ACIT Corporate Circle 6(2), CHENNAI V. Suryavardhan Estates Pvt Ltd., CHENNAI

ITA 1865/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0267 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Depreciation; Opportunity of being heard; Additional depreciation; Assessment record; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.1865/CHNY/2018 / ASSESSMENT YEAR :2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M. G. ROAD, CHENNAI 600 034. VS. M/S. SURYAVARDHAN ESTATES PVT. LTD., 6 TH FLOOR, DHUN BUILDING, 827, ANNA SALAI, CHENNAI 600 002. [PAN:AAJCS5120M] ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI GURU BASHYAM, JCIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 26.06.2019 /DATE OF PRONOUNCEMENT : 28.06.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 15, CHENNAI DATED 26.02.2018 RELEVANT TO THE ASSESSMENT YEAR 2012-13. THE REVENUE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAIM AND DECIDE THE SAME AS PER LAW. 2. AT THE OUTSET, THE LD. DR HAS SUBMITTED THAT THE POWER OF THE LD. CIT(A) TO SET ASIDE HAS BEEN DELETED FROM SECTION 251(1)(A) OF THE INCOME TAX ACT, I.T.A. NO.1865/M/18 2 1961 [ACT IN SHORT] W.E.F. 01.06.2001. THEREFORE, THE LD. CIT(A) WAS NOT LEGALLY CORRECT TO REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY AND DECIDE THE ISSUE. THUS, THE LD. DR HAS PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 3. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THOUGH THE LD. CIT(A) DOES NOT HAVE ANY POWER TO SET ASIDE ANY ISSUE TO THE FILE OF THE ASSESSING OFFICER W.E.F. 01.06.2001, THE MATTER WHICH REQUIRED TO BE VERIFIED/EXAMINED BY THE ASSESSING AUTHORITY IS REQUIRED TO BE DONE BY HIM ONLY. THUS, THE LD. COUNSEL PRAYED THAT ON MERITS OF THE CASE, THE TRIBUNAL MAY REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND DECIDE THE ISSUE FRESH BY ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). VIDE ORDER DATED 07.11.2016, ON THE ISSUE OF NOTIONAL ALV OF SHOPPING MALL, THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN TREATING THE SAID INCOME UNDER THE HEAD HOUSE PROPERTY AND THE ASSESSEE HAD RIGHTLY REPORTED THE INCOME UNDER THE HEAD BUSINESS. HOWEVER, THE LD. CIT(A) HAS NOT ADJUDICATED THE GROUND RAISED BY THE ASSESSEE AGAINST THE DISALLOWANCE OF ADDITIONAL DEPRECIATION I.T.A. NO.1865/M/18 3 ON PLANT AND MACHINERY AND CAR PARK FACILITIES, AGAINST WHICH, THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL. ACCORDINGLY, THE TRIBUNAL REMITTED THE MATTER TO THE LD. CIT(A) FOR ADJUDICATION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FACTS OF THE CASE, THE LD. CIT(A) HAS OBSERVED AND HELD AS UNDER: 3.3 CIT(A) REMARK AND DECISION: THE BACKGROUND FACTS IN THIS APPEAL ARE BRIEFLY MENTIONED AS UNDER: THE APPELLANT HAD CONSTRUCTED A SHOPPING MALL BY NAME 'COROMANDEL PLAZA' NEAR SIRUSERI WHICH IS NOW CALLED VIVIRA MALL. THE APPELLANT HAD OFFERED INCOME FROM THE AFORESAID SHOPPING MALL AS 'INCOME FROM HOUSE PROPERTY' IN THE ORIGINAL RETURN OF INCOME IN VIEW OF THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS PVT LTD. THE APPELLANT HAD OFFERED INCOME FROM PARKING FEES UNDER THE HEAD - INCOME FROM BUSINESS. BUT, DEPRECIATION WAS NOT CLAIMED ON THE PARKING STRUCTURE WHICH WAS ENTITLED TO 10% AND ON PLANT AND MACHINERY WHICH WAS ENTITLED TO 15%. AFTER THE APEX COURT'S DECISION IN WHICH THE HON'BLE MADRAS HIGH COURT DECISION WAS REVERSED IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENT LTD., THE APPELLANT CLAIMED DURING THE ASSESSMENT PROCEEDINGS THAT THE INCOME FROM SHOPPING MALL WAS TO BE ASSESSED UNDER THE HEAD - BUSINESS INCOME AND DEPRECIATION ON PARKING STRUCTURE AND PLANT AND MACHINERY ATTACHED TO IT SHOULD BE ALLOWED AS PER LAW. THE AO HAS REJECTED THE APPELLANT'S CLAIM ON THE GROUND THAT THE APPELLANT WAS NOT ENTITLED TO ADDITIONAL DEPRECIATION U/S28BA. 3.3.1 IN VIEW OF THE HON'BLE SUPREME COURT'S DECISION IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD., THE CIT(A) ALLOWED THE APPELLANT'S APPEAL BY DIRECTING THE AO TO ASSESS THE INCOME FROM SHOPPING MALL UNDER THE HEAD - BUSINESS INCOME. HOWEVER, THE CIT(A) DID NOT ADJUDICATE THE APPELLANT'S CLAIM WITH REGARD TO DEPRECIATION. IN THIS REGARD, THE APPELLANT HAS FILED A MISCELLANEOUS PETITION DATED 13.2.2017 ON THE CIT(A)'S ORDER VIDE ITA NO.180/CIT(A)-15/2015-16 DATED 7.11.2016. ON APPEAL BY THE DEPARTMENT AND THE APPELLANT, AGAINST THE CIT(A)'S ORDER, THE HON'BLE ITAT CHENNAI VIDE ORDER IN ITA NO.462/MDS/2017 DATED 17.10.2017 HAS REMITTED TO THE CIT(A) TO CONSIDER THE AFORESAID ISSUES WHICH WERE NOT ADJUDICATED. 