Shri Prosenjit Chatterjee, Kolkata V. JCIT, Range - 55, Kolkata, Kolkata

ITA 186/KOL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5633 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI GEORGE MATHAN, J.M. ] I.T.A. NO.186/KOL/2012 : ASSESSMENT YEAR : 2008-09 SRI PROSENJIT CHATTERJEE -VS- JCIT, RANGE-55, KOLKATA PAN : ACRPC 8164C ( APPELLANT ) ( RESPONDENT ) I.T.A. NO.204/KOL/2012 : ASSESSMENT YEAR : 2008-09 DCIT, CIRCLE-55, KOLKATA -VS- SRI PROSENJIT CHATTERJEE PAN : ACRPC 8164C ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 07.01.2014 DATE OF PRONOUNCING THE ORDER : 15.01.2014 APPEARANCES : FOR THE ASSESSEE : SHRI SUBASH AGARWAL, ADVOCATE : FOR THE DEPARTMENT : SHRI RAJENDRA PR ASAD, SR.DR O R D E R PER SHRI P.K.BANSAL, A.M. : THESE CROSS-APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE CIT(A), KOLKATA DATED 21.01.2011 FOR THE ASSESSMENT YEAR 20 08-09. 2. THE ASSESSEE DID NOT PRESS GROUND NO.3. IN BOTH THE APPEALS, THERE REMAINS ONLY TWO GROUNDS FOR ADJUDICATION. GROUND NO.1 IN B OTH THE APPEALS IS COMMON RELATING TO THE CLAIM OF DEPRECIATION ON BUILDING A T P-19/1, OLD BALLYGUNGE ROAD, KOLKATA BY THE ASSESSEE. 3. BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEPRECIATION ON THE AFORESAID BUILDING AT RS.16,94,790/-, WHILE COMPUTING THE INCOME FROM BUSINESS. THE AO DID NOT AGREE WITH THE ASSESSEE AN D ALLOWED THE DEPRECIATION TO THE ASSESSEE @25% BY OBSERVING THAT THE SAID BUILDI NG HAS FOUR SECTIONS. THE ASSESSEE HAS USED GROUND FLOOR FOR THIS PURPOSE. WH EN THE MATTER WENT BEFORE THE 2 I.T.A. NO.186 & 204/KOL/2012 SR I PROSENJIT CHATTERJEE A.Y. 2008-09 CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE AND CALLING FOR THE REMAND REPORT FROM THE AO, THE CIT(A) ALLOWED DEPRE CIATION TO THE ASSESSEE @50%. AGAINST THE FURTHER ALLOWANCE OF DEPRECIATION @25% BY THE CIT(A), THE REVENUE HAS COME IN APPEAL BEFORE US, WHILE THE ASS ESSEE HAS ALSO COME IN APPEAL AGAINST SUSTENANCE OF 50% OF THE DISALLOWANCE OUT O F THE DEPRECIATION BY OBSERVING AS UNDER: 4.4. I HAVE DULY CONSIDERED OF AR AND CONSULTED TH E RELEVANT RECORDS. THE APPELLANT IS A RENOWNED FILM ARTIST OF BENGALI CINEMA. HE CLAIMED DEPRECIATION OF RS.16,94,790/- FOR THE F OUR-STORIED BUILDING AT P-19/1, OLD BALLYGUNGE ROAD, KOLKATA-19 , WITH THE CONTENTION THAT THE GROUND FLOOR OF THE BUILDING HA S BEEN USED AS HIS OFFICE AND OTHER THREE FLOORS HAVE BEEN USED FOR RE HEARSALS. THE AO ALLOWED ONLY 25% OF THE DEPRECIATION CLAIMED AS THE APPELLANT COULD NOT FURNISH EVIDENCES THAT OTHER FLOORS WERE USED F OR REHEARSALS PURPOSES. IN THE REMAND PROCEEDINGS, THE AO DEPUTED HIS INSPECTOR FOR SPOT VERIFICATION, WHO REPORTED THAT MR. KHAN, P.A., OF THE APPELLANT STATED THAT THE 1ST AND 2 ND FLOORS OF THE BUILDING ARE USED FOR REHEARSALS. THE AR OF THE APPELLANT HAS ASSERTED TH AT THE BUILDING WAS USED FOR APPELLANT'S SELF-REHEARSALS FOR MAXIMIZATI ON OF THEIR ARTISTIC SKILLS. THE APPELLANT ALSO HAD RAISED AS WELL AS T EAM REHEARSALS. HAVING CONSIDERED THE MATERIALS BROUGHT ON RECORD, I CANNOT RULE OUT THE ISSUE OF REHEARSALS ALTOGETHER. CINE ARTISTS OF TEN DO SELF- REHEARSALS FOR MAXIMIZATION OF THEIR ARTISTIC SKILL S. THE APPELLANT ALSO HAS RAISED THE POINT OF REHEARSALS AT THE TIME OF A SSESSMENT .PROCEEDINGS. THE INSPECTOR ALSO GATHERED FROM THE PERSONAL ASSISTANT OF THE APPELLANT THAT THE FLOORS WERE USED FOR REH EARSALS. THUS, THE ISSUE OF REHEARSALS CANNOT BE RULED OUT. HAVING SAI D THAT, I AM NOT INCLINED TO ACCEPT APPELLANTS VERSION THAT ALL THR EE FLOORS WERE USED FOR REHEARSALS. ONE FLOOR, RATHER ONE ROOM WAS QUIT E SUFFICIENT FOR SELF OR GROUP REHEARSALS. THE APPELLANT HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE FLOORS WERE USED FOR REHEARSALS EVE N DURING THE REMAND PROCEEDINGS. THE INSPECTOR DEPUTED BY THE AO FOR SPOT INQUIRY FOUND THE FLOORS WERE UNDER MAJOR RENOVATIONS AND G ATHERED THAT THE 3 RD FLOOR HAS BEEN USED FOR ACCOMMODATION OF PAYING GU EST. UNDER THE CIRCUMSTANCES, IN MY OPINION, IT WILL MEET THE END OF JUSTICE IF THE APPELLANT IS ALLOWED ANOTHER 25 % DEPRECIATION FOR USING ANOTHER FLOOR FOR REHEARSALS PURPOSES. THUS, THE APPELLANT IS ALL OWED 50% OF DEPRECIATION CLAIMED, EQUIVALENT TO RS.8,47,3951-. THE AO IS DIRECTED ACCORDINGLY. THUS, THE ADDITION TO THE EXTENT OF RS .8,47,395/- IS SUSTAINED. THE APPELLANT GETS RELIEF OF RS4,23,697/ -. 3 I.T.A. NO.186 & 204/KOL/2012 SR I PROSENJIT CHATTERJEE A.Y. 2008-09 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE REPORT OF THE INSPECTOR IN WH O DID THE INSPECTION IN RESPECT OF SPOT VERIFICATION. WE NOTED FROM THE PROFIT & LO SS A/C., A COPY OF WHICH IS FILED BEFORE US, THAT THE ASSESSEE HAS RETURNED INCOME FR OM PAYING GUEST ACCOMMODATION AND FLAT, WHICH HAS DULY BEEN CREDITED TO ITS PROFI T & LOSS A/C. THE SAID INCOME HAS BEEN ACCEPTED BY THE AO UNDER THE HEAD INCOME FROM BUSINESS. IT IS NOT DENIED BY THE REVENUE ON THE BASIS OF THE REPORT OF THE IN SPECTOR THAT 3 RD FLOOR OF THE BUILDING IS USED FOR ACCOMMODATION PURPOSES. IN VIE W OF THIS FACT, IN OUR OPINION, THE ASSESSEE IS ALSO ALLOWED TO GET DEPRECIATION IN RESPECT OF 3 RD FLOOR. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THI S ISSUE AND DIRECT THE AO TO ALLOW DEPRECIATION TO THE ASSESSEE @75% ON RS.16,94,790/- , WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS. THUS, THE ASSESSEE GETS A FURTHER RELIEF OF RS.4,23,697/- AND THE DISA LLOWANCE TO THE EXTENT OF RS.4,23,698/- IS SUSTAINED. THEREFORE, THE GROUND T AKEN BY THE REVENUE STANDS DISMISSED WHILE THE GROUND TAKEN BY THE ASSESSEE IS PARTLY ALLOWED. 5. GROUND NO.2 IN BOTH THE APPEALS RELATES TO THE C LAIM OF DEDUCTION IN RESPECT OF INTEREST PAID TO THE BANKS. 6. BRIEF FACTS RELATING TO THIS COMMON GROUND TAKEN IN BOTH THE APPEALS ARE THAT THE AO NOTED THAT THE ASSESSEE HAS TAKEN THE LOAN F ROM THE BANK FOR ACQUIRING (I) DREAMPLEX, DURGAPUR RS.1,18,234.00, (II) MORTGAGE L OAN (HSBC) RS.3,52,385.00, (III) HOUSING LOAN CBP RS.2,76,28 7.54 AND (IV) SMART LOAN (HSBC) SHOWN TO HAVE BEEN USED FOR THE BUSINESS. TH E AO THEREFORE, ALLOWED 25% OF THE INTEREST CLAIM OF RS.15,74,467/- I.E. RS .3,93,617/- AND DISALLOWED RS.11,80,850/- IN RESPECT OF BALLYGUNGE PROPERTY AN D THUS ADDED THE BALANCE INTEREST I.E. RS.19,27,776/- (RS.23,21,383/- - RS.3 ,93,617/-). THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A), AFTER HEARING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS CONSIDERING THE REMAND REPORT O F THE AO, ALLOWED INTEREST IN RESPECT OF DREAMPLEX, DURGAPUR PROPERTY AMOUNTING T O RS.1,18,234/- AND ALSO 4 I.T.A. NO.186 & 204/KOL/2012 SR I PROSENJIT CHATTERJEE A.Y. 2008-09 ALLOWED 50% OF THE BALANCE INTEREST. THUS, THE ADDI TION TO THE EXTENT OF RS.11,01,575/- WAS SUSTAINED. 7. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. WE NOTED THAT BEFORE US, THE ASSESSEE HAS COME IN APPE AL AGAINST THE DISALLOWANCE OF THE INTEREST PAID ON LOAN FOR BALLYGUNGE PROPERTY A MOUNTING TO RS.11,01,575/-, WHILE THE REVENUE HAS COME IN APPEAL AGAINST THE FU RTHER ALLOWANCE OF INTEREST ON HOUSING LOAN IN RESPECT OF BALLYGUNGE PROPERTY. WE NOTED THAT THE AO HAS ALLOWED INTEREST @25% ON TOTAL INTEREST PAID FOR BALLYGUNGE PROPERTY AND ON THE SAME ANALYSIS, HE ALLOWED 25% OF THE DEPRECIATION IN RES PECT OF BALLYGUNGE PROPERTY. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) FURTHER ALLOWED 25% DEPRECIATION TO THE ASSESSEE ON BALLYGUNGE PROPERTY AND ON SIMILAR LINE ALLOWED FURTHER 25% OF THE INTEREST PAID ON THE LOAN IN RES PECT OF BALLYGUNGE PROPERTY. SINCE WE HAVE ALREADY ALLOWED 75% OF THE DEPRECIATI ON TO THE ASSESSEE ON THE BALLYGUNGE PROPERTY, WHILE DISPOSING THE GROUND NO. 1 IN BOTH THE APPEALS, WE THEREFORE, ON THE SAME REASONING, DIRECT THE AO TO ALLOW 75% OF THE INTEREST PAID BY THE ASSESSEE ON THE LOAN FOR BALLYGUNGE PROPERTY . THUS, THE ASSESSEE IS ALLOWED A FURTHER RELIEF OF RS.5,50,787/- AND DISALLOWANCE TO THE EXTENT OF RS.5,50,788/- IS SUSTAINED. THUS, THE GROUND TAKEN BY THE ASSESSEE I S PARTLY ALLOWED, WHILE THE GROUND TAKEN BY THE REVENUE STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED WHILE THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN THE COURT ON 15 TH JANUARY, 2014. SD/- SD/- (GEORGE MATHAN) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JANUARY, 2014 5 I.T.A. NO.186 & 204/KOL/2012 SR I PROSENJIT CHATTERJEE A.Y. 2008-09 COPY OF THE ORDER FORWARDED TO: 1. PROSENJIT CHATTERJEE, P-19/1, OLD BALLYGUNGE ROAD, KOLKATA-19 2. JCIT, RANGE-55, KOLKATA /DCIT, CIRCLE-55, KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)