CIT V. HOTEL EXCELSIOR LTD

ITA/840/2011

AI Insights

The case involves multiple appeals related to the assessment years 2004-05, 2006-07, and 2007-08 concerning the depreciation rates applied, penalties/damages paid to NDMC, and the treatment of certain expenditures related to the renovation of Hotel Kanishka under the disinvestment policy of the Government of India. The main legal issues revolved around the correct depreciation rate for the assets, the allowance of certain expenditures as pre-operative expenses, and the treatment of interest earned on FDRs. The ITAT had previously decided in favor of the assessee on these issues, which was upheld by the court.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 688270 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 15-07-2011
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. ESES Yamana Power Ltd., CIT Vs. Delhi Airport Service, CIT Vs. Gwalior Rayon Silk Mfg. Co. Ltd., CIT Vs. Solution Petro Chemicals Industries Corporation Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Applicant
• Court: HIGH COURT
• Assessee Lawyers: ANUPAM TRIPATHI
• Keywords: Bank guarantee; Building; Creditors; Damages; Depreciation; FDR; Income from other sources; Landscaping; Penalty; Pre-operative expenses; Liability ceased
• Section: 438

Judgement Text

"rl. .rJ+ zJ-tf o/\" L5.07.201n Present: Mr. Anupam Tripathi, Sr. SLanding Counsel for the . Revenue. +cM APPI-. L2337/2OU. Exemption allowed subject to just e>tception. Application stands disposed of. ' +ITA E39/20fl.n All the four issues raised in this appl,=al are identical as raised in appeal pertaining to the assessing year 2004-05 (lTA B3B/2011). This appeal is also dismissed. +CM APP[-. T23431203.n. in lT'A 84L l?O'n\"L a ( I t ; Apart from the two issues which a,re covered by the orders passed 'in ITA 837/2OLI on 14th JulV, ,ZOff and in the afore mentioned appeals, the additional issue raised in tlris appeal pertains to the expenditure incurred on landscaping. The assessee had debited a sum of T33,20,4I71- on this account and had claimed the depreciation thereon. The question was as to whether this i expenditure can be treated as part of building and can be , capitalized for the purpose of depreciatiQn. The answer given by f' the ITAT is in affirmative with the followin$ discussion:- \"We have carefully considered the rival contentions and gone through the record including the discussion in the impugned order. The term 'building' has not been defined in the Act. The mature of the as;ses has to be ascertained and we have to understand tlre meaning of the term 'building' depending upolr the context to which a reference has been made. Here the assessee is in a Hotel business. His building is not merely a structr:re of four walls nut includes all such things as are necessary to give the building a better look and is a matter of attraction for the customers to use it. Having regard to the assessee's nature of business it cannot be said the landscaping done by the assessee cannot be considereil as a building. After all the assessee has given a better lool< to this building by pi'ovision of :this landscaping which has become an integral part of the building to be used as a Flotel. In order to acquire a Star category, all these artistic lool< Act. The Assessing Officer had noticed that certain,'creditors who lrad to talce i the money from the assessee had not nlade their claims for more ; t ,. 'i ; ;1. T i, 1' J I {/ a-r9 i i than three years and those accounts haVe become non-operative. On this basis, h'e concluded that the liabitity had ceased to exist : and, therefore, it was a gairr to the assessee and made aclditions on l, this ground. The Tribunal has deleted the lrddition talcing note of the factthat merely because three years have passed the liability is not seized to exist, moreso, when the assessee was still showing that liability in its books of accounts. ; We.do not find any infirmity in the order of the Tribunal. This appeal is also dismissed. . l'Vi'w7lir'-' tl .,t)._. I AlK. Sfltn \"- ffia t'ale #23 Spl.DB %27.04.2012 Present: None for the Parties + ITA No.840/2011 * This matter is listed on the basis of note put up by the office. Vide order dated 15th July, 2011, batch of income tax appeals rverc decided, which includes ITA g41/2011. However, Registry has pointed out that actual number of the said- ITA is 84012011. We thus clari$r that the order dated 15tr' July, z[lf'lffble K in ITA g40l10l1 instead of ITA 84112011. Necessary oorrections bJmade in this I behalf. t.4 nd\" Ie ,I J ACTINKffi JUSTICE APRIL 27 ,2OT2 pk z ff.t/rhr'1ra,r f- "