The DCIT, Circle-1(1), Baroda V. Gaekwad Services Ltd., Baroda

ITA 321/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63232 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Corroborative evidences; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.162/AHD/2010 A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010 A. Y. 2004-05 GAEKWAR SERVICES LTD. INDUMATI MAHAL, OPP. L.V. PALACE, J.N. MARG, BARODA PAN-AAACG7100J (ASSESSEE) VS. THE A.C.I.T., CIRCLE-1(1), BARODA (DEPARTMENT) DEPARTMENT BY : SHRI D.K. SINGH, SR. D.R. ASSESSEE BY : SHRI J.P. SHAH, A.R. DATE OF HEARING : 12.10.2012 DATE OF PRONOUNCEMENT 14.12.2012 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER OF LD. CIT(A)-V, BARODA DATED 13.11.2009. THE GROUNDS OF APPEAL RAISED ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW DEPRECIATION AT HIGHER RATE @ 25% ON THE EXPENDITURE ON BUNKER, FIELD RAKE DRAINA GE WORK, PIPES, SPRINKLER, NEW WELL AND CONSTRUCTION OF WALL AS AGA INST 10% ALLOWED BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW DEPRECIATION AT HIGHER RATE @ 25% ON THE EXPENDITURE ON RNA CONSULTANCY (DESIGNIN G), SURVEY WORK, RNA GRASS, LABOUR GAGES FOR EARTH WORK, RNA S UPERVISION AND WEB DESIGNING AS AGAINST 10% ALLOWED BY THE ASSESSI NG OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.21, 70,000/- MADE U/S I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 2 68 OF THE ACT WITHOUT APPRECIATING THE FACT THAT TH E ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINES S OF THE CREDITORS WITH SUPPORTING EVIDENCE. 2. THE BRIEF FACTS, AS CULLED OUT FROM THE ORDERS A RE AS UNDER:- ASSESSEE IS A COMPANY DERIVING INCOME FROM RENTAL O F HOARDINGS AND INCOME FROM GEEKWAD BARODA GOLF COURSE. ASSESSEE F ILED ITS RETURN OF INCOME ON 01.11.2004 FOR A.Y. 2004-05 DECLARING TOTAL LOSS OF RS.8647593/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESS MENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 03.10.2006 AND THE INCOME WAS DETE RMINED AT RS.3346292/- AFTER MAKING ADDITIONS. AGGRIEVED BY THE ORDER OF THE A.O. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 13.11 .2009 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT (A), BOTH ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. SINCE THE ISS UES IN BOTH THE APPEALS ARE CONNECTED BOTH APPEALS ARE HEARD TOGETHER. I.T.A. NO.162/AHD/2010 (ASSESSEES APPEAL) 3. ON BEHALF OF ASSESSEE VIDE LETTER DATED 27.08.20 12 FOLLOWING ADDITIONAL GROUND WAS RAISED AND IT WAS URGED THAT THE ADDITIO NAL GROUND BE ADMITTED. 4. HOWEVER, DURING THE COURSE OF HEARING LD. A.R. D ID NOT SERIOUSLY ARGUED THE GROUND AND THEREFORE THE SAME IS NOT ADJUDICATED. 4. GROUND NO.1: SECURITY DEPOSITS FROM NRI MEMBERS CONSIDERED AS UNEXPLAINED CASH CREDITS. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT ASSESSEE HAS CLAIMED TO HAVE ACCEPTED DEPOSITS. TH E ASSESSEE WAS ASKED TO FURNISH NAME, ADDRESS, CONFIRMATION LETTER ETC. IN SUPPORT OF ITS CLAIM AND TO PROVE THE IDENTITY AND CREDITWORTHINESS. AS THE AS SESSEE DID NOT MAKE ANY SUBMISSIONS, THE A.O. WAS OF THE VIEW THAT THE ASSE SSEE HAS NOT DISCHARGED ITS I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 3 ONUS REQUIRED U/S 68 OF THE ACT AND ACCORDINGLY TRE ATED THE DEPOSITS AGGREGATING TO RS.2170000/- (LISTED ON PAGE 4 & 5 OF THE ORDER) AS UNEXPLAINED CASH CREDIT AND ADDED TO THE INCOME. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). BEFORE LD. C IT(A) IT WAS SUBMITTED THAT OUT OF 105 DEPOSITORS, IN RESPECT OF ONLY TWO NRIS, TH E CONFIRMATION AND PAN WERE NOT AVAILABLE AND THAT IN RESPECT OF OTHER 27 PERSO NS EITHER THE PAN OR CONFIRMATIONS WERE AVAILABLE AND THE SAME WERE SUBM ITTED. LD. CIT(A) CALLED FOR REMAND REPORT FROM THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT, LD. CIT(A) GRANTED PARTIAL R ELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE REMAND REPORT. THE AO HAD ADDED RS.21,70,000/- U/S 68 ON THE GROUND THAT THE PAN OR CONFIRMATION WERE NOT AVAILABLE IN RESPE CT OF 29 DEPOSITORS. THE CONTENTION OF THE APPELLANT THAT MO ST OF THE DETAILS WERE SUBMITTED TO AO VIDE LETTER DATED 11/09/2006 A ND THESE WERE NOT FULLY VERIFIED BY AO IS FOUND TO BE CORRECT. N OW IN THE REMAND REPORT THE AO HAS SUBMITTED THAT SAVE FOR RS.2,75,0 00/- IN RESPECT OF THE OTHERS THE PAN AND CONFIRMATIONS HAVE BEEN FILE D. IT IS NOTED THAT OUT OF THE FOUR CREDITORS MENTIONED IN THE REM AND REPORT IN RESPECT OF MR. CLAUDE DE FENOYL, WHO IS A FRENCH CI TIZEN AND MRS. DIPIKABEN WHO IS A BRITISH CITIZEN, COPIES OF PASSP ORT AND THEIR MEMBERSHIP APPLICATION FROM WERE SUBMITTED TO SHOW THAT THESE WERE GENUINE PERSONS. IN RELATION TO NAVNIT PATEL AND MAHESH PATEL ALSO, IT WAS CLAIMED THAT THEY WERE BRITISH NATIONA LS AND THE MEMBERSHIP FORMS WERE ALSO SUBMITTED AND IT WAS STA TED THAT SINCE THEY WERE NOT IN INDIA IT WAS TIME CONSUMING TO OBT AIN THE COPIES OF PASSPORTS OF THESE PERSONS. CONSIDERING THESE FACT S AND ALSO THE REMAND REPORT IN MY VIEW, THE ADDITION U/S 68 IS SU STAINABLE ONLY TO THE EXTENT OF RS.1,25,000/- CONCERNING SHRI NAVNIT PATEL AND SHRI MAHESH PATEL WHERE THE IDENTITY OF THE CREDITORS AL SO REMAIN UNSUBSTANTIATED. GROUND NO.4 IS PARTLY ALLOWED. 6. AGGRIEVED BY THE ACTION OF LD. CIT(A) OF CONFIRM ING THE ADDITION OF RS.125000/- THE ASSESSEE IS NOW IN APPEAL BEFORE US AND THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN DELETING ADDITION OF RS.2170000/-. I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 4 7. BEFORE US LD. A.R. SUBMITTED THAT THE DEPOSIT OF RS.125000/- WAS RECEIVED FROM NAVNIT PATEL AND MAHESH PATEL AND THEY ARE BRI TISH NATIONALS HOLDING BRITISH PASSPORTS. HE PLACED AT PAGE 68 TO 75 TO THE COPIE S OF THEIR MEMBERSHIP FORM AND POINTED OUT TO THE FACT THAT IN THE FORM IT HAS BEEN STATED THAT THEY ARE BRITISH NATIONALS WHEREIN THEIR PASSPORT NUMBERS WE RE ALSO MENTIONED. HE FURTHER POINTED OUT THAT THE MEMBERSHIP FEES OF RS. 1 LAC IN THE CASE OF NAVNIT PATEL CONSISTED TO DEPOSIT OF RS.75000/- AND ENTRAN CE FEES OF RS.25000/-. THE ADDITION HAS BEEN MADE ONLY WITH RESPECT TO THE ENT RANCE FEES. HE ALSO PLACED ON RECORD THE DETAILS OF SECURITY DEPOSITS AT PAGE 16C TO 16F. FROM THE DETAILS HE POINTED OUT THAT THE NAMES, ADDRESSES AND PAN NUMBE RS WERE SUBMITTED AND THEREFORE THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON IT. HE THEREFORE SUBMITTED THAT THE ADDITION OF RS.125000/- BE DELET ED AND FOR THE ADDITION ALREADY DELETED BY LD. CIT(A) HE SUPPORTED THE ORDE R OF LD. CIT(A). 8. LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDER OF THE A.O. 9. WE HAVE HERD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. THE FACTUAL POSITION IS THAT THE ASSESSEE HAD RECEI VED DEPOSITS FROM VARIOUS PERSONS. ADDITION WAS MADE BY THE A.O. FOR THE REA SON THAT THE ASSESSEE COULD NOT PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CASH CREDITS. IN THE REMAND PROCEEDINGS, THE ASSESSEE SUBMITTED THE NAMES, ADDR ESSES, PAN NUMBER AND CONFIRMATIONS OF THE LENDERS. LD. CIT(A) DELETED T HE ADDITIONS AS THE IDENTITY OF THE CREDITORS WERE PROVED. LD. D.R. COULD NOT CONT ROVERT THE FINDING OF LD. CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. WITH RESPECT TO THE ADDITION OF RS.125000/- MADE IN RESPECT OF NRIS, THE ASSESSEE H AD SUBMITTED THE PASSPORT NUMBER OF THE LENDERS. LD. D.R. DID NOT BRING ANY MATERIAL ON RECORD TO PROVE THAT THE SUBMISSIONS OF THE ASSESSEE WERE NOT CORRE CT. THUS CONSIDERING THE I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 5 TOTALITY OF THE FACTS, WE ARE OF THE VIEW THAT LD. CIT(A) HAD RIGHTLY DELETED THE ADDITION MADE BY THE A.O. AND WE DO NOT FIND ANY RE ASON TO INTERFERE WITH HIS ORDER ON THIS COUNT. AS FAR AS THE ADDITION OF RS. 125000/- THAT WAS SUSTAINED BY LD. CIT(A) IS CONCERNED, WE ARE OF THE VIEW THAT SI NCE THE ASSESSEE HAS SUBMITTED THE PASSPORT NUMBERS OF THE NRI DEPOSITOR S, IT HAS PROVED THEIR IDENTITIES AND REVENUE COULD NOT CONTROVERT THE SAM E. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE. W E THUS DIRECT THE DELETION OF RS.125000/- SUSTAINED BY LD. CIT(A). IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE GROUND OF THE REVENUE IS DISMISSED. I.T.A. NO.321/AHD/2010 (REVENUES APPEAL) 10. GROUND NO.1 OF THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW DEPRECIATION AT HIGHER RATE @ 25% ON THE EXPENDITURE ON BUNKER, FIELD RAKE DRAINAGE W ORK, PIPES, SPRINKLER, NEW WELL AND CONSTRUCTION OF WALL AS AGA INST 10% ALLOWED BY THE ASSESSING OFFICER. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT ASSESSEE HAD CLAIMED 100% DEPRECIATION ON EARTH WOR K WHICH CONSISTED OF SAND AND RENT OF TRACTOR, DUMPER, JCB FOR THE PURPOSE OF CONSTRUCTING SPECIAL STRUCTURE ON THE LAND. THE ASSESSEE HAD ALSO CLAIMED DEPRECI ATION ON PLANT AND MACHINERY WHICH CONSISTED OF BUNKER, FIELD RAKE, DRAINAGE WOR K, PIPE SPRINKLERS ETC. AT 25%. THE A.O. WAS OF THE VIEW THAT BUNKER, FIELD RAKE, D RAINAGE WORK, PIPE SPRINKLER ETC. FORM PART OF BUILDING BLOCK AND THEREFORE THE APPLICABLE RATE OF DEPRECIATION IS 10%. 12. AS FAR AS EXPENDITURE OF EARTHWORK WAS CONCERNE D, THE A.O. WAS OF THE VIEW THAT THE ASSESSEE IS THE OWNER OF THE SPECIALI ZED STRUCTURE CONSTRUCTED ON LAND AND THE SPECIALIZED STRUCTURE IN THE FORM OF G OLF COURSE IS AN ASSET AND HAS ADVANTAGE OF ENDURING NATURE TO THE ASSESSEE. HE T HUS REJECTED THE ASSESSEE I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 6 CLAIM OF 100% DEPRECIATION BUT HELD THAT ASSESSEE I S ENTITLED TO DEPRECIATION AT 10% BEING THE RATE APPLICABLE TO BUILDING. SINCE B OTH THE ASSETS (EARTHWORK AND BUNKERS ETC) WERE PUT TO USE FOR A PERIOD OF LESS T HAN 180 DAYS, HE ALLOWED DEPRECIATION AT HALF OF THE PRESCRIBED RATE AND ACC ORDINGLY DISALLOWED THE EXCESS DEPRECIATION OF