(2003) 24 SITC 321 (Ker)

[IN THE HIGH COURT OF KERALA]

HON'BLE G. SIVARAJAN & HON'BLE K. BALAKRISHNAN NAIR, JJ.

CIT Vs. Victory Acqa Farm Ltd.

I.T. Appeal Nos. 79 & 80 of 2000

Shri P.K.R. Menon and Shri George K. George, Advocates for the Appellant.

Dated 17.10.2002.

DEPRECIATION—PLANT—POND—NOT A PLANT THEREFORE, NOT ENTITLED TO DEPRECIATION AT THE RATE APPLICABLE TO PLANT AND MACHINERY—SECTIONS 32 AND 43(3) OF THE I.T. ACT, 1961.

FACTS.—

The Department submits that the Tribunal has decided the appeals in favour of the assessee relying on a decision of the Full Bench in CIT Vs. Hotel Luciya (1998) 231 ITR 492 (Ker) : (1998) 8 SITC 252 (Ker) but the Supreme Court has reversed the said judgment in a batch of appeals in CIT Vs. Anand Theatres (2000) 244 ITR 192 (SC) : (2000) 14 SITC 536 (SC). The Department on the basis of the aforesaid decision submits that the orders of the Tribunal have to be set aside and the appeals have to be allowed.

HELD.—

The Tribunal, for deciding the matter in favour of the assessee, had relied on the decision of the Full Bench of this Court in Hotel Luciya's case, We also find from the decision of the Supreme Court in Anand Theatres' case that the Supreme Court has specifically referred to the decision in Hotel Luciya's case in page 200 of the said report and the appeal against the same is also stated as being disposed of along with Anand Theatres' case by the said judgment. The Supreme Court has reversed the judgment of the Kerala High Court in Hotel Luciya's case and decided the matter in favour of the revenue by holding that building which is used as a hotel or theatre cannot be given depreciation as plant.

In view of the said decision of the Supreme Court the question on which notice has been issued, viz., "Whether on the facts and in the circumstances of the case and also in the light of the decision of the Supreme Court in Anand Theatres'case the Tribunal is right in law and fact in holding that the pond in the case of the assessee is to be treated as plant and is eligible for depreciation at the rate applicable to Plant and Machinery?" has to be answered in favour of the revenue and against the assessee. Consequently the orders of the Tribunal in I.T. Appeal No. 756 (Coch.)/95 and ITA No. 447 (Coch.)/98 are set aside and the orders of the AO are restored.

CIT Vs. Anand Theatres (2000) 244 ITR 192 (SC) : (2000) 14 SITC 536 (SC)—Followed.

Vital Point :

Pond in the case of the assessee could not be treated as `plant' and was not eligible for depreciation at the rate applicable to plant and machinery.

JUDGMENT

G. Sivarajan, J.—These two appeals are filed by the CIT, Thiruvananthapuram against a common order of the Tribunal, Cochin Bench in I.T. Appeal No. 756 (Coch.)/ 1995 & I.T. Appeal Nos. 446 (Coch.)/98 and 447 (Coch.)/ 1998. I.T. Appeal No. 756/1995 before the Tribunal was filed by the respondent-assessee in respect of the A.Y. 1992-93 and ITA Nos. 446 and 447 of 1998 were filed by the department in respect of the A.Y.s 1994-95 and 1995-96. These two appeals are filed against the order of the Tribunal in ITA Nos. 756/95 and 447/1998.

2. Sri P.K.R. Menon, learned senior Central Government standing counsel for the revenue submits that one more appeal, ITA No. 82 of 2000 against the order in ITA No. 446 (Coch.)/ 1998 was also filed which is pending. The senior counsel submits that the Tribunal has decided the appeals in favour of the assessee relying on a decision of the Full Bench in CIT Vs. Hotel Luciya (1998) 231 ITR 492 (Ker) : (1998) 8 SITC 252 (Ker) but the Supreme Court has reversed the said judgment in a batch of appeals in CIT Vs. Anand Theatres (2000) 244 ITR 192 (SC) : (2000) 14 SITC 536 (SC). The senior counsel on the basis of the aforesaid decision submits that the orders of the Tribunal have to be set aside and the appeals have to be allowed.

3. Though notice was served on the respondent-assessee there is no appearance for the respondent. Since the senior standing counsel submitted that the matter is covered by the Supreme Court decision, we have perused the orders of the Tribunal and the decision of the Supreme Court in Anand Theatres' case (supra). We find that the Tribunal, for deciding the matter in favour of the assessee, had relied on the decision of the Full Bench of this Court in Hotel Luciya's case (supra), We also find from the decision of the Supreme Court in Anand Theatres' case (supra) that the Supreme Court has specifically referred to the decision in Hotel Luciya's case (supra) in page 200 of the said report and the appeal against the same is also stated as being disposed of along with Anand Theatres' case (supra) by the said judgment. The Supreme Court has reversed the judgment of the Kerala High Court in Hotel Luciya's case (supra) and decided the matter in favour of the revenue by holding that building which is used as a hotel or theatre cannot be given depreciation as plant.

4. In view of the said decision of the Supreme Court the question on which notice has been issued, viz., "Whether on the facts and in the circum-stances of the case and also in the light of the decision of the Supreme Court in Anand Theatres'case (supra) the Tribunal is right in law and fact in holding that the pond in the case of the assessee is to be treated as plant and is eligible for depreciation at the rate applicable to Plant and Machin-ery?" has to be answered in favour of the revenue and against the assessee. Consequently the orders of the Tribunal in I.T. Appeal No. 756 (Coch.)/95 and ITA No. 447 (Coch.)/98 are set aside and the orders of the AO are restored. The order of the first appellate authority on this point also goes.

These appeals are allowed as above.