M/s. Pallavi Real Estate Pvt. Ltd., Pune V. ACIT, Cir.-4, Pune

ITA 392/PUN/2012

• Counselvise Citation: 39224514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 392/PN/2012 (ASSESSMENT YEAR 2004-05) M/S. PALLAVI REAL ESTATE PVT. LTD. 12, SOUTH COURT, SOUTH MAIN ROAD, KOREGAON PARK, PUNE-411001 PAN NO. AABCP 1292P .. APPELLANT VS. ACIT, CIRCLE-4, PMT BUILDING, SWARGATE, PUNE .. RESPONDENT APPELLANT BY : SHRI SUNIL PATHAK RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 26-06-2013 DATE OF PRONOUNCEMENT : 28 -06-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 26-12-2011 OF THE CIT(A)-II, PUNE RELATING TO ASSES SMENT YEAR 2004-05. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : ON FACTS AND IN LAW, 1. THE LD. CIT(A)-II, PUNE ERRED IN NOT ALLOWING D EPRECIATION ON THE HOTEL BUILDING AS CLAIMED BY THE APPELLANT. 2. THE LD. CIT(A)-II, PUNE ERRED IN UPHOLDING THE L AND COST AT RS.49,16,118/- AS AGAINST RS.17,93,810/- AS VALUED BY THE REGISTERED GOVERNMENT VALUER. 3. THE LD. CIT(A)-II, PUNE ERRED IN UPHOLDING THE D ISALLOWANCES OF DEPRECIATION U/S.32 OF RS.4,91,612/- AGAINST RS.1,7 9,381/-. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN HOTEL BUSINESS. IT FILED ITS RETURN OF INCOME ON 29-10-2004 2 DECLARING TOTAL INCOME OF RS.50,70,400/-. THE SAME WAS REVISED ON 31- 01-2005 DECLARING TOTAL INCOME AT RS.59,93,610/-. THE ORDER U/S.143(3) WAS PASSED ON 31-07-2006 ASSESSING THE TOTAL INCOME AT RS.64,27,610/-. SUBSEQUENTLY, THE LD. CIT(A) PASSED ORDER U/S.263 O N 27-02-2009 SETTING ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE ASSESSING OFFICER TO REFRAME THE ORDER AFRESH. THE SAME WAS SET-ASIDE ON THE ISSUE OF DEPRECIATION ON LAND AND DEDUCTION U/S.80IB(7) F OR NON-SUBMISSION OF FORM NO.10CCB. IN THE ORDER PASSED BY THE ASSESSIN G OFFICER SUBSEQUENT TO THE 263 PROCEEDINGS THE ASSESSING OFF ICER DETERMINED THE INCOME AT RS.86,77,900/- AS AGAINST THE EARLIER ASS ED INCOME AT RS.64,27,610/-. IN THE SAID ORDER THE ASSESSING OF FICER DISALLOWED DEPRECIATION OF RS.4,91,612/- AND DISALLOWED THE CL AIM OF DEDUCTION U/S.80IB(7) AMOUNTING TO RS.21,92,677/-. THE ISSUE OF DEDUCTION U/S.80IB(7) WAS FAVOURABLY DECIDED BY THE LD. CIT(A ) FOR WHICH THE REVENUE IS NOT IN APPEAL BEFORE US. 3.1 HOWEVER, SO FAR AS THE ISSUE OF DEPRECIATION ON THE HOTEL BUILDING IS CONCERNED, THE ASSESSING OFFICER NOTED THAT THE LD. CIT IN HIS ORDER U/S.263 HAS HELD THAT DEPRECIATION IS AVAILABLE ONL Y ON BUILDING AND NOT FOR THE LAND ON WHICH IT IS SITUATED. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ON BEING QUESTIONED BY THE ASSESSING O FFICER, IT WAS SUBMITTED THAT WHEN A PROPERTY IS PURCHASED ALONG W ITH LAND AND BUILDING THE PRICE PAID IS FOR THE ENTIRE PROPERTY AND NOT FOR LAND AND BUILDING SEPARATELY AND HENCE THERE IS NO QUESTION OF ALLOCATION OF PART OF THE PRICE TOWARDS THE LAND AS LAND HAS NO SEPARATE IDENTITY. THE ASSESSING OFFICER HOWEVER NOTED THAT THE ASSESSEE H AD PRIMA-FACIE CONSENTED TO THE DISALLOWANCE OF DEPRECIATION ON LA ND ON WHICH THE 3 BUILDING HAS NOT BEEN CONSTRUCTED. HE OBSERVED THA T THE ONLY ISSUE OF DISPUTE IS THAT THE PIECE OF LAND ON WHICH THE BUIL DING IS CONSTRUCTED FOR WHICH THE ASSESSEE CONTENDS THAT A SEPARATE VALUATI ON IS NOT POSSIBLE AS THE BUILDING AND LAND GOT MARRIED. FROM THE REPO RT GIVEN BY THE REGISTERED VALUER THE ASSESSING OFFICER NOTED THAT THE VALUE OF LAND COMES TO RS.49,16,118/-. SINCE THE ASSESSEE HAD DE CLARED THE VALUE OF THE LAND AND BUILDING AT RS.91,57,509.79 AND HAD CL AIMED DEPRECIATION ON THE ENTIRE AMOUNT AT 10% WHICH ACCORDING TO THE AO IS NOT PERMISSIBLE UNDER THE ACT, THEREFORE, HE DEDUCTED T HE COST OF LAND AMOUNTING TO RS.49,16,118/- AND ALLOWED DEPRECIATIO N @10% ON THE AMOUNT OF RS.42,41,391/-. 4. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. WHILE DOING SO, HE NOTED THAT THE ASSESSEE HAD TAKEN THE GROUND BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED U/S.263 BY THE LD . CIT WHICH READS AS UNDER : 4A THE LEARNED CIT FAILED TO APPRECIATE THAT THE A O HAD ALLOWED THE DEPRECIATION ON THE BROUGHT FORWARD WDV OF THE BUILDINGS AND HENCE, AS PER THE PROVISIONS OF SECTI ON 43(6), THE DEPRECIATION FOR THIS YEAR HAD TO BE ALLOWED ON THE WDV BROUGHT FORWARD FROM THE EARLIER YEAR AND THUS, THERE WAS N O ERROR COMMITTED BY THE AO IN ALLOWANCE OF DEPRECIATION. HE OBSERVED THAT THE ASSESSEE HAD NOT PRESSED THE A BOVE GROUND FOR WHICH THE SAME WAS DISMISSED BY THE TRIBUNAL AS NOT PRESSED. HE OBSERVED THAT SINCE THE ITAT HAD ALREADY TAKEN A VI EW, THEREFORE, HE HAS NO AUTHORITY TO DECIDE THE ISSUE AFRESH. HE ACCORD INGLY DISMISSED THE GROUND RAISED BY THE ASSESSEE BEFORE HIM. 4 4.1 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING DREW THE ATTENTION OF THE BENCH TO PAGE 19 OF THE PAPER BOOK WHICH IS AS UNDER : PALLAVI REAL ESTATE PVT. LTD. DEPRECIATON CHART AS PER THE ASSESSE A.Y. 1213/A, SHIVAJINAGAR TOTAL LAND BUILDING 2001 - 02 PURCHASE (2 ND HALF) 1,20,07,654 49,16,11 8 70 ,91,536 DEPRECIATION @20% WDV 31-03-2001 12,00,765 4,91,612 7,09,154 WDV 31 - 03 - 2001 1,08,06,889 44,24,506 63,82,382 2002 - 03 ADDITION (2 ND HALF) 12,45,000 -- 12,45,000 1,20,51,889 44,24,506 76,27,382 DEPRECIATION @20% 22,85,878 8,84,901 14,00,976 WDV 31 - 03 - 2002 97,66,011 35,39,605 62,26,406 2003 - 04 ADDITION (IST HALF) 4,09,000 -- 4,09,000 1,01,75,011 35,39,605 66,35,406 DEPRECIATION @ 1 0% 10,17,501 3,53,960 6,63,541 WDV 31 - 03 - 200 3 91,57,510 31,85,644 59,71,865 2004 - 05 DEPRECIATION @10% 9,15,751 3,18,564 5,97,187 WDV 31 - 03 - 2004 82,41,759 28,67,080 53,74,679 HE SUBMITTED THAT THERE IS NO DISPUTE TO THE FACT T HAT DEPRECIATION ON LAND IS NOT TO BE ALLOWED. HOWEVER, THE GRIEVANCE OF T HE ASSESSEE IS THAT DEPRECIATION HAS TO BE DENIED ON THE LAND AS PER TH E WDV AS ON 01-04- 2003 WHICH IS SHOWN AT RS.31,85,644/-. HE SUBMITTE D THAT DEPRECIATION ALREADY ALLOWED ON THE LAND DURING A.Y. 2001-02, 20 02-03 AND 2003-04 CANNOT BE RECTIFIED AT THIS STAGE IN THE A.Y. 2004- 05 IN ABSENCE OF ANY REMEDIAL RECOURSE TAKEN BY THE REVENUE IN THE PRECE DING YEARS. HE SUBMITTED THAT THE DEPRECIATION ON LAND CLAIMED BY THE ASSESSEE AT RS.3,18,564/- ONLY HAS TO BE DISALLOWED AS AGAINST RS.4,91,612/- DISALLOWED BY THE AO. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 5 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND FROM THE CHART FURNISHED BY THE ASSESSEE THAT THE DISPUTE IS REGARDING COMPUTATION OF DEPRECIATION ON THE VALUE AS ON 01-04-2000 OR THE VALUE AS ON 01-04-200 3. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE DEPRECIATION HAD ALREADY BEEN ALLOWED ON THE LAND DURING A.Y. 20 01-02, 2002-03 AND 2003-04, THEREFORE, DEPRECIATION HAS TO BE DISALLOW ED FOR THE IMPUGNED ASSESSMENT YEAR ONLY ON THE WDV AS ON 01-04-2003. ACCORDING TO HIM, SUCH WDV BEING RS.31,85,644/-, THEREFORE, DEPRECIAT ION @10% BEING RS.3,18,564/- ONLY SHOULD BE DISALLOWED. WE FIND S OME FORCE IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E. SINCE THE DEPARTMENT RIGHTLY OR WRONGLY HAS ALLOWED DEPRECIAT ION ON THE LAND DURING A.Y. 2001-02, 2003-03 AND 2003-04 AND SINCE NO REMEDIAL ACTION HAS BEEN TAKEN BY THE REVENUE IN ALL THESE YEARS, T HEREFORE, DEPRECIATION FOR THE IMPUGNED ASSESSMENT YEAR HAS TO BE DISALLOW ED ON THE WDV OF LAND AS ON 01-04-2003. WE THEREFORE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT DEPRECIATION OF RS.3,18,564/- ONLY HA S TO BE DISALLOWED AS AGAINST RS.4,91,612/- DISALLOWED BY THE AO. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF JUNE 2013 SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 28 TH JUNE 2013 SATISH 6 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4 CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE