Arihant Foundations & Housing Ltd., CHENNAI V. DCIT, CHENNAI

CO 31/CHNY/2013

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4258 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2013
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: DEVENDRA KUM AR BHANDARI
• Keywords: Depreciation; Condonation of delay
• Section: 143(3); 56(2); 201; 143(2); 32; 148; 56; 12

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER I . T.A. NO S . 1764 AND 1765/MDS/2012 ASSESSMENT YEAR S :200 4 - 0 5 AND 2005 - 06 & C.O. NO S . 31 AND 32/MDS/2013 [IN I.T.A. NO S . 1765 AND 1764 /MDS/201 2 ] THE DEPUTY COMMISSIONER OF INCOME TAX, CO MPANY CIRCLE I (1 ), CHENNAI . VS. M/S. ARIHA NT FOUNDATIONS & HOUSING LTD., NO. 271, POONAMALLEE HIGH ROAD, CHENNAI 600 0 1 0 . [PAN: AA A C A7402P ] ( APPELLANT ) ( R ESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : SHRI S UPRIYO PAL , J CIT ASSESSEE BY : SHRI DEVENDRA KUMAR BHANDARI , CA / DATE OF HEARING : 14 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 23 .09 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH E S E TWO APPEAL S FILED BY THE REVENUE AND THE CROSS OBJECTION S FILED BY THE ASSESSEE A RE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) III , CHENNAI BOTH DATED 1 9 . 06 .201 2 FOR THE ASSESSMENT YEAR S 20 0 4 - 0 5 AND 2005 - 06 . THE ONLY EFFECTIVE COMMON GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A ) HAS ERRED IN ALLOWING DEPRECIATION @ 100% ON TEMPORARY WOODEN PARTITIONS. I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL COMPLEXES AT VARIOUS PROJECTS. IT FILED THE RETURN OF INCOME ON 23.08.2005 ADMITTING TOTAL INCOME OF .1,89,12,614/ - . ASSESSMENT U NDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [ ACT IN SHORT] WAS COMPLETED ON 30.05.2006 DETERMINING THE TOTAL INCOME AT .1,97,81,220/ - . THE ASSESSEE HAD CLAIMED AN AMOUNT OF .29,87,018/ - AS DEPRECIATION @ 100% ON THE EXPENDITURE INCURRED ON ERECTING TEMPORARY WOODEN PARTITIONS. IT WAS FOUND OUT BY THE A SSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06 THAT THE ASSESSEE HAD LET OUT ITS BUILDING ALO NG WITH VARIOUS EQUIPMENTS INSTALLED IN IT WHICH INCLUDES TEMPORARY WOODEN PARTITIONS AND THESE PARTITIONS, THOUGH TEMPORARY, WOULD REMAIN FOR A PERIOD OF THREE YEARS TILL THE EXPIRY OF THE LEASE PERIOD AND THAT THE ASSESSEE SHOULD HAVE CAPITALIZED THESE I TEMS. AS THE ASSESSEE HAD CLAIMED THE ENTIRE EXPENDITURE IN FULL, THE A SSESSING OFFICER HAS REOPENED THE ASSESSMENT BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 03.0 1.2008. IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT , THE ASSESSEE VIDE LETT ER DATED 0 8. 0 2. 20 08 REQUESTED TO TREAT THE ORIGINAL RETURN FILED ON 23.08.2005 AS THE RETURN FILED IN RESPONSE TO THE SAID NOTICE. SUBSEQUENTLY, NOTICE U NDER SECTION 143(2) OF THE ACT WAS ISSUED ON 0 2. 0 5.2008. I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 3 3. BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED THAT THE TEMPORARY WOODEN PARTITIONS WERE INSTALLED IN THE BUILDING WHICH WAS LET OUT ON RENT DURING THE YEAR AND THE INCOME DERIVED THEREON WAS OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE INCOME DERIVED FROM HIRING OF EQUIPMENT S AND PROVISION S OF AMENITIES WERE OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCES . THE ASSESSEE HAD CONTENDED THAT THE EXPENDITURE WAS INCURRED AS PER THE REQUIREMENT OF THE LESSEE AND IT HAS NOT RESULTED IN ANY ASSET OF ENDURING NATURE. THE WOODEN PAR TITIONS ARE OF NO USE AFTER THE EXPIRY OF LEASE PERIOD. HENCE, THEY WERE TEMPORARY ERECTIONS ELIGIBLE FOR 100% DEPRECIATION. HOWEVER, T HE A SSESSING O FFICER DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND CONCLUDED THAT THE TEMPORARY PARTITIONS WILL REMA IN FOR THREE YEARS AND THEREFORE HE HELD THAT EXPENDITURE INCURRED ON FALSE CEILING AND WOODEN PARTITIONS WERE OF CAPITAL IN NATURE TO BE INCLUDED IN THE COST OF THE BUILDING AND THE ASSESSEE SHOULD HAVE CAPITALIZED THESE ITEMS IN ITS BOOKS ALONG WITH THE COST OF THE BUILDING. BY RELYING ON THE FOLLOWING DECISIONS VIZ., CIT V. INDIA METAL AND METALLURGICAL CORPORATION (141 ITR 40), CIT V. N.L. MEHTA CINEMA ENTERPRISES PRIVATE LIMITED (216 ITR 437) AND UTTAR BHARAT EXCHANGE LIMITED V. CIT (55 ITR 55), T HE A S SESSING O FFICER HAS FURTHER HELD THAT SINCE THE BUILDING WAS LET OUT AND THE INCOME DERIVED THEREON WAS OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , NO DEPRECIATION ON THE BUILDING WAS ALLOWABLE UNDER THE HEAD INCOME FROM BUSINESS AND CONSEQUENTL Y NO DEPRECIATION WOULD BE ALLOW ED I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 4 ON THE COST OF WOODEN PARTITIONS. THUS, THE A SSESSING O FFICER HAS D ISALLOWED THE DEPRECIATION OF .29,87,018/ - CLAIMED BY THE ASSESSEE ON THE TEMPORARY PARTITIONS AND FALSE CEILING AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT .2,27,68,238/ - . 4. THE ASSESSEE CARRIED THE M ATTER IN APPEAL BEFORE THE LD. CIT(A). THE AR OF THE ASSESSEE HAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE COMPANY CONSTRUCTS THE RESIDENTIAL AND COMMERCIAL BUILDINGS AND SELLS THE SAME TO ITS PROSPECTIVE CUSTOMERS. IN SOME SITUATIONS, WHERE THE C OMPANY HAS COMPLETED THE PROJECTS AND DOES NOT HAVE ANY READYMADE BUYERS, IT FINDS A SUITABLE TENANT AND LEASES OUT THE PROPERTY. THE COMPANY HA S COMPLETED CONSTRUCTION OF THE JOINTLY DEVELOPED PROJECT 'ARIHANT VICEROY' IN APRIL 2003 BUT COULD NOT IMMEDIAT ELY FIND ANY TAKER FOR THE BUILDING. THE BUILDING CONSISTED OF 9 FLOORS, OUT OF WHICH 4 FLOORS BELONGED TO THE OWNER AND THE OTHER 4 FLOORS TO THE A SSESSEE . THE COMPANY ENTERED INTO AN AGREEMENT WITH VERIZON DATA SERVICES INDIA PVT. LTD (VDSI) FOR LEAS ING OUT THE PROPERTY. ONCE THE PROPERTY WAS LET OUT, IT WOULD BE EASY TO FIND BUYER FOR THE BUILDING. THE TENANT (VDSI) WANTED PROPERTY WITH ALL FIXTURES, FALSE CEILINGS AND INTERIOR DECORATION TO THEIR SATISFACTION. IT ALSO WANTED THE A SSESSEE TO INSTALL CERTAIN WOODEN TEMPORARY STRUCTURES/PARTITIONS, LIFTS, EXTRA GENERATORS, SANITARY INSTALLATIONS, SCANNING INSTALLATIONS LIKE WEB CAMERA, I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 5 BIOMETRIC ACCESS TO PREMISES, SPECIAL AIR - CONDITIONING REQUIREMENTS ETC. THE A SSESSEE INSTALLED ALL THE FURNITURE AND F IXTURES AS WELL AS THE PARTITIONS ETC . ACCORDING TO THE REQUIREMENT OF VDSI. THE EXPENDITURE WAS INCURRED SO THAT THE BUILDING COULD BE LET OUT WHICH WOULD ENABLE THE A SSESSEE TO SUBSEQUENTLY SELL THE BUILDING. THE A SSESSEE SOLD TWO FLOORS ALONGWITH WOODEN PARTITIONS/STRUCTURES INSTALLATIONS INSTALLED IN THOSE FLOORS AFTER LETTING OUT THE PROPERTY AND THEREFORE, THE AR OF THE ASSESSEE PLEADED THAT EXPENDITURE TOWARDS PART OF THE TEMPORARY WOODEN STRUCTURES DESERVES TO BE ALLOWED AS DEDUCTION SOLD WITH THE B UILDING. THE AR OF THE ASSESSEE HAS FURTHER STATED THAT THE TOTAL EXPENDITURE ON THE BUILDING ON THIS ACCOUNT WAS TO THE EXTENT OF .3 TO 4 CRORES. HE STATED THAT OUT OF THE SAID EXPENDITURE, .59,74,037/ - WAS TOWARDS TEMPORARY WOODEN PARTITION ON WHICH DEPRECIATION @ 100% HAS BEEN CLAIMED. HE EXPLAINED THAT THE TENANT PAID LEASE RENT OF .32.50 PER SQ.FT. FOR THE AREA LET OUT AND .5 .50 AS RENT FOR AMENITIES INCLUDING FLOORING, INTERIORS, FIRE SPRINKLERS ETC. NO DEPRECIATION HAS BEEN CLAIMED ON THE RENT OF THE HOUSE PROPERTY BUT DEPRECIATION HAS BEEN CLAIMED ON INTERIOR DECORATION, TEMPORARY WOODEN PARTITIONS ETC . WHOSE RENTAL INCOME IS SHOWN AS 'INCOME FROM OTHER SOURCES'. THE AR ALSO REFERRED TO CLAUSE (H) AND CLAUSE 7(B) OF THE LEASE AGREEMENT AND STATED THAT THE A SSESSEE (DEVELOPER) WAS FULLY RESPONSIBLE FOR THE OPERATION AND MAINTENANCE SERVICES TO BE PROVIDED FOR VICEROY BUILDING . HENCE, IT WAS CONTENDED THAT PROVIDING THE FURNITURE AND FIXTURE AS WELL AS MAINTENANCE OF I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 6 THE BUILDING WAS PART OF THE AGREEMENT WHICH HAS TO BE FOLLOWED BY THE A SSESSEE AND THE EXPENDITURE INCURRED IN RELATION TO SUCH AGREEMENT IS DEDUCTIBLE. ON THE AB OVE SUBMISSIONS AND THE REQUEST OF THE ASSESSEE , THE LD. CIT(A) ASKED THE ASSESSING OFFICER TO FURNISH REMAND REPORT. 5. I N THE REMAND REPORT , THE ASSESSING OFFICER STATED THAT THE PROJECT 'ARIHANT VICEROY' CONSTITUTES 9 FLOORS OUT OF WHICH 4 FLOORS H AVE GONE TO THE OWNER. THE ASSESSEE HAD SOLD 2 FLOORS ALLOTTED TO IT AND THE BALANCE OF 2.5 FLOORS WAS STILL RETAINED WHICH FETCHED RENT. HE STATED THAT THE ENTIRE CLAIM OF 100% DEPRECIATION CANNOT BE ALLOWED. IN RESPECT OF 2.5 FLOORS RETAINED AND GIVEN ON RENT AND 4.5 FLOORS TRANSFERRED TO THE OWNER OF THE LAND, THE ASSESSEE DERIVED AMENITIES @ . 5.5. PER SQ.FT. OF SUPER BUILT - UP AREA. THE WOODEN PARTITIONS AND FALSE CEILING ERECTED DURING THE YEAR PERTAINING TO 7 OUT OF 9 FLOORS WAS NOT ELIGIBLE FOR 100% DEPRECIATION. THE VALUE CORRESPONDING TO 2 FLOORS NEED TO BE ALLOWED AS COST OF THE ASSET TR ANSFERRED. BY DOING SO, .13,27,653/ - GETS ALLOWED AS EXPENDITURE PERTAINING TO THE TWO FLOORS OF THE BUILDING SOLD DURING THE YEAR. IN RESPECT OF THE BALANCE OF .46,46,785/ - , THE SAME CANNOT BE ALLOWED AS EXPENDITURE FOR THE YEAR. THEREFORE, DEPRECIATION @ 100% IS NOT ALLOWABLE AND THE SAME SHALL BE RESTRICTED TO 15%. SINCE THE ASSET WAS PUT IN USE FOR LESS THAN 180 DAYS, DEPRECIATION HAS TO BE RESTRICTED TO 7.5% WHICH WORKS TO . 3,48,509/ - . I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 7 6. I N THE REJOINDER , T HE AR OF THE ASSESSEE SUBMITTED THAT T HE BUILDING WAS COMPLETED IN MAY, 2003. THE A SSESSEE HAS TO LIQUIDATE THE TERM LOAN OF .5 CRORES FROM INDIAN OVERSEAS BANK. THEREFORE, THE ASSESSEE DECIDED TO LIQUIDATE THE STOCK THROUGH RENT CAPITALIZATION METHOD. IF THE PROPERTY WAS LET OUT TO A REPUTED TENANT, THE A SSESSEE COULD TAKE A LIQUIRENTAL LOAN FROM THE BANK AND REPAY THE EXISTING LOAN. IT CAN ALSO SELL THE PROPERTY ON THE BASIS OF RENT CAPITALIZATION METHOD. IT WAS A PRE - CONDITION OF THE TENANT THAT THE COLOUR, INTERIOR DESIGN ETC HAD TO BE COM PLETED BEFORE LETTING OUT THE PROPERTY. IF THE A SSESSEE HAD NOT INCURRED COST TOWARDS TEMPORARY PARTITIONS AND FALSE CEILINGS, IT COULD NOT HAVE LET OUT THE PREMISES TO VDSI AND CONSEQUENTLY COULD NOT HAVE SOLD THE SAME. THE LAND OWNER HAD ALSO REFUSED TO INCUR THE ABOVE EXPENDITURE. IF THE TENANT VACATED, THE TEMPORARY PARTITIONS WOULD BE WORTH NOTHING AS IT CONTAINED ONLY 4 - 5 MM PLY WOOD AND FALSE CEILING MADE OUT OF PLASTER OF P AR I S. HE FURTHER STATED THAT THE OBJECTIVE FOR THE ENTIRE PROJECT WAS TO DEVE LOP AND EARN PROFITS ON THE SAME AND NOT TO INVEST AND GET RETURNS ON THE INVESTMENT. HENCE, HE REQUESTED THAT THE ENTIRE COST OF TEMPORARY PARTITIONS INSTALLED SHOULD BE ALLOWED. IN CASE, THE SAME IS NOT ALLOWED, THEN APART FROM THE COST OF TEMPORARY PART ITIONS IN THE SOLD PREMISES, THE TEMPORARY PARTITIONS INSTALLED IN THE PREMISES OF THE LAND OWNER SHOULD ALSO BE ALLOWED WHICH WERE INSTALLED ONLY TO CLINCH THE COMMERCIAL UTILISATION OF PREMISES LEADING TO SALES. FURTHER, IT WAS ARGUED THAT ON THE SAME AN ALOGY ADOPTED BY THE A SSESSING O FFICER , THE COST OF AIR - I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 8 CONDITIONERS AMOUNTING TO .7,08,333/ - SHOULD BE ALLOWED BECAUSE NO SEPARATE CONSIDERATION WAS PAID TO THE A SSESSEE BY THE BUYER. 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS IN ITS REJOINDER TO THE REMAND REPORT, AND ALSO BY FOLLOWING THE DECISION IN THE CASE OF CIT V. AMRUTANJAN FINANCE LTD. IN TCA NO. 294 OF 2005 DATED 24.08.2011 THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 100% ON THE TEMPORARY WOOD PARTITIONS. 8. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUN AL FOR BOTH THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 SINCE FACTS ARE IDENTICAL AND THE DEPARTMENT HAS RAISED GROUND FOR BOTH THE YEARS. BY REITERATING THE GROUNDS RAISED BY THE REVENUE, T HE LD. DR HAS SUBMITTED THAT THE FURNITURE AND FIXTURE PUT UP BY THE ASSESSEE IN THE SITED PREMISES IS NOT A CONSUMABLE ITEM WHICH GETS DEPLETED WITHIN A YEAR OR BECOME UNUSABLE AFTER A YEAR, BUT BRINGS INTO EXISTENCE AN ASSET OF ENDURING NATURE FOR WHICH 100% DEPRECIATION IS NOT ALLOWABLE. HE STRONGLY SUPPORTED THE ASSESSM ENT ORDER AND REMAND REPORT OF THE ASSESSING OFFICER AND PLEADED THAT THE ORDER PASSED BY THE LD. CIT(A) SHOULD BE REVERTED. 9. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A), WHO HAS FOLLOW ED THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. AMRUTANJAN I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 9 FINANCE LTD. IN TCA NO. 294 OF 2005 DATED 24.08.2011 ON SIMILAR FACTS AND CIRCUMSTANCES, WHEREIN THE HON BLE HIGH COURT HAS HELD THAT THE ISSUE IS COVERED BY THE BY T HE DECISION IN THE CASE OF THIRU AROORAN SUGARS LTD V. D CIT [T.C. NO.197 OF 2005, DATED 26 - 7 - 2011] AND ALSO A PPL IED THE DECISION IN CIT V. MAD RAS AUTO SERVICES (P) LTD [1998] 233 ITR 468 (SC) AND CIT V. AYESHA HOSPITALS (P) LTD. [2007J 292 ITR 266 . THEREFOR E, HE PRAYED THAT THE APPEAL FILED BY THE DEPARTMENT SHOULD BE DISMISSED. 10. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE S PROJECT CONSISTED OF 9 FLOORS OUT OF WHICH 4.5 FLOOR S BELONGED TO THE ASSESSEE AND THE OTHER 4.5 FLOORS BELONGED TO THE LAND OWNERS. THE A SSESSEE AND LAND OWNER ENTERED INTO AGREEMENT OF LEASE WITH V ERIZON D ATA S ERVICES I NDIA PVT. LTD. [VDSI] FOR THE WHOLE BUILDING. THE TENANT INSISTED ON INTERIOR, FALSE CE ILING, WOODEN PARTITIONS AND SEVERAL OTHER AMENITIES AS A PRECONDITION FOR TAKING THE PROPERTY ON LEASE. SINCE T HE LAND OWNERS REFUSED TO BEAR THE COST FOR SUCH FIXTURES AND AMENITIES IN THEIR PORTION OF THE BUILDING , THE ASSESSEE HAS TO BEAR THE ENTIRE CO ST OF SUCH FIXTURES AND AMENITIES. AS PER THE FACTS ON RECORDS, SEPARATE CONSIDERATIONS WERE PAID FOR FLOOR SPACE OF THE BUILDING AND FIXTURES, AMENITIES E TC. THE RENT FOR BUILDING WAS .32.50 PER SQ.FT. , WHEREAS , THE RENT FOR THE INSTALLATION AND FIXTURES WAS .5.50 PER SQ.FT. THE A SSESSEE HAS RECEIVED RENT FOR 4.5 FLOORS OF THE PROPERTY BELONGING TO IT. I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 10 SUCH RENTAL INCOME HAS BEEN OFFERED AS 'INCOME FROM HOUSE PROPERTY'. IT HAS ALSO RE CEIVED RENT FOR THE FURNITURE, FIXTURES, AMENITIES ETC FOR THE ENTIRE BUILDING (9 FLOORS). SUCH RENT WAS OFFERED AS 'INCOME FROM OTHER SOURCES'. ADMITTEDLY, OUT OF 9 FLOORS BUILDING PROPERTY, ONLY 4.5 FLOORS BELONGED TO THE ASSESSEE AND THE OTHER 4.5 FLOOR S BELONGED TO THE LAND OWNERS. BUT THE ASSESSEE HAS CREATED SUCH FIXTURES AND AMENITIES FOR THE ENTIRE 9 FLOORS. THOUGH THE ASSESSEE IS IN RECEIPT OF RENT FOR 4.5 FLOORS, BUT RECEIVED RENT FOR THE FURNITURE, FIXTURES, AMENITIES ETC FOR THE ENTIRE BUILDING (9 FLOORS) AND T HE ASSESSEE HAS OFFERED THE RENT INCOME FROM SUCH ASSETS UNDER THE HEAD 'INCOME FROM OTHER SOURCES' U NDER SECTION 56 OF THE ACT. SECTION 57 OF THE ACT SPECIFIES THE DEDUCTIONS ALLOWABLE WHILE COMPUTING 'INCOME FROM OTHER SOURCES'. AS PER CL AUSE (II) OF SEC 57 OF THE ACT , INCOME U NDER SECTION 56(2) IS ELIGIBLE FOR DEPRECIATION UNDER SUB - SECTIONS (1) AND (2) OF SEC 32 OF THE ACT . SINCE THE ASSESSEE HAS SHOWN 'INCOME FROM HOUSE PROPERTY' AND 'INCOME FROM OTHER SOURCES' SEPARATELY IN RESPECT OF THE RENTAL INCOME OF THE BUILDING AND THE RENTAL INCOME OF THE FIXTURES AND OTHER AMENITIES SUCH AS WOODEN PARTITIONS ETC, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION ON SUCH ASSETS U NDER SECTION 57(II) OF THE ACT. HOWEV ER , T HE QUESTION THAT ARISES IS WHETHER DEPRECIATION @ 100% CAN BE ALLOWED ON SUCH FURNITURE & FIXTURES INCLUDING WOODEN PARTITIONS AND FALSE CEILING OR NOT . IN THE REMAND REPORT SUBMITTED BEFORE THE CIT(A), THE ASSESSING OFFICER HELD THAT THE WOODEN PARTI TION IN QUESTION COMES UNDER I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 11 THE BLOCK OF ASSETS OF PLANT AND MACHINERY WHICH IS ENTITLED FOR DEPRECIATION @ 15% AS AVAILABLE IN CASE OF PLANT AND MACHINERY . HE FURTHER EXPLAINED THAT SINCE THE ASSET WAS PUT TO USE LESS THAN 180 DAYS, THE DEPRECIATION CLAIMED WOULD COME DOWN @ 7.5%. HOWEVER, T HE LD. CIT(A) HAS TREATED THE WOODEN PARTITION AS PURELY TEMPORARILY ERECTED WOODEN STRUCTURE [BUILDING] ENTITLED FOR DEDUCTION @ 100% AND THEREFORE, BY FOLLOWING THE CASE LAW OF CIT V. AMRUTANJAN FINANCE LTD. REPO RTED IN [2011] 15 TAXMAN.COM 392 (MAD), HE ALLOWED THE GROUND RAISED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS . 11. ON PERUSAL OF THE ORDERS OF AUTHORITIES BELOW, IT IS CLEAR THAT AS PER THE REQUIREMENTS OF THE LESSEES, THE ASSESSEE HAS INCURRED THE EXPENDITURE TOWARDS INTERIOR DESIGNING INCLUDING ERECTION OF TEMPORARY WOODEN PARTITIONS AND HAS NOT RESULTED IN ANY ASSET OF ENDURING NATURE. IT WAS ALSO CONTENDED THAT THE WOODEN PARTITIONS ARE OF NO USE TO THE ASSESSEE AFTER THE EXPIRY OF THE LEASE PER IOD AND THEREFORE, THEY HAVE BEEN CLAIMED AS TEMPORARY ERECTIONS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 100%. HOWEVER, WE HAVE NO DETAILS TO EXAMINE THE NATURE OF PARTITION & INTERIOR DESIGNING AND LIFE OF THE STRUCTURE TO ASCERTAIN AS TO WHETHER THE ASS ESSEE WILL ENJOY ENDURING BENEFIT OR SO AND ALSO ASSESS WHETHER THE STRUCTURE CREATED BY THE ASSESSEE IS PURELY TEMPORARY ERECTION OR NOT. UNDER THESE FACTS AND CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 12 ST RUCTURE ERECTED BY THE ASSESSEE WAS PURELY TEMPORARY TO CLAIM 100% DEPRECIATION OR NOT AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURP OSES FOR BOTH THE ASSESSMENT YEARS . 12. COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS, BOTH THE CROSS OBJECTIONS ARE FOUND TO HAVE BEEN FILED LATE BY 112 DAYS IN FILING THE CROSS OBJECTIONS BEFORE THE TRIBUNAL AND DUL Y MENTIONED THE DEFECTS IN THE NOTICE OF HEARING. HOWEVER, THE ASSESSEE HAS NOT FILED ANY PETITIONS FOR CONDONATION OF DELAY OF 112 DAYS. SINCE THE ASSESSEE FAILED TO RECTIFY THE DEFECT, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS UNADMITTE D. 1 3 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE ARE ALLOWED AND THE CROSS OBJECTION S FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 23 RD SEPTEMBER , 201 6 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 .0 9 .201 6 VM/ - I.T.A. NO S . 1764 & 1765 /M/1 2 & C.O. NO S . 31 & 32/M/13 13 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.