DCIT, Circle - 3, Kolkata, Kolkata V. M/s. The Peerless General Finance & Investment Company Ltd., Kolkata

ITA 587/KOL/2011

• Counselvise Citation: 58723514 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1996-1997
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SABOORUL HASAN USMANI
• Assessee Lawyers: S K TULSIYAN
• Keywords: Depreciation; Unabsorbed depreciation; Capital expenditure
• Section: 32

Judgement Text

I.T.A. NOS.: 586 & 587/KOL./ 2011 ASSESSMENT YEAR : 1996-97 PAGE 1 TO 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NOS.: 586 & 587/KOL. / 2011 ASSESSMENT YEAR : 1996-1997 DEPUTY COMMISSIONER OF INCOME TAX, ........ .APPELLANT CIRCLE-3, KOLKATA, 8/2, ESPLANADE EAST, DWARLI HOUSE, 2 ND FLOOR, KOLKATA-700 069 -VS.- THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. RESPONDENT 3, ESPLANADE EAST, KOLKATA-700 069 [PAN : AABCT 3043 L APPEARANCES BY: SHRI SABOORUL HASAN USMANI, SR. D.R., FOR THE DEPAR TMENT SHRI S.K. TULSIYAN, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 07, 2013 DATE OF PRONOUNCING THE ORDER : NOVEMBER 21, 2013 O R D E R PER BENCH: 1. THESE ARE THE APPEALS FILED BY THE REVENUE AGAIN ST AN ORDER DATED 10 TH JANUARY, 2011 OF COMMISSIONER OF INCOME TAX (APPEA LS)-1, KOLKATA FOR ASSESSMENT YEAR 1996-97. ITA NO. 587/KOL/2011 I S A DUPLICATION OF I.T.A. NO. 586/KOL/2011. REVENUE IN ITS APPEAL HAS RAISED TWO GROUNDS. 2. ITS FIRST GROUND IS WITH REGARD TO DELETION OF A DISALLOWANCE OF DEPRECIATION ON LEASEHOLD BUILDINGS AMOUNTING TO RS .1,00,51,314/-. 3. FACTS APROPOS ARE THAT ORIGINAL ASSESSMENT WAS C OMPLETED, MAKING CERTAIN DISALLOWANCES WHICH, INTER ALIA, INCLUDED D EPRECIATION CLAIM OF I.T.A. NOS.: 586 & 587/KOL./ 2011 ASSESSMENT YEAR : 1996-97 PAGE 1 TO 5 RS.1,06,13,610/- ON LEASEHOLD BUILDINGS. ON AN APPE AL FILED BY THE ASSESSEE, LD. CIT(APPEALS) RESTORED THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH. ASSESSI NG OFFICER WAS OF THE OPINION THAT IN VIEW OF EXPLANATION 1 TO SECTION 32 (1)(II) OF THE ACT, ASSESSEE WAS NOT ENTITLED TO GET DEPRECIATION ON LE ASEHOLD BUILDINGS, SINCE IT WAS NOT AN OWN THE BUILDING. THIS VIEW T AKEN BY THE ASSESSING OFFICER ORIGINALLY, WAS PERSISTED WITH EVEN IN THE PROCEEDINGS GIVING EFFECT TO THE ORDER OF LD. CIT(APPEALS). 4. ASSESSEE THEREAFTER ONCE AGAIN MOVED IN APPEAL B EFORE THE LD. CIT(APPEALS). AS PER THE ASSESSEE, THE ISSUE WAS NO T CONSIDERED ON MERITS BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE AMO UNT OF DEPRECIATION WITH RESPECT TO LEASEHOLD BUILDINGS CAME TO RS.5,62 ,269/- ONLY AND NOT RS.1,06,13,610/-. FURTHER, AS PER THE ASSESSEE, THE TOTAL CLