SHRI P. KAREEM GANI, TRICHY V. ITO, WARD - 1 (2), TRICHY

ITA 2577/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0231 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR SHRI G CHAND
• Keywords: Business income; Depreciation
• Section: 143(3); 22

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO.2577/CHNY/2019 / ASSESSMENT YEAR:2014-15 SHRI P. KAREEM GANI, NO. 17, NADAR LANE, OLD KARUR BYE PASS ROAD, CHINTHAMANI, TRICHY 620 002. [PAN: AACPK6068Q] VS. THE INCOME TAX OFFICER, WARD 1(2), TRICHY. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI G. CHANDRABABU, ADDL. CIT / DATE OF HEARING : 24.11.2020 /DATE OF PRONOUNCEMENT : 22.12.2020 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, TRICHY DATED 03.07.2019 RELEVANT TO THE ASSESSMENT YEAR 2014-15. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRONEOUSLY CONFIRMED THE RESTRICTION OF CLAIM OF DEPRECIATION ON THE HOTEL BUILDING. ITA NO. 2577/CHNY/2019 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 28.04.2015 ADMITTING A TOTAL INCOME OF .3,78,860/- PLUS AGRICULTURAL INCOME OF .15,000/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. AGAINST STATUTORY NOTICES, THE ASSESSEE FURNISHED THE DETAILS AS CALLED FOR. AFTER CONSIDERING THE SUBMISSIONS AND ACCOUNTS OF THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .10,98,144/- AFTER DETERMINING INCOME FROM BUSINESS AT .10,73,228/-.ON APPEAL THE LD. CIT(A) CONFIRMED THE RESTRICTION OF CLAIM OF DEPRECIATION ON THE HOTEL BUILDING AND CONSEQUENTLY CONFIRMED THE ADDITION QUANTIFIED THE COMPUTATION OF TAXABLE INCOME OF THE ASSESSEE. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES THROUGH VIDEO CONFERENCING, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED A LODGE CUM RESTAURANT NAMED AK RESIDENCY WITH A FEATURE OF GROUND FLOOR FOR SHOPPING AREA/RESTAURANT AND THREE FLOORS FOR LODGING PURPOSES. IT WAS THE SUBMISSION THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME UNDER TWO HEADS ONE IS INCOME FROM LODGE AND THE SECOND IS INCOME FROM HOUSE PROPERTY WITH REGARD TO RESTAURANT. IT WAS THE SUBMISSION THAT THE ITA NO. 2577/CHNY/2019 3 ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE HOUSE PROPERTY INCOME AS BUSINESS INCOME. THEREFORE, THE ASSESSEE IS ENTITLED FOR DEPRECIATION OF FOUR FLOORS [GROUND FLOOR AND THREE FLOORS OF THE BUILDING] SINCE THE ASSESSING OFFICER HAS TREATED THE ENTIRE INCOME AS BUSINESS INCOME OF THE ASSESSEE. THUS, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION FOR THE ENTIRE PROPERTY AS BUSINESS INCOME. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE BUSINESS HAS NOT COMMENCED IN THE RESTAURANT AND THEREFORE, THE INCOME FROM HOUSE PROPERTY FOR RESTAURANT WAS NOT TREATED AS INCOME FROM HOUSE PROPERTY. THUS, THE ASSESSEE IS NOT ENTITLED FOR CLAIM OF DEPRECIATION FOR THE GROUND FLOOR AND THE ASSESSING OFFICER HAS RIGHTLY RESTRICTED THE CLAIM OF DEPRECIATION ONLY FOR THREE FLOORS. AFTER CONSIDERING THE SUBMISSIONS, WE FIND THAT ONCE THE ASSESSING OFFICER HAS TREATED THE RECEIPT UNDER BUSINESS INCOME, THE ASSESSEE IS ENTITLED FOR DEPRECIATION. IF, SUPPOSE THE ASSESSING OFFICER RESTRICT THE RECEIPTS AND ASSESSED THE SAME UNDER INCOME FROM HOUSE PROPERTY AS CLAIMED BY THE ASSESSEE, THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION FOR THE GROUND FLOOR. WHEN THE ASSESSING OFFICER HIMSELF HAS CHANGED THE HEAD OF INCOME I.E., INCOME FROM HOUSE PROPERTY TO BUSINESS INCOME, THE ASSESSEE HAS RIGHTLY POINTED OUT THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION FOR THE ENTIRE BUILDING. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT SINCE THE ASSESSING OFFICER HAS TREATED THE INCOME RECEIPT AS BUSINESS INCOME OF THE ASSESSEE, WE ITA NO. 2577/CHNY/2019 4 DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION FOR GROUND FLOOR ALSO. THUS, THE GROUND RAISED BY THE ASSESSEE STANDS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 22 ND DECEMBER, 2020 AT CHENNAI. SD/- SD/- (S JAYARAMAN) ACCOUNTANT MEMBER (DUVVURUL RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 22.12.2020 VM/- /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. ( )/CIT(A), 4. /CIT, 5. /DR & 6. /GF.