DCIT RG 8(2), MUMBAI V. NUCLEUS SECURITIES LTD, MUMBAI

ITA 4061/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49240 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: SHRI SATISH R MODY
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD (A. M) ITA NO.4061/MUM/2010(A.Y. 2005-0) THE DCIT 8(2), ROOM NO.216-A, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 20. (APPELLANT) VS. M/S. NUCLEUS SECURITIES LTD., OPP. L&T GATE NO.1, SAKI VIHAR ROAD, ANDHERI (E), MUMBAI 400 049. PAN:AAACN 091L (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : SHRI SHRI SATISH R. MODY ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDE R DATED 24/2/2010 OF CIT(A) XVII, MUMBAI RELATING TO ASSESSMENT YEAR 2005-06. THE GROUND OF APPEAL OF THE REVENUE READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN GRANTING RELIEF TO THE ASS ESSEE TO DEPRECIATION ON THE LAND PORTION AND RESTRICTED THE DEPRECIATION ONLY TO THE SUPER STRUCTURE ERECTED ON THE LAND, WITHOUT APPRECIATIN G THE FACTS OF THE CASE. 2. THE ASSESSEE IS A COMPANY ENGAGED IN BUSINESS AS MONEY CHANGER, BUYING AND SELLING FOREIGN CURRENCIES/TRAVELER CHEQ UES, ARBITRAGE ETC. THE ASSESSEE HAD, WHILE DETERMINING ITS INCOME FROM BUS INESS, CLAIMED AS A DEDUCTION, DEPRECIATION ON ACCOUNT OF OFFICE PREMI SES AS PER THE INCOME TAX ACT, 1961(THE ACT) AT RS. 30,99,894/-. ACCORDING T O THE AO THE CLAIM SO MADE BY THE ASSESSEE INCLUDED DEPRECIATION ON THE V ALUE OF THE LAND ON WHICH THE OFFICE PREMISES WAS CONSTRUCTED. ACCORDI NG TO THE AO AS PER THE ITA NO.4061/MUM/2010(A.Y. 2005-06) 2 DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ALPS THEATRE (65 ITR 377) DEPRECIATION CANNOT BE ALLOWED ON LAND. IN T HIS REGARD THE AO REFERRED TO THE FACT THAT IN THE EARLIER ASSESSMENT YEARS AS WELL, SIMILAR ISSUE HAD COME FOR CONSIDERATION IN ASSESSEES OWN CASE. THE AO ACCORDINGLY WORKED OUT THE ALLOWABLE DEPRECIATION AS FOLLOWS: FOLLOWING THE ASSESSMENT ORDER OF THE EARLIER YEAR S, ASSESSEES CLAIM OF DEPRECIATION ON LAND IS DISALLOWED. THE DISALLO WANCE OUT OF DEPRECIATION WORKS OUT AS UNDER: PARTICULARS 2002-03 2003-04 2004-05 OPENING WDV 1,20,14,705 1,08,13,235 97,31 ,912 DEPRECIATION 12,01,470 10,81,323 9,73,192 CLOSING WDV 1,08,13,235 97,31,912 87,5 8,720 THUS, ASSESSEES CLAIM OF DEPRECIATION TO THE EXTEN T OF RS. 9,73,192 IS DISALLOWED. 3. IT HAS BEEN THE STAND OF THE ASSESSEE IN THE PAS T AS WELL IN THE PRESENT ASSESSMENT YEARS THAT DEPRECIATION HAS NOT BEEN CLA IMED ON LAND AND THE SAME HAS BEEN CLAIMED ONLY ON THE VALUE OF THE OFFI CE BUILDING. ON APPEAL BY THE ASSESSEE THE CIT(A) NOTICED THAT THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 1998-99 AND 1999-2000 IN ITA NO.4589/M/01 ORDE R DATED 29/12/2004 AND ITA NO.7658/M/03 ORDER DATED 29/8/07 HELD THAT THE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE WAS ONLY ON SUPER STRUCTURE AND NOT ON COST OF LAND. IN FACT THE CIT(A) ALSO NOTICED THAT AGAINST THE ORDER OF THE ITAT FOR A.Y. 1999-2000 THE REVENUE HAS FILED APPEAL B EFORE THE HONBLE BOMBAY HIGH COURT IN ITA 1050 OF 2008 AND THE HONBLE BOMB AY HIGH COURT BY ITS ORDER DATED 29/9/2008 DISMISSED THE APPEAL AFTER NO TICING THAT SIMILAR ISSUE IN ASSESSEES OWN CASE IN A.Y 1997-98, 1998-99 AND 2001-02 WAS ALREADY CONSIDERED BY THE HONBLE HIGH COURT AND THE REVENU ES APPEAL ON SIMILAR ISSUE WAS DISMISSED. FOLLOWING THE AFORESAID ORDER S THE CIT(A) DIRECTED THE AO TO ACCEPT THE CLAIM FOR DEDUCTION ON ACCOUNT OF DEPRECIATION AS CLAIMED BY THE ASSESSEE. ITA NO.4061/MUM/2010(A.Y. 2005-06) 3 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. WE ARE OF THE VIEW THAT THE ISSUE HAS ALREADY BE EN CONSIDERED AND DECIDED BY THE TRIBUNAL AND THERE IS NO REASON TO T AKE A DIFFERENT VIEW IN THE PRESENT ASSESSMENT YEAR. THE LD. D.R HOWEVER, POIN TED OUT THAT THE ASSESSEE HAD SHOWN RENTAL INCOME THAT IT RECEIVED O N A PROPERTY AS BUSINESS INCOME BUT THE AO TREATED THE SAME AS INCOME FROM H OUSE PROPERTY. ACCORDING TO THE LD. D.R., IF THE PROPERTY IN RESP ECT OF WHICH THE DEPRECIATION IS CLAIMED AND THE PROPERTY FOR WHICH THE RENTAL I NCOME WAS RECEIVED BY THE ASSESSEE AND CONSIDERED AS BUSINESS INCOME BY THE A SSESSEE BUT WHICH WAS TREATED AS INCOME FROM HOUSE PROPERTY BY THE AO, IS ONE AND THE SAME, THEN THE ASSESSEE WOULD NOT BE ENTITLED TO CLAIM DEPRECI ATION. 6. WE HAVE CONSIDERED THIS SUBMISSION AND WE FIND T HAT IN PARA 5.1 THE A.O HAS CLEARLY REFERRED TO THE FACT THAT THE CLAIM FOR DEPRECIATION WHICH IS IN DISPUTE RAISED BY THE REVENUE IN THIS APPEAL RELATE S TO OFFICE PREMISES. IN THE EARLIER PARA I.E. PARA 4 THE AO HAS DISCUSSED ABOUT THE RENTAL INCOME RECEIVED BY THE ASSESSEE. A READING OF PARA 4 & 5 OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS NOT RAISED ANY SUCH D ISPUTE AS IS NOW SOUGHT TO BE PUT FORTH BY THE D.R BEFORE US. THE L D. D.R WAS ALSO NOT ABLE TO SHOW ANY PRIMA-FACIE MATERIAL TO COME TO A CONCLUSI ON THAT THE PROPERTY IN RESPECT OF WHICH THE ASSESSEE RECEIVED RENTAL INCOM E AND WHICH WAS DECLARED AS BUSINESS INCOME AND THE OFFICE PREMISES IN RESPE CT OF WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE ARE ONE AND THE SAME. IN THE CIRCUMSTANCES, WE REJECT THE ARGUMENTS PUT FORTH BEFORE US BY THE LD. D.R. RESPECTFULLY ITA NO.4061/MUM/2010(A.Y. 2005-06) 4 FOLLOWING THE DECISIONS OF THE TRIBUNAL IN ASSESSEE S OWN CASE ON THE VERY SAME ISSUE WE DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF JUNE, 2011. SD/- SD/- (T.R.SOOD ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 30 TH JUNE.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RH BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.4061/MUM/2010(A.Y. 2005-06) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23/6/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23/6/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER