Anika International Pvt. Ltd., New Delhi V. M/s Noida Power Company Ltd., Greater Noida

ITA 1571/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87119 (ITAT-DELHI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: SANJEEV JAIN
• Keywords: Capital asset; Depreciation; Cost of acquisition; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1571/DEL./2013 (ASSESSMENT YEAR : 2009-10) M/S. ANIKA INTERNATIONAL PRIVATE LTD., VS. DCIT, C IRCLE 1 (1), F 402, 4 TH FLOOR, RAS VILLAS, NEW DELHI. PLOT NO.D 1, DISTRICT CENTRE, NEW DELHI 110 017. (PAN : AABCA571F) ITA NO.2093/DEL./2013 (ASSESSMENT YEAR : 2009-10) DCIT, CIRCLE 1 (1), VS. M/S. ANIKA INTERNATIONAL P RIVATE LTD., NEW DELHI. F 402, 4 TH FLOOR, RAS VILLAS, PLOT NO.D 1, DISTRICT CENTRE, NEW DELHI 110 017. (PAN : AABCA571F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJEEV JAIN, CA REVENUE BY : MS. Y. KAKKAR, DR DATE OF HEARING : 04.03.2015 DATE OF PRONOUNCEMENT : 18.03.2015 ORDER PER G.C. GUPTA, VICE PRESIDENT : THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECTED AGAINST THE OR DER OF THE CIT (APPEALS). THESE ARE BEING DISPOSED OFF BY THIS CO NSOLIDATED ORDER. ITA NO.1571/DEL./2013 ITA NO.2093/DEL./2013 2 2. ITA NO.1571/DEL./2013 THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DISALLOWING THE DEPRECIATION AMOUNTING TO RS.31,38,477/- OUT OF TOTAL DEPRECIATION OF RS.2,31 ,37,540/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE PURCHASE COST INCLUDES PR ICE OF LAND. ITA NO.2093/DEL./2013 THE GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER : - 1. WHETHER THE LD. CIT (A) HAS ERRED IN LAW AND O N FACTS IN DELETING ADDITIONS MADE ON ACCOUNT OF DEPRECIATION CLAIMED ON LAND AMOUNTING TO RS.27,37,225/- IGNORING THE FACT THAT I. LAND IS CAPITAL ASSET BUT NOT A DEPRECIABLE ASSET. II. THE COST OF CONSTRUCTION CAN NOT BE HIGHER THAN WHA T IS ARRIVED AT BY THE VALUATION AS PER MUNICIPAL AUTHOR ITY AND THE DIFFERENCE BETWEEN THE TOTAL CONSIDERATION AND THE COST OF CONSTRUCTION IS DIRECTLY ATTRIBUTABLE TO THE COS T OF LAND. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE HAS PURCHASED ESSENTIALLY A COMMERCIAL FLAT IN A MULTI-STOREY BUI LDING AND NOT THE LAND AND, THEREFORE, THE ASSESSEE WAS ENTITLED TO DEPREC IATION ON THE WHOLE VALUE OF PURCHASE OF THE COMMERCIAL SPACE AT SAKET FOR A CONSIDERATION OF RS.12.5 CRORES. HE SUBMITTED THAT ASSESSEE HAS ACQ UIRED ONLY A NOTIONAL RIGHT IN THE LAND, WHICH IS MERELY INCIDENTAL TO TH E TRANSACTION OF PURCHASE OF COMMERCIAL SPACE. HE REFERRED TO THE DOCTRINE O F ESSENTIAL ITA NO.1571/DEL./2013 ITA NO.2093/DEL./2013 3 CONSIDERATION REGARDING INDIAN DOUBLE TAXATION AGRE EMENTS IN RESPECT OF HIS ARGUMENTS. HE SUBMITTED THAT THE RIGHT OF OWNE RSHIP INCLUDES RIGHT TO POSSESS, USE IN WHATEVER MANNER ETC., WHICH IS ABSE NT IN THIS CASE. HE REFERRED TO THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF NAWAB SIR MIR OSMAN ALI KHAN (LATE) VS. COMMISSIONER OF W EALTH TAX, HYDERABAD - 162 ITR 888 IN SUPPORT OF THIS PROPOSIT ION. 4. LD. DR HAS OPPOSED THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE. SHE SUBMITTED THAT THE DOCTRINE OF ESSEN TIAL CONSIDERATION IS NOT RELEVANT TO THE ISSUE BEFORE THE TRIBUNAL. SHE SUB MITTED THAT THE ASSESSEE IS THE PROPORTIONATE OWNER OF THE LAND ALSO AS MENTION ED IN THE RELEVANT DOCUMENTS. SHE REFERRED TO THE COPY OF ALLOTMENT L ETTER AND SALE DEED OF COMMERCIAL SPACE IN QUESTION, COPY OF WHICH HAS BEE N FILED IN THE COMPILATION FILED BEFORE THE TRIBUNAL WHEREIN, IN C OLUMN 5 OF THE DESCRIPTION, THE SHARE IN PLOT TRANSFERRED HAS BE EN SHOWN AS PROPORTIONATE. SHE ALSO REFERRED TO COLUMN 10 OF THE SALE DEED WHEREIN VALUATION AS PER CIRCLE RATE OF THE LAND HAS BEEN S HOWN AT RS.75,50,800/-. SHE ALSO REFERRED TO THE VALUATION REPORT OF THE AS SESSEES APPROVED VALUER WHEREIN THE PROPORTIONATE LAND COST HAS BEEN WORKED OUT BY THE VALUER AT RS.1,07,56,064/-. SHE RELIED ON THE DECISION OF HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, UT TAR PRADESH VS. KAILASH MOTORS 82 ITR 253 (ALL.) AND OF DELHI TRI BUNAL IN DCIT VS. ITA NO.1571/DEL./2013 ITA NO.2093/DEL./2013 4 CAPITAL CARS (P.) LTD. - (2008) 114 ITD 286 (DEL.) WHEREIN HELD THAT THE ASSESSEE ACQUIRES A PART OF COMMERCIAL COMPLEX ALON G WITH UNDIVIDED INTEREST IN LAND, THE DEPRECIATION SHALL BE ALLOWED ONLY ON THE BUILDING PART. SHE RELIED ON THE ORDER OF AO AND CIT (A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE ORDER OF THE AO AND CIT (A) AND ALSO THE COPIES OF VARIOUS DOCUMENTS FILED IN THE COMPILATION BEFORE US. WE FIND THAT T HE ASSESSEE HAS ACQUIRED A COMMERCIAL SPACE AT SAKET ALONG WITH THE PROPORTION ATE UNDIVIDED INTEREST IN THE LAND. WE FIND THAT ESSENTIALLY IT IS A CASE OF PURCHASE OF COMMERCIAL SPACE AND THE ASSESSEE PURCHASES ALONG WITH COMMERC IAL SPACE ONLY NOTIONAL RIGHT IN THE LAND WHICH IS VERY MUCH INCID ENTAL TO THE TRANSACTION OF PURCHASE OF THE COMMERCIAL SPACE. THE PROPORTIO NATE UNDIVIDED INTEREST IN THE LAND IS PROVIDED IN THE SALE DEED ONLY TO SA FEGUARD THE INTEREST OF THE INTENDING PURCHASER IN CASE OF SOME UNFORESEEN CIRC UMSTANCE OF DEMOLITION OF THE BUILDING ITSELF. HOWEVER, THE IS SUE BEFORE US IS COVERED BY THE DECISION OF DELHI TRIBUNAL IN DCIT VS. CAPIT AL CARS (P.) LTD., CITED SUPRA, WHEREIN HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION ON THE AMOUNT OF BUILDING AND NOT ON THE WHOLE AMOUNT PAID FOR ACQUIRING A PART OF THE COMMERCIAL COMPLEX ALONG WITH THE UNDIVIDED INTEREST IN LAND. THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE. THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IS BINDING ON US. ITA NO.1571/DEL./2013 ITA NO.2093/DEL./2013 5 ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE AMOUNT PAID FOR BUILDING AND NOT ON THE WHOLE AMOUN T PAID FOR ACQUIRING THE COMMERCIAL SPACE ALONG WITH UNDIVIDED INTEREST IN LAND. WE FIND THAT THE ASSESSEES VALUER HIMSELF HAS VALUED THE VALUE OF PROPORTIONATE UNDIVIDED INTEREST IN LAND AT RS.1,07,56,064/-. AC CORDINGLY, WE DIRECT THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE AMO UNT OF RS.11,42,43,936/- (RS.12,50,00,000/- MINUS RS.1,07,56,064/-) AND SH ALL NOT BE ENTITLED TO DEPRECIATION ON THE VALUE OF PROPORTIONATE UNDIVIDE D INTEREST IN THE LAND AT RS.1,07,56,064/- AND THE GROUNDS OF APPEAL OF THE A SSESSEE ARE PARTLY ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF MARCH, 2015. SD/- (B.C. MEENA) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DATED THE 18 TH DAY OF MARCH, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-IV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.