Anika International Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2579/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2859 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C DANDAY
• Assessee Lawyers: DINESH BAJAJ
• Keywords: Capital asset; Depreciation; Cost of acquisition
• Section: 143(3)

Judgement Text

1 ITA NOS. 2579 & 2081/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 2579/DEL/2 014 (A.Y .2010-11) ANIKA INTERNATIONAL PVT. LTD. F-402, 4 TH FLOOR, RAS VILLAS, PLOT NO. D-1, DISTRICT CENTRE NEW DELHI AAACA5751F (APPELLANT) VS ACIT CIRCLE-1(1) NEW DELHI (RESPONDENT) I.T.A .NO. 2081/DEL/2 014 (A.Y .2010-11) ACIT CIRCLE-1(1) NEW DELHI (APPELLANT) VS ANIKA INTERNATIONAL PVT. LTD. F-402, 4 TH FLOOR, RAS VILLAS, PLOT NO. D-1, DISTRICT CENTRE NEW DELHI AAACA5751F (RESPONDENT) APPELLANT BY SH. DINESH BAJAJ, CA RESPONDENT BY SH. R.C. DANDAY, SR. DR ORDER PER SUCHITRA KAMBLE, JM THE APPEALS ARE FILED BY THE ASSESSEE AND THE REVEN UE AGAINST THE ORDER DATED 10/01/2014 PASSED BY THE CIT(A)-IV, NEW DELH I. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- (ITA NO. 2579/DEL/2014) DATE OF HEARING 14.06.2017 DATE OF PRONOUNCEMENT 16.06.2017 2 ITA NOS. 2579 & 2081/DEL/2014 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DISALLOWING THE DEPRECIATION ON BUILDING AS ON SAME LINES OF THE ASSESSMENT YEAR 2009-10. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE PURCHASE COST INCLUDES PRICE OF LAND. 3. THE GROUNDS OF APPEAL ARE AS UNDER:- (ITA NO. 2081/DEL/2014) 1. WHETHER THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITIONS MADE ON ACCOUNT OF DEPRECIATION CLAIMED O N LAND AMOUNTING TO RS.1,17,51,405/- IGNORING THE FACT THA T- I. LAND IS A CAPITAL ASSET BUT NOT A DEPRECIABLE A SSET II. THE COST OF CONSTRUCTION CANNOT BE HIGHER THAN WHAT IS ARRIVED AT BY THE VALUATION AS PER MUNICIPAL AUTHORITY AND THE DIFFERENCE BETWEEN THE TOTAL CONSIDERATION AND THE COST OF CON STRUCTIONS DIRECTLY ATTRIBUTABLE TO THE COST OF LAND. 3. THE ASSESSEE IS PURCHASED A COMMERCIAL SPACE S UITABLE FOR AN OFFICE IN THE COMMERCIAL COMPLEX SITUATED D-1 DISTRICT CENTR E SAKET, NEW DELHI FOR RS. 12,50,00,000/-. THE ASSESSEE WAS ALLOTTED THE C OMMERCIAL SPACE VIDE PROVISIONAL ALLOTMENT LETTER DATED 11.01.2008. POSS ESSION WAS HANDED OVER ON 01.09.2008 AND REGISTRATION WAS THEREAFTER EFFECTED UNDER DELHI STAMP RULES 2007. THE COMMERCIAL SPACE/UNIT WAS REFLECTED AS F LAT IN THE ASSESSEES BALANCE SHEET AND DEPRECIATION CLAIMED ACCORDINGLY. THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 28.02.2013 AN D THE CLAIM OF THE ASSESSEE ON ACCOUNT OF DEPRECIATION ON SUPERSTRUCTU RE PURCHASED FOR RS.1,17,51,405/- WAS DISALLOWED. AGGRIEVED BY THE A SSESSMENT ORDER, THE ASSESSEE COMPANY FILED APPEAL BEFORE THE CIT(A). TH E CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY ALLOWING A RELIEF OF RS. 54,74,450/- AND CLAIM OF DEPRECIATION ON COST OF LAND AT RS. 6,27,69,548 WAS REJECTED. 3 ITA NOS. 2579 & 2081/DEL/2014 4. THE LD. AR SUBMITTED THAT FOR THE ASSESSMENT YEA R 2009-10, THE TRIBUNAL IN ASSESSEES OWN CASE HAS ALLOWED THE DEPRECIATION ON BALANCE PORTION OF BUILDING. THE LD. AR SUBMITS THAT THEREFORE, THE IS SUE IN PRESENT ASSESSMENT YEAR IS ALSO COVERED BY THE TRIBUNALS DECISION IN ITA NO. 1571/DEL/2013 DATED 18.03.2015. 5. THE LD. DR COULD NOT DISTINGUISH THE FACTS OF TH E PRESENT CASE WITH THE EARLIER ASSESSMENT YEAR. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS. IN EARLIER ASSESSMENT YEAR 2009-10, THE TRIBUNAL IN AS SESSEES OWN CASE ALLOWED THE SAID DEPRECIATION. THE TRIBUNAL HELD IN PARA 5 AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE ORDER OF THE AO AND CIT(A) AND ALSO THE COPIES OF VARIOUS DOCUMENTS FILED IN THE COMPILATION BEFORE US. WE FIND THAT THE ASSESSEE HA S ACQUIRED A COMMERCIAL SPACE AT SAKET ALONG WITH THE PROPORTION ATE UNDIVIDED INTEREST IN THE LAND. WE FIND THAT ESSENTIALLY IT IS A CASE OF PURCHASE OF COMMERCIAL SPACE AND THE ASSSESSEE PURCHASES ALONG WITH COMMER CIAL SPACE ONLY NOTIONAL RIGHT IN THE LAND WHICH IS VERY MUCH INCID ENTAL TO THE TRANSACTION OF PURCHASE OF THE COMMERCIAL SPACE. THE PROPORTION ATE UNDIVIDED INTEREST IN THE LAND IS PROVIDED IN THE SALE DEED ONLY TO SA FEGUARD THE INTEREST OF THE INTENDING PURCHASER IN CASE OF SOME UNFORESEEN CIRCUMSTANCE OF DEMOLITION OF THE BUILDING ITSELF. HOWEVER, THE ISS UE BEFORE US IS COVERED BY THE DECISION OF DELHI TRIBUNAL IN DCIT VS. CAPITAL CARS (P) LTD., CITED SUPRA, WHEREIN HELD THAT THE ASSESSEE WAS ENTITLED TO DEPR ECIATION ON THE AMOUNT OF BUILDING AND NOT ON THE WHOLE AMOUNT PAID FOR AC QUIRING A PART OF THE COMMERCIAL COMPLEX ALONG WITH THE UNDIVIDED INTERES T IN LAND. THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS OF THE CASE OF T HE ASSESSEE. THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IS BINDING ON US. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE AMOUNT PAID FOR 4 ITA NOS. 2579 & 2081/DEL/2014 BUILDING AND NOT ON THE WHOLE AMOUNT PAID FOR ACQUI RING THE COMMERCIAL SPACE ALONG WITH UNDIVIDED INTEREST IN LAND. WE FIN D THAT THE ASSESSEES VALUER HIMSELF HAS VALUED THE VALUE OF PROPORTIONAT E UNDIVIDED INTEREST IN LAND AT RS. 1,07,56,064/-. ACCORDINGLY, WE DIRECT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE AMOUNT OF RS. 11,42,43,936/- (RS.12,50,00,000/- MINUS RS. 1,07,56,064/-) AND SHALL NOT BE ENTITLED TO DEPRECIATION ON THE VALUE OF PROPORTIONATE UNDIVIDED INTEREST IN THE L AND AT RS. 1,07,56,064/- AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTL Y ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. THUS, THE ISSUE BEFORE US IS IDENTICAL TO THE PRE SENT CASE. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 16/06/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 5 ITA NOS. 2579 & 2081/DEL/2014 ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 14/06/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 14/06/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 16.06.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 19 .06.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.