TMI Blog2004 (1) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Karnataka High Court in the case of CIT vs. Dr. V. Venkata Rao (1996) 131 CTR (Kar) 236 : (1993) 202 ITR 303 (Kar) it has been held that a nursing home is not an ordinary building. The building is used not only to house the patients and to nurse them but also to treat them for which various equipments and instruments are installed. It should have an operation theatre, a pathology and X-ray room, plant for sterilisation of cloths, plant for sterilisation of other instruments and air conditioning room, etc. Therefore, a nursing home building is plant and is entitled to depreciation as such. In view of this clear-cut finding and respectfully following these observations there is no doubt the nursing home portion of the building is a plant because the building or premises are constructed and used in a particular way and without which it was not possible to use these equipments. In view of this, the AO is directed to allow the depreciation as is allowable in the case of the plant. However, this depreciation shall be limited to the 60 per cent of the building which is being used as nursing home and not to the 40 per cent which the appellant is using for his residence." 5. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is used not only to house the patients and nurse them, but also to treat them for which various equipment and instruments are installed. It should have an operation theatre, a pathological laboratory, X-ray room, plant for sterilisation of clothes, plant for sterilisation of other surgical instruments, an air-conditioning room, etc. Therefore, a nursing home building is plant and is entitled to depreciation at ten per cent under s. 32 of the IT Act, 1961." 9. We have heard the parties and perused the records of the case. The Department has not placed any material on record to establish that the portion of the building which is used for nursing home does not contain operation theatre, pathology and X-ray room and plant for sterilisation of clothes, plant for sterilisation of other surgical instruments. In the absence of such material, in the facts and circumstances of the case and in view of the case law referred to above, we are of the view that by applying the functional test the building in question can be said to be plant within the meaning of s. 43(3) of the Act. We, therefore, find no infirmity in the order passed by the learned CIT(A). 10. We now take up the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 12,56,989 would come to Rs. 7,51,193. Thus, the loan had already been consumed in the construction of the nursing home. Therefore, there is no question of the disallowance of 40 per cent on this ground. He has further submitted that no nexus has been established by the Revenue that the loan taken was utilised for the residential portion of the building. Thus, he has urged that the order of CIT(A) may be set aside. 16. The learned Departmental Representative has relied upon the order passed by the CIT(A). 17. We have heard the parties and perused the records of the case. It may be mentioned that the building in question has been constructed for nursing home-cum-residential purposes. Thus, it is incorrect to say that the loan taken in the previous year by the assessee was consumed in the construction of nursing home portion of the building. In the facts and circumstances of the case, we find no infirmity in the order passed by the learned CIT(A). Hence, we uphold the order. 18. The second ground of appeal states that because the learned CIT(A) has also wrongly and illegally confirmed the addition of Rs. 17,605 made by the AO towards household expenses. 19. Briefly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and arbitrarily confirmed an addition of Rs. 2,25,088 out of the addition of Rs. 2,28,088 made by the AO towards the construction cost of the nursing home. Because the cost of nursing home as shown by the appellant is fully explained and proved. The addition confirmed by the learned CIT(A) is arbitrary and against the facts of the case." 25. Briefly stated, facts are that the assessee had constructed a nursing home-cum-residential building for which the assessee made an investment of Rs. 12,56,989 during the financial year 1991-92 to 1994-95. The AO referred the matter to the Valuation Officer for ascertaining the cost of investment in the building. The AO estimated the investment in the building for financial years 1991-92 to 1994-95 at Rs. 15,26,000. The copy of the said report was sent to the assessee for his comments. The AO after having considered the objection of the assessee had worked out the cost at Rs. 14,68,177. Thus, the extra cost came to Rs. 2,28,088 and the same was added to the income of the assessee. 26. On appeal, the CIT(A) confirmed the addition to the extent of Rs. 2,28,088. 27. The learned counsel for the assessee, at the outset, has submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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