Surmandir Entertainment Complex Pvt. Ltd., Palanpur V. The Jt. CIT, Anand Range, Anand

ITA 2151/AHD/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8322 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 14A; 201

Judgement Text

ITA NO. 2151/AHD/2014 ASSESSMENT YEAR 2010 - 11 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH C , AHMEDABAD [CORAM : JUSTICE P P BHATT, PRESIDENT , AND PRAMOD KUMAR , VICE PRESIDENT ] ITA NO . 2151/AHD/2014 ASSESSMENT YEAR 20 10 - 11 SURMANDIR ENTERTAINMENT CO PVT LTD .....APPELLANT SURMANDIR THEATRES, PALANPUR - ABU HIGHWAY NO. 14 PALANPUR 385 001 [PAN: AADCS2676L] VS JOINT COMMISSIONER OF INCOME TAX ANAND RANGE, ANAND ..........RESPONDENT APPEARANCES BY M K PATEL FOR THE APPELLANT L P JAIN FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 20, 201 9 DATE OF PRONOUNC EMENT : M ARCH 12 TH , 2020 ORDE R PER PRAMOD KUMAR VP: 1 . THIS APPEAL IS DIRECTED AGAINST THE ORDER DATE D 21 ST MAY 2014 , PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 20 10 - 11. 2. IN THE FIRST GROUND OF APPEAL, THE APPELLANT IS AGGRIEVED THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN NOT AL LOWING THE WHOLE DEPRECIATION AMOUNT OF RS 22,13,139. 3. TO ADJUDICATE ON THIS GROUND OF APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS A COMPANY WHICH OWNS CINEMA THEATRE. DURING THE COURSE OF SCRUTINY ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED RS 1,08,00,000 FROM RELIANCE MEDIA WORKS LTD ON ACCOUNT OF LEASE RENTAL FOR THE CINEMA THEATRE. WHILE THE ASSESSEE HAS TREATED THIS INCOME AS INCOME FROM HOUSE PROPERTY, THE ASSESSING OFFICER WAS OF THE VIEW THAT IT SHOULD BE TREATED AS INCOME FROM OTHER SOURCES INASMUCH AS IT IS A PURE AND SIMPLE RENT RECEIPT FOR THE THEATRE BUILDING. A REFERENCE WAS MADE TO HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF UNIVERSAL PLAST LIMITED VS C IT [(1999) 237 ITR 454 ITA NO. 2151/AHD/2014 ASSESSMENT YEAR 2010 - 11 PAGE 2 OF 3 (SC)]. AS FOR THE CLAIM OF THE ASSESSEE IN RESPECT OF DEPRECIATION, AMOUNTING TO RS 22,13,139, THE ASSESSING OFFICER DECLINED THE SAME BY HOLDING THAT THE ASSETS LEASED OUT BY THE ASSESSEE WILL SATISFY THE CONDITIONS OF OWNERSHIP A ND USE, AND, AS SUCH, THE ASSESSEE WILL BE ELIGIBLE FOR DEPRECIATION IN HIS OWN HANDS, IF ELIGIBLE, AND, AS SUCH, IT CANNOT BE ALLOWED AS A DEDUCTION IN COMPUTATION OF INCOME FROM OTHER SOURCES. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE T HE CIT(A). WHILE LEARNED CIT(A) UPHELD THE CLAIM OF THE ASSESSEE IN PRINCIPLE, HE PARTIALLY DECLINED THE CLAIM ON THE SHORT GROUND THAT RESTAURANT BUILDING, RESTAURANT FURNITURE, KITCHEN EQUIPMENT, RESTAURANT ELECTRICAL FITTING AND MACHINERY HAVE BEEN SEP ARATELY GIVEN IN THE DEPRECIATION CHART AND THE SAME HAS NOT BEEN COVERED BY THE LEASING OUT OF THEATRE COMPLEX. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. ON A PERUSAL OF THE ASSESSMENT ORDER ITSELF, WE FIND THAT IT IS UNCONTROVERTED STAND OF THE ASSESSEE THAT WHAT HAS BEEN DESCRIBED AS RESTAURANT IS BEING USED BY THEATRE AND UT ILITY STAFF AND WORKMEN, AND THAT THE RESTAURANT IS NOT IN OPERATION SINCE 2007. IN OTHER WORDS, THEREFORE, IT IS A KIND OF CANTEEN FOR WORKMEN AND AS SUCH INTEGRAL PART OF THE ARRANGEMENTS ATTACHED TO THE LEASING OUT OF THEATRE COMPLEX. ON THESE FACTS, I N OUR CONSIDERED VIEW, THE DEPRECIATION THEREON CANNOT BE DECLINED FOR THE PURPOSE OF COMPUTING THE INCOME FROM OTHER SOURCE; THIS DEPRECIATION IS AS MUCH ADMISSIBLE AS IS THE DEPRECIATION ON THE THEATRE BUILDING. WHAT HAS BEEN TERMED AS RESTAURANT CANNO T, THEREFORE, BE CONSIDERED IN ISOLATION WITH THE THEATRE COMPLEX. WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE, AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PARTIAL DISALLOWANCE OF DEPRECIATION. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 6. G ROUND NO. 1 IS THUS ALLOWED. 7. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE HAS RAISED GRIEVANCE AGAINST LEARNED CIT(A) REJECTING THE CLAIM OF DEDUCTION OF RS 14,946, ON ACCOUNT OF MUNICIPAL TAX. 8. WHILE THE ASSESSEE HAD CLAIMED THE DEDUCTION OF RS 14 ,946, ON ACCOUNT OF MUNICIPAL TAXES, IN COMPUTATION OF INCOME FROM PROPERTY, THE ASSESSING OFFICER DID NOT GRANT THIS DEDUCTION AT THE TIME OF COMPUTING INCOME FROM OTHER SOURCES. LEARNED CIT(A) DID NOT INTERFERE IN THE MATTER EITHER. THE ASSESSEE IS NOT S ATISFIED AND IS NOW BEFORE US. 9. HAVING HEARD THE RIVAL CONTENTIONS, AND HAVING PERUSED THE MATERIAL ON RECORD, WE SEE MERITS IN THE PLEA OF THE ASSESSEE. IN THE COMPUTATION OF INCOME, ATTACHED TO AND FORMING PART OF THE RETURN OF INCOME, THE ASSESSEE HA D SPECIFICALLY MENTIONED ABOUT THE MUNICIPAL TAXES BEING RS 14,946. IN THESE CIRCUMSTANCES, THE DEDUCTION OUGHT TO HAVE BEEN GRANTED IN RESPECT OF THE SAME, EVEN THOUGH THE INCOME WAS EVENTUALLY ASSESSED AS INCOME FROM OTHER SOURCES. IN VIEW OF THESE DISC USSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE PLEA OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION OF RS 14,946 IN COMPUTATION OF INCOME FROM OTHER SOURCES ON ACCOUNT OF THEATRE LEASING INCOME. ITA NO. 2151/AHD/2014 ASSESSMENT YEAR 2010 - 11 PAGE 3 OF 3 10. GROUND NO. 2 IS THUS ALLOWED. 11. IN GROUND NO. 3, THE ASSESSEE IS AGGRIEVED THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS 9,16,048 UNDER SECTION 14A. 12. TO ADJUDICATE ON THIS GRIEVANCE, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT WHILE THE RE WAS NO DIVIDEND INCOME IN THE RELEVANT PREVIOUS YEAR, THE ASSESSING OFFICER DISALLOWED RS 9,16,048 UNDER SECTION 14A ON THE GROUND THAT THESE EXPENSES PERTAINED TO THE EARNING TAX EXEMPT INCOME FROM DIVIDENDS. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN A PPEAL BUT WITHOUT SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 13. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 14. A S HELD BY HONBLE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS CORRTECH ENERGY LTD [(2015) 372 IR 97 (GUJ)], WHEN THERE IS NO EXEMPT INCOME IN THE HANDS OF THE ASSESSEE, DISALLOWANCE UNDER SECTION 14A DOES NOT COME INTO PLAY AT ALL. IN VIEW OF THIS LEG AL POSITION, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. THE ASSESSING OFFICER IS, ACCORDINGLY, DIRECTED TO DELETE THIS DISALLOWANCE AS WELL. 15. GROUND NO. 3 IS ALSO THUS ALLOWED. 16. GROUND NOS. 4 AND 5, BEING GENERAL IN NATURE, DONOT CALL FOR ANY SPECIFIC ADJUDICATION. 17 . IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE . ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE LIST OF PRONOUNCEMENTS BEING PLACED ON THE NOTICE BOARD. SD/ - SD/ - JUSTICE P P B HATT PRAMOD KUMAR ( PRESIDENT) ( VICE - PRESIDENT) D ATED THE 12 TH DAY OF MARCH , 20 20 COPIES TO : (1) THE APPELLANT (2) THE RESPONDEN T (3) CIT (4) CIT(A) ( 5 ) DR (6) GUARD FILE BY ORDER ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD