Commissioner of Income Tax vs Dr. Ganga R. Menon

C.N. Ramachandran Nair, J.

This appeal filed by the department is against the order of the Tribunal cancelling the order issued by the Commissioner (Appeals) u/s 263 of the Income Tax Act disallowing depreciation at the rate applicable to "plant" on the nursing home of the assessee. The Tribunal following the Full Bench decision of this court in Commissioner of Income Tax Vs. Hotel Luciya, and, that of the Supreme Court in Commissioner of Income Tax Vs. Dr. B. Venkata Rao, , held that the assessee is entitled to depreciation on the hospital building at the rate applicable to "plant", and reversed the order of the Commissioner issued u/s 263 of the Act.

We have heard Sri P.K.R. Menon, senior counsel appearing for the department, and Sri P. Balakrishnan, counsel for the assessee. While senior counsel for the revenue relied on the later decision of the Supreme Court in Commissioner of Income Tax, Trivandrum Vs. M/s. Anand Theatres, , counsel for the assessee relied on the decision of the Supreme Court in Dr. B. Venkata Rao''s case (supra). No doubt, the Supreme Court in the decision in Anand Theatres'' case (supra) held that plant and building can co-exist in the same establishment. In other words, the building may be independent from the plant, and the business activity involved with the plant can be in the building. Of course the decision was rendered in the context of a theatre wherein the Supreme Court held that building also cannot be treated as a plant. We find that the Supreme Court referred to its earlier decision in Dr. B. Venkata Rao''s case (supra) referred to above, but distinguished the same, as the facts are different. However, the decision in Dr. B. Venkala Rao''s case (supra) remains, and is not overruled by the Supreme Court. From the facts noticed by the Supreme Court in the decision in Dr. B. Venkala Rao''s case (supra), we find that both the Tribunal and the High Court decided the issue in favour of the assessee on the basis of sterilization facility available in the hospital to constitute the building also as a part of the plant. In a nursing home or hospital, the operation theatre has to be kept sterilised all through to prevent germs entry, and, therefore, the theatre room may be called a plant, and hence it has to be treated differently from other parts of the hospital building which building has consultation rooms, accommodation for patients, canteen, resting place, etc. This may be the position with regard to the X-ray plant, which is also to be insulated to prevent any kind of pollution and to prevent X-rays escaping outside. Therefore, while the entire building does not constitute plant, some parts of the building may be treated as plant, depending upon its use. It is, therefore, a matter to be claimed and proved by the assessee before the assessing officer. This issue is not considered by the Tribunal or any other authority in these lines. A blanket order of the Tribunal following some decisions without going into the details is not tenable. We, therefore, set aside the order of the Tribunal and since findings on facts are required we remand the matter to the officer for deciding the matter afresh after calling for details from the assessee and the officer will decide the matter in the light of the decisions above referred and our above observations and grant depreciation at the rate applicable to plant only to so much of the area qualifying as ''plant''.

The appeal is allowed as above.