RS.7264430/- AND ADDED TO THE INCOM E. AGGRIEVED BY THE ACTION OF THE A.O. THE ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 4.3.1 THOUGH THE MOU DOES NOT REFER TO THE WORD LEASE HOLD AND MERELY TRANSFERS THE POSSESSION ON MONTHLY FEE BASI S, THE NATURE OF COMMERCIAL EXPLOITATION OF THE LAND, SUBSTANTIAL IN VESTMENT BY THE APPELLANT WOULD SUGGEST THAT THE INTENTION IS ALL A LONG TO PROVIDE LONG TERM LEASE FOR OPERATION OF THE GOLF COURSE. ALBEIT THE MOU PROVIDES FOR TERMINATION OF UNDERSTANDING AT ONE MO NTHS NOTICE IT IS NOWHERE MENTIONED THAT WHAT WOULD HAPPEN TO THE SUB STANTIAL INVESTMENT ON THE LANDS BY THE APPELLANT AND WHETHE R IT WOULD BE COMPENSATED BY THE TRANSFEROR. THUS, IN REALITY TH E MOU IS NOTHING BUT A LONG TERM LEASE WITH A REVISION IN FEES FROM TIME TO TIME. THE FACT IS ALSO FORTIFIED BY SUBSEQUENT OPERATION OF T HE MOU AS TILL OCTOBER 2009, THE TRANSFERORS HAVE NEVER ASKED FOR TERMINATION OF THE MOU. IN FACT SUBSTANTIAL AMOUNTS HAVE BEEN RAI SED BY THE APPELLANT THROUGH MEMBERSHIP FEES ETC. LEADING TO C OMMERCIAL COMMITMENTS ON THE PART OF THE APPELLANT. IT IS NE ITHER FEASIBLE NOR INTENDED TO TERMINATE THE MOU AND REVERT THE DEVELO PED LAND TO THE TRANSFERORS. IN OTHER WORDS, THROUGH THE MOU NOT O NLY THE POSSESSION OF THE LANDS HAS BEEN TRANSFERRED BUT AL SO A LONG TERM COMMERCIAL RIGHT TO DEVELOP AND EXPLOIT THE LAND. THE RIGHT IS TANGIBLE IN NATURE AS IT ARISES ON ACCOUNT OF INVES TMENT ON SPECIALIZED DEVELOPMENT OF LAND. IN OTHER WORDS, T HE EXPENDITURE INCURRED ON EARTH WORK ETC. CREATES THE SUSTAINABLE INCOME GENERATING APPARATUS AND AFFORDING AN ENDURING ADVA NTAGE TO THE APPELLANT. THE RIGHT AND ITS EXPLOITATION THUS GEN ERATES A CAPITAL ASSET OF TANGIBLE NATURE. THE EARTH WORK RELATED E XPENSES ARE THUS CAPITAL EXPENDITURE. IN REGARD TO ALL THE EXPENDITU RE RELATED TO EARTH WORK AND EXPENDITURE ON BUNKER, FIELD RAKE, DRAINAG E WORK, PIPES AND SPRINKLER, WELL AND WALL ETC., I AM OF THE VIEW THAT THESE ARE THE ESSENTIAL INCOME GENERATING APPARATUS OF BUSINESS O F THE APPELLANT AND EXPENDITURE THEREON IS SIMILAR TO THAT ON PLANT AND MACHINERY AND THE ADMISSIBLE DEPRECIATION RATE IS 25% AND FOR THE YEAR UNDER CONSIDERATION IT IS 12.5% IN VIEW OF USAGE FOR LESS THAT 180 DAYS. THE A.O. IS ACCORDINGLY DIRECTED TO RE-WORK THE DEP RECIATION. THE GROUND NO.1 AND 2 ARE PARTLY ALLOWED. I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 7 13. AGGRIEVED BY THE ORDER OF LD. CIT(A) THE REVENU E IS NOW IN APPEAL BEFORE US. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF THE A.O., AND ON THE OTHER HAND LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CONSIDERING ALL THE FACT, LD. CIT(A) H AS HELD THAT EARTH WORK RELATED EXPENSES ARE CAPITAL IN NATURE AND THE EXPENDITURE INCURRED ON BUNKER, FIELD RAKEM DRAINAGE WORK ETC. ARE SIMILAR TO PLANT AND M ACHINERY AND THE ADMISSIBLE RATE OF DEPRECIATION TO BE 25%. LD. D.R. COULD NOT CONTROVERT THE FINDINGS OF LD. CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR TO THE ORDER OF LD. CIT(A). WE THUS UPHOLD LD. CIT(A)S ORDER ON THIS GROUND. THUS , THIS GROUND OF REVENUE IS DISMISSED. 15. GROUND NO.2 RELATES TO DEPRECIATION AT 25% ON E XPENDITURE INCURRED ON DESIGNING, SURVEY WORK ETC. 16. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON SCRUTINY OF EXPENSES THE A.O. OBSERVED THAT ASSESSEE HAS CLAIMED VARIOUS EXP ENSES AGGREGATING TO RS.2454108/- AS REVENUE EXPENSES. ASSESSEE SUBMITT ED THAT IT INCLUDED RS.350000/- PAID TO RNA CONSULTANCY, LABOUR WAGES F OR EARTH ETC. THE EXPENSES HAVE BEEN INCURRED FOR DESIGNING, PURCHASE OF SPECI AL GRASS, LABOUR WORK ETC. IN CONNECTION WITH THE GOLF COURSE. THE A.O. WAS OF T HE VIEW THAT CONSTRUCTION OF THE GOLF COURSE TO BE AN ASSET OR ADVANTAGE OF ENDU RING NATURE AND SINCE THE EXPENSES HAVE BEEN INCURRED FOR GOLF COURSE, THE SA ME SHOULD BE CAPITALIZED. HE ACCORDINGLY CAPITALIZED IT AND ALLOWED DEPRECIATION AT HALF OF THE RATE APPLICABLE FOR BUILDING AND THEREBY MADE A NET ADDITION OF RS. 2332203/-. THE ASSESSEE I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 8 CARRIED THE MATTER BEFORE LD. CIT(A) WHO PARTLY ALL OWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORD ER. FOR DETAILED REASONS RECORDED IN REGARD TO GROUND NO.1 & 2 ABOVE , THE TRANSFER OF POSSESSION OF LAND AND THE DEVELOPMENT RIGHTS AND I TS EXPLOITATION IS HELD TO BE A CAPITAL ASSET OF TANGIBLE NATURE. THE EARTH WORK RELATED EXPENSES ARE THUS CAPITAL IN NATURE. EVEN OTHERWIS E, THE APPELLANT IS IN THE BUSINESS OF OPERATING THE GOLF COURSE AND AL L EXPENSES PRIOR TO COMMENCEMENT OF ITS MAIN BUSINESS ARE REQUIRED TO B E CAPITALIZED. ADMITTEDLY ALL THE EXPENSES ARE ESSENTIAL FOR CREAT ION OF THE GOLF COURSE AND THE GOLF COURSE CANNOT FUNCTION WITHOUT SUCH DEVELOPMENT EXPENSES. THE AO WAS THUS JUSTIFIED IN CAPITALIZIN G SUCH EXPENSES. HOWEVER, THE EXPENDITURE HAS LED TO CREATION OF ASS ETS WHICH ARE SIMILAR TO THAT ON PLANT AND MACHINERY AND THE ADMI SSIBLE DEPRECIATION RATE IS 25% AND FOR THE YEAR UNDER CON SIDERATION IT IS 12.5% IN VIEW OF USAGE FOR LESS THAT 180 DAYS. THE AO IS ACCORDINGLY DIRECTED TO RE-WORK THE DEPRECIATION. THE GROUND N O.3 IS PARTLY ALLOWED. 17. AGGRIEVED WITH THE ORDER OF LD. CIT(A) THE REVE NUE IS NOW IN APPEAL BEFORE US. BEFORE US LD. D.R. SUBMITTED THAT CONSIDERING THE FACTS OF THE CASE, THE A.O. HAD RIGHTLY HELD THE AMOUNT TO BE OF CAPITAL NATURE AND ALLOWED DEPRECIATION AT THE RATES APPLICABLE TO BUILDING. HE URGED THAT TH E ORDER OF THE A.O. BE UPHELD. ON THE OTHER HAND, LD. A.R. RELIED ON THE ORDER OF LD. CIT(A). 18. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE FACTUAL POSITION IS THAT THE ASSESSEE IS DERIVING I NCOME FROM GOLF COURSE AND HAD INCURRED EXPENSES FOR THE GOLF COURSE AND THE SAME WAS RIGHTLY HELD TO BE OF CAPITAL NATURE BY THE A.O. LD. CIT(A) HAS GIVEN A FINDING THAT THE CREATION OF ASSETS TO BE SIMILAR TO THAT OF PLANT AND MACHINERY AND THE ADMISSIBLE RATE OF DEPRECIATION TO BE 25%. LD. D.R. COULD NOT CONTROV ERT THE FINDING OF LD. CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. IN VI EW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AN D WE THUS UPHOLD HIS ORDER ON THIS GROUND. THUS, THIS GROUND OF THE REVENUE IS D ISMISSED. I.T.A. NO.162/AHD/2010, A. Y. 2004-05 WITH I.T.A. NO.321/AHD/2010, A. Y. 2004-05 9 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 20. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14.12.2012 SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *