M/s. Shankaranarayana Constructions Private Limited, Bangalore V. Deputy Commissioner Of Income Tax,Central Circle-- 2(4), Bangalore

ITA 1607/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3555 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-03-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 09-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Keywords: Capital expenditure
• Section: 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI N.V.VASUDEVAN, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. NO S . 1 607 & 1 608 /BANG /201 9 (ASSESSMENT YEAR S : 20 13 - 14 & 2014 - 15 ) M/S SHANKA R ANARAYA NA C ONSTRUCTIONS PVT.LTD.( FORMERLY KNOWN AS SNC POWER COPRN.PVT.LTD., )NO.7, RESIDENCY ROAD, (OLD NO.9, RAJARAM MOHAN ROY ROAD, BANGALORE - 560 0 25 VS. D CIT , CENTRAL CIRCLE - 2( 4 ), BANGALORE PAN/GIR NO. A A JCS7901C ( APPELLANT ) .. ( RESPONDENT ) APPEL LANT BY : S HRI NARENDRA SHARMA, ADVOCATE RESPONDENT BY : S MT. R.PREMI, JCIT DATE OF HEARING 03 - 0 3 - 2020 DATE OF PRONOUNCEMENT - 03 - 2020 O R D E R PER PRADIP KUMAR KEDIA : AM THE CAPTIONED APPEAL S HA VE BEEN FILED BY THE ASSESS EE AGAINST THE RESPECTIVE ORDER S OF THE CIT(A) ARISING FROM THE RESPECTIVE ASSESSMENT ORDERS CONCERNING ASSESSMENT YEAR S 2013 - 14 & 2014 - 15. 2. WE SHALL FIRST TAKE UP APPEAL OF THE ASSESSEE IN ITA NO.1607/BANG/2018 C ONCERNING ASSESSMENT YEAR 20 13 - 14 FOR AD JUDICATION PURPOSE. ITA NOS.1152 & 1153(B)/2018 2 3 BY WAY OF GROUNDS OF APPEAL , THE ASSESSEE HAS RAISED TWO SUBSTANTIVE ISSUES FOR DETERMINATION; ( I ) D ISALLOWANCE OF RS.4,10,433/ - IN RESPECT OF LEASEHOLD LAND AND ( II ) D ISALLOWANCE OF RS.10,94,871/ - BEING AMORTIZATION O F COST OF C ONSTRUCTION OF BUILDING ON LEASED LAND. 4. WHEN THE MATTER WAS CALLED FOR HEARING, LD. AR FOR THE ASSESSEE FAIRLY SUBMITTED THAT BOTH THE ISSUES NOTED ABOVE ARE COVERED AGAINST ASSESSEE IN ITS OWN CAS E BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBU NAL IN ITA NO.65/BANG/2013 ORDER DATED 20 - 02 - 2020 C ONCERNING ASSESSMENT YEAR 2007 - 08 . 5. ON PERUSAL OF THE ORDER OF THE CO - ORDINATE BENCH, WE OBSERVE THAT THE CO - ORDINATE BENCH HAS DEALT WITH THE ISSUE NO.1 CONCERNING D ISALLOWAN C E OF LEASE RENT EXPENSES AS UNDER; 6. AS PER GROUND NO. 6, THE GRIEVANCE OF THE ASSESSEE IS ABOUT CONFIRMING OF THE DISALLOWANCE OF RS. 468,600/ - MADE BY THE AO TOWARDS THE LEASE RENT. IN THIS REGARD, IN PARA (E) OF THE SYNOPSYS, IT IS SUBMITTED THAT THE ASESSEE HAS ALREADY DISAL LOWED LEASE RENT OF RS. 6 LACS IN THE COMPUTATION OF INCOME AVAILABLE ON PAGE 54 OF THE PAPER BOOK AND HENCE, DISALLOWANCE OF LEASE RENT BY THE AO AMOUNTS TO DOUBLE DISALLOWANCE AND THEREFORE, IT SHOULD BE DELETED. WE FIND THAT AS PER THE COMPUTATION AVAIL ABLE ON PAGE 54 OF THE PAPER BOOK, AN ADDITION OF RS. 6 LACS IS MADE ON ACCOUNT OF LEASE RENT BUT THE SAME IS CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM HOUSE PROPERTY AND THE AO DISALLOWED RS. 6 LACS SO CLAIMED BY THE ASSESSEE AND THERE IS NO SEPARA TE DISALLOWANCE OF ITA NOS.1152 & 1153(B)/2018 3 RS. 480,000/ - . THE CONTENTION THAT THERE IS DOUBLE DISALLOWANCE IS NOT CORRECT BECAUSE DEDUCTION IS VERY MUCH CLAIMED IN THE COMPUTATION AVAILABLE ON PAGE 54 OF THE PAPER BOOK AND IT IS DISALLOWED BY THE AO BY OBSERVING THAT FOR COMPUTIN G INCOME UNDER THE HEAD HOUSE PROPERTY, DEDUCTION ON ACCOUNT OF GROUND RENT IS NOT ALLOWABLE. WE FIND NO INFIRMITY IN THE ORDER OF CIT (A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 6 IS ALSO REJECTED . I T IS THUS NOTICED THAT THE C O - ORDINATE BENCH HELD THAT TH E AFORESAID EXPENDITURE TO BE CAPITAL EXPENDITURE AND THUS NOT ALLOWABLE UNDER SEC.37(1 ) OF THE ACT. IN PARITY, THE GRIEVANCE AS PER ISSUE NO. 1 IS WITHOUT MERIT AND THUS REJECTED. 6. SIMILARLY, THE CO - ORDINATE BENCH HAS DEALT WITH ISSUE NO. 2 ABOVE IN A Y 2007 - 08 IN OWN CASE OF THE ASSESSEE AS UNDER; 7. AS PER GROUND NO. 7, THE GRIEVANCE OF THE ASSESSEE IS ABOUT CONFIRMING OF THE DISALLOWANCE OF RS. 10,21,444/ - MADE BY THE AO TOWARDS THE ASSESSEES CLAIM FOR AMORTIZATION OF THE COST OF THE LET - OUT PROPERTY. IN THIS REGARD, IN PARA (B) OF THE SYNOPSYS, IT IS SUBMITTED RELIANCE IS PLACED ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHANKARNARYANA INDUSTRIES AND PLANTATIONS PVT. LTD. IN ITA NO. 860/BANG/1995 DATED 22.08.1997. COPY OF THIS TRIBUNAL ORD ER IS ALSO SUBMITTED. IN THIS TRIBUNAL ORDER, THE TRIBUNAL HAS NOTED ABOUT ANOTHER TRIBUNAL ORDER WHICH IS AGAINST THE ASSESSEE BUT THE TRIBUNAL FOLLOWED THAT TRIBUNAL ORDER WHICH IS IN FAVOUR OF THE ASSESSEE BUT IT IS NOT CLEAR AS TO WHAT IS THE EXACT BAS IS OF THOSE TRIBUNAL ORDERS WHICH ARE IN FAVOUR ITA NOS.1152 & 1153(B)/2018 4 OF THE ASSESSEE BY HOLDING THAT THERE IS DIVERSION OF A PORTION OF INCOME AT SOURCE. IN THE TRIBUNAL ORDER WHICH IS AGAINST THE ASSESSEE HAVING BEEN RENDERED IN THE CASE OF L. S. ENTERPRISES IN ITA NO. 940/BA NG/1989 DATED 21.02.1995, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE ON THIS BASIS THAT NO SUCH DEDUCTION IS ALLOWABLE U/S 23 AND 24 OF I. T. ACT. SINCE, A VALID BASIS IS GIVEN BY THE TRIBUNAL FOR DECIDING THE ISSUE AGAINST THE ASSESSEE AND THERE IS NO VAL ID BASIS IN THE TRIBUNAL ORDER IN WHICH, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND SINCE, NO DEDUCTION IS IN FACT ALLOWABLE U/S 23 & 24 OF THE I T ACT ABOUT COST OF BUILDING LET OUT EVEN IF CONSTRUCTED ON LEASE HOLD LAND AND FOR COMPUTING ANNUAL R ENT U/S 22 & 23, WHAT IS RELEVANT IS THE AMOUNT OF RENT RECEIVED OR RECEIVABLE AND THERE IS NO SCOPE OF ANY DEDUCTION ON ACCOUNT OF DIVERSION OF A PORTION OF INCOME AT SOURCE, WE HOLD THAT THIS CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. ACCORDINGLY, GROUND NO . 7 IS ALSO REJECTED. THUS, AS CAN BE NOTICED ABOVE, ISSUE NO.2 NOTICED HAS A LSO BEEN DECIDED AGAINST THE ASSESSEE BY THE CO - ORDINATE BENCH ON THE GROUND THAT AMORTIZATION OF EXPENSES ON COST OF CONSTRUCTION OF BUILDING ON LEASEHOLD LAND IS NOT A PERMISSI BLE DEDUCTION UNDER SEC.24 OF THE IT ACT IN THE FACTS OF THE CASE . IN PARITY, ISSUE NO. 2 OF THE ASSESSEE S APPEAL IS REJECTED. 7. IN THE RESULT, APPEAL OF THE ASSEESSEE IN ITA NO. 1607/BANG/ 2019 CONCERNING AY 2013 - 14 IS DISMISSED. 8 . GRIEVANCE OF THE ASSESSEE IN ITA NO.1608/BANG/2019 CONCERN ING ASSESSMENT YEAR 2014 - 15 BEING IDENTICAL, THE SAME IS ALSO DISMISSED. ITA NOS.1152 & 1153(B)/2018 5 9 . IN THE COMBINED RESULT, BOTH THE CAPTIONED APPEALS ARE DISMISSED. SD/ - SD/ - ( N.V.VASUDEVAN ) (PRADIP KUMAR KEDIA) VICE PRESIDENT ACCOUNTANT MEMBER PLACE: BENGALURU DATED: 04 - 03 - 2020 AM COPY OF ORDER FORWARDED TO: - 1 . REVE NUE 2 . ASSESSEE 3 . CONCERNED CIT 4 . CIT (A) 5 . DR, ITAT, BENGALURU . 6. GUARD FILE. BY ORDER ASST. REGISTRAR THIS ORDER PRONOUNCED IN OPEN COURT ON 04 - 03 - 2020 ITA NOS.1152 & 1153(B)/2018 6