iii) of Part I of Appendix I to the Income-tax Rules, 1962.

The judgment further discusses the substantial questions of law raised in the application under section 261 of the Act. These questions include the applicability of item No. III(iii) to approved hotels, the concept of shift working in machinery for factories versus hotels, and whether an approved hotel can claim both extra depreciation and extra shift allowances. The court dismisses the contention that the judgment is fallacious or self-contradictory, stating that the interpretation aligns with the intention of the rules regarding extra shift depreciation allowance.

The court clarifies that extra shift depreciation allowance is intended for factories or concerns that do not operate 24 hours daily, which does not apply to hotels. It highlights that hotels have been specifically excluded from extra shift depreciation allowance due to the special provision for extra depreciation in item No. III(iii) for hotels operating continuously. The judgment rejects the argument that unapproved hotels would be entitled to triple shift allowance, affirming that unapproved hotels are not eligible for either extra shift or extra depreciation allowances.

In conclusion, the court finds its interpretation of the law clear and in line with the rules, stating that there is no ambiguity left for the Supreme Court to resolve. The court declines to certify the questions for appeal to the Supreme Court, dismissing the application under section 261 of the Act.

The judgment is a comprehensive analysis of the entitlement of hotels to depreciation and shift allowances under the Income-tax Act, providing clarity on the specific provisions applicable to hotels and the rationale behind excluding them from certain allowances meant for factories or concerns with different operational structures.