TMI Blog1995 (3) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10,71,470.24 Electrical fittings equipments 2,66,103.97 Musical equipment 8,091.09 Kitchen equipments 1,30,207.12 Water pump 8,637.65 Generator 1,49,442.99 Neon sign 4,745.00 Intercom systems 17,519.77 Vacuum cleaner 3,742.13 Boiler 11,462.38 -------------------------- 18,32,310.36 -------------------------- The Assessing Officer did not allow any investment allowance but made no discussion either. 2. The learned CIT (A), following the decisions of Kerala High Court in the case of CIT v. Casino (P.) Ltd. [1973] 91 ITR 289 and of Madras High Court in the case of CIT v. Buhari Sons (P.) Ltd [1983] 144 ITR 12 and certain decisions of the Tribunal, held that the assessee was not engaged in the production of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that the assessee was entitled to investment allowance on the plant and machinery installed in the hotel. 4. In the alternative, it was submitted that for the year under consideration, the total income of the assessee was Rs. 2,31,253 which included room rent of Rs. 22,185 only but a considerable amount of Rs. 1,63,846 from the restaurant. It was also pointed out that for assessment years 1988-89, 1989-90, 1990-91 and 1991-92, the restaurant income was Rs. 18,82,148, Rs. 22,77,188, Rs. 18,87,083 and Rs. 22,53,823 respectively as against the total receipts of Rs. 39,60,892, Rs. 51,39,370, Rs. 53,81,375 and Rs. 73,18,604 respectively. It was, therefore, submitted that since a major portion of the assessee's income not only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Jaiswal Estales (P.) Ltd. [1992] 196 ITR 179, it was submitted that the business of a hotel was essentially a non-manufacturing or non-producing concern and was a trading concern. It was pointed out that the basic ingredients of hotel-keeping is providing lodging or maintaining a building consisting of many rooms for overnight accommodation which had nothing to do with any manufacturing or producing any article or thing. It was submitted that the said decision was in the context of an industrial undertaking and the High Court held that the ultimate nature of the business of hotel-keeping which is determinative of the issue was that it was not an industrial undertaking and hence did not qualify for relief under section 32A. It was also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of food materials in a hotel as manufacture. The decision of the Calcutta High Court in the case of S.P. Jaiswal Estates (P.) Ltd. is regarding the deduction of investment allowance under section 32A. It has been held by the High Court that under section 32A, the industrial undertaking is to be wholly manufacturing or producing goods or things whereas for purposes of determining whether an assessee is an industrial company or not, it should be mainly manufacturing or processing goods. It has further been held by the High Court that though a hotel also produces eatables from raw materials, such manufacturing or production of goods that may be involved therein is only incidental or ancillary to the business of hotel-keeping. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not serve the purpose because essentially the assessee is running a hotel and the running of restaurant is an ancillary part of the hotel-keeping. Moreover, the machinery used for the preparation of eatables consumed in the restaurant is the same machinery used for purposes of preparation of meals supplied in the hotel rooms, and that too of the order only of Rs. 1,30,207 being kitchen equipment. This equipment is also not used exclusively for purposes of the restaurant and the restaurant in the scheme of things is also a part and parcel of the hotel. There is thus no justification for allowing deduction to the assessee under section 32A of the Act. 8. It may also be mentioned that the Bombay High Court in the case of CIT v. Berry's Hote ..... X X X X Extracts X X X X X X X X Extracts X X X X
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