G.C Bharuka, J.:— The Income-Tax Appellate Tribunal, Bangalore, has, in all, referred six questions of law seeking the opinion of this court under section 256(1) of the Income-Tax Act, 1961 (in short the “Act”), out of which three are at the instance of the Revenue and three at the instance of the assessee. The questions are the following:
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee's activity of producing food items from its boarding section was one involving production or manufacture of an article or thing within the meaning of section 32A(2)(iii)?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that investment allowance was allowable in respect of kitchen boilers?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that investment allowance was not allowable under section 32A in respect of air-conditioner used in the rooms of the lodging section?
(iv) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the building used for the purpose of hotel business was ‘plant’ for the purpose of depreciation?
(v) Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing liability of Rs. 1,89,385 relating to bonus ‘set on’?
(vi) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the claim for interest under section 214, on Rs. 35,708 paid within the accounting year, but beyond the statutory date of March 15?”
2. The facts are quite short. The assessee is a company by status, carrying on the business of running a hotel having boarding facilities as well. For the assessment year 1982-83, the claim of the assessee for investment allowance made under section 32A of the Act in respect of hotel building, kitchen boiler and air-conditioners was rejected by the Assessing Officer and then by the first appellate authority on the ground that the assessee was not an industrial undertaking, manufacturing or producing any article or thing. However, the Tribunal, keeping in view the decision of its own held that the assessee was entitled to investment allowance as claimed. Secondly, the assessee's claim for depreciation in respect of building for running a hotel by treating it as a “plant” was also allowed by the Tribunal, though at the first instance it was disallowed by the Assessing Officer and the first appellate authority on the ground that section 32 has no application to hotel building.
3. Thirdly, the assessee's claim for deduction of bonus liability amounting to Rs. 2,99,350 was allowed by the Assessing Officer only to the extent of Rs. 1,09,965 and disallowed the rest on the ground that there was no enforceable liability to the extent of Rs. 1,89,385 which finding was also upheld by the Tribunal.
4. Further, the assessee's claim for interest on the excess amount under section 214 of the Act was outrightly rejected by the Assessing Officer and upheld by the first and second appellate authorities. Under these circumstances, the questions of law referred to above have been referred to us for opinion.
5. So far as the first three questions referred to us are concerned, the same have to be answered against the assessee in view of the decision of this court in the case of Commissioner Of Income-Tax v. Hotel Ayodya., [1993] 201 ITR 1002, where it has been held that the business of a hotelier, as in the present case, is in the nature of trading activity and not industrial activity. Therefore, the assessee is not entitled to any investment allowance under section 32A of the Act.
6. So far as the fourth question of law is concerned, it relates to grant of depreciation pertaining to hotel building. The question is whether the rate of depreciation to be allowed to such a building should be that which is applicable to building or to plant? In substance, the question canvassed is, whether the building of a hotel has to be treated as “plant” for the purpose of depreciation. Keeping in view the judgments of the Supreme Court in the cases of Scientific Engineering House (Pvt.) Ltd. v. Commissioner Of Income-Tax., [1986] 157 ITR 86 and CIT v. Taj Mahal Hotel, [1971] 82 ITR 44, we are of the considered opinion that a building used for lodging in hotel business is a tool of the trade and therefore for the purpose of depreciation it has to be treated as a “plant”.
7. So far as the fifth question of law is concerned, it has to be answered against the assessee in view of the decision of this court in the case of Mysore Lamp Works Ltd. v. Commissioner Of Income-Tax., [1990] 185 ITR 96, wherein it has been held that (page 103):
“We are also in respectful agreement with the view expressed by the Kerala High Court in P.K Mohammed Pvt. Ltd. v. Commissioner Of Income-Tax, [1986] 162 ITR 587, that the setting apart of this amount under section 15 of the Bonus Act is only a provision to satisfy an unascertained liability in future and there is no diversion of the fund at source by overriding title.”
8. Lastly, coming to the sixth question referred to us, from the assessment order, we find the following details of the tax assessed and the advance tax paid:
(Rs.)
Tax assessed
8,81,709
Less: Advance tax paid on
Date
Amount (Rs.)
18-09-1981
78,271
18-12-1981
78,271
18-3-1982
6,50,875
31-3-1982
1,10,000
9,17,417
Excess tax paid
35,708
9. From the above figures it is clear that for the assessment year in question the assessee had paid Rs. 35,708 in excess of its assessed liability. Though the said payments by way of advance tax were made after the prescribed due dates, none the less, in similar circumstances, this court in the case of Commissioner Of Income-Tax v. M/S. Karnataka State Warehousing Corporation Ltd., [1990] 185 ITR 25 has held that interest on excess advance tax has to be paid by the Government even if the instalments of advance tax have been paid after due dates but within the financial year. For the reasons as stated above, in the conclusion questions Nos. (i), (ii), (iii) and (v) are answered against the assessee and in favour of the Revenue. However, questions at Sl. Nos. (iv) and (vi) are answered in favour of the assessee and against the Revenue.
10. In the circumstances, there will be no order as to costs.