3.3.2 BEFORE THE CIT(A), THE APPELLANT'S AR HAS SUBMITTED THAT THE INCOME FROM PARKING FEE SHOULD BE ASSESSED AS BUSINESS INCOME AND THEREFORE, THE DEPRECIATION ON THE ENTIRE STRUCTURE OF SHOPPING MALL INCLUDING PARKING STRUCTURE AND PLANT & MACHINERY SHOULD BE GIVEN DEPRECIATION AS PER LAW. I.T.A. NO.1865/M/18 4 THE APPELLANT'S AR HAS FURTHER POINTED THAT THE AO HIMSELF HAS ACCEPTED THE APPELLANT'S STAND ON THE AFORESAID ISSUES IN AY 2014-15. 3.3.3 I HAVE CONSIDERED BOTH THE POINTS OF VIEW. ON THE ISSUE OF CONSIDERING A FRESH CLAIM OF AN ASSESSEE, ALTHOUGH THE APEX COURT HAS HELD IN THE CASE OF GOETZE INDIA LTD THAT THE AO CANNOT ENTERTAIN A FRESH CLAIM WHICH WAS NOT MADE IN THE ORIGINAL RETURN OF INCOME, THEREAFTER THERE HAVE BEEN DECISIONS HOLDING THAT THE APPELLATE AUTHORITY IS EMPOWERED TO ENTERTAIN A FRESH CLAIM OF AN ASSESSEE AS PER LAW. I HAVE PERUSED THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF 'RAMCO CEMENTS LTD [2015] 373 ITR 146 (MAD) AND IN THE CASE OF ABHINITHA FOUNDATION P LTD [2017] 396 ITR 251 (MAD). 3.3.4 BEFORE THE CIT(A), THE APPELLANT'S AR HAS SUBMITTED THAT THE AO HAS MISUNDERSTOOD THE APPELLANT'S CLAIM OF NORMAL DEPRECIATION U/ S 32( 1) AS ADDITIONAL DEPRECIATION. BESIDES, THE AR HAS REFERRED TO EXPLANATION 5 TO SEC.32(1) AS PER WHICH DEPRECIATION SHALL BE ALLOWED WHETHER AN ASSESSEE CLAIMS DEPRECIATION OR NOT. THE AR HAS SUBMITTED A DETAILED WORKING OF DEPRECIATION CLAIMED, REPRODUCED ABOVE UNDER PARA 3.2 WHICH NEED TO BE VERIFIED BY THE AO WITH REFERENCE TO THE RELEVANT ASSESSMENT RECORDS. 3.3.5 IN VIEW OF THE ABOVE REMARKS, THE APPELLANT'S CLAIM OF DEPRECIATION IS PRIMA FACIE ACCEPTABLE. HOWEVER, SINCE THE AO HAS NOT CONSIDERED THE APPELLANT'S CLAIM IN THIS ASSESSMENT YEAR, THE AO IS DIRECTED TO VERIFY THE APPELLANT'S CLAIM OF DEPRECIATION AND TO ALLOW THE SAME AS PER LAW AFTER VERIFICATION OF THE RELEVANT ASSESSMENT RECORDS. IF THE AO HAS ALREADY ALLOWED DEPRECIATION, THE SAME SHOULD NOT BE ALLOWED TWICE. IN VIEW OF THE ABOVE REMARKS, THE APPELLANT'S GROUNDS ON THE AFORESAID ISSUE ARE PARTLY ALLOWED. ACCORDINGLY, THE APPELLANT'S MISCELLANEOUS PETITION DATED 13.2.2017 ON THE EARLIER CIT(A)'S ORDER IN THIS ASSESSMENT YEAR IS ALSO DISPOSED. 4.1 ON PERUSAL OF THE APPELLATE ORDER, WE ALSO FIND THAT, PRIMA FACIE, THE GROUND RAISED BY THE ASSESSEE ON THE CLAIM OF DEPRECIATION NEEDS VERIFICATION BY THE ASSESSING OFFICER, BECAUSE, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER TREATED THE CLAIM AS ADDITIONAL DEPRECIATION, WHEREAS, THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE CLAIM OF THE ASSESSEE IS NORMAL DEPRECIATION UNDER SECTION 32(1) OF THE ACT. NO DOUBT, TO CONSIDER A FRESH CLAIM, IN VIEW OF THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. V. CIT 284 ITR 323, THE ASSESSING OFFICER HAS NO POWER TO CONSIDER AN ISSUE WHICH I.T.A. NO.1865/M/18 5 WAS NOT CLAIMED IN THE RETURN OF INCOME. HOWEVER, IT COULD STILL BE CONSIDERED, IF THE RELEVANT MATERIAL WAS AVAILABLE ON RECORD, EITHER BY THE APPELLATE AUTHORITIES, [WHICH INCLUDES BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL] BY THEMSELVES, OR ON REMAND, BY THE ASSESSING OFFICER, AS HAS BEEN HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ABHINITHA FOUNDATION PVT. LTD. 396 ITR 251 (MAD). IN VIEW OF THE JUDICIAL PRECEDENT, WE FIND NOTHING WRONG IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND DECIDE IN ACCORDANCE WITH LAW. OTHERWISE ALSO, ON MERITS, WE DIRECT THE ASSESSING OFFICER TO EXAMINE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 28 TH JUNE, 2019 AT CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 28.06.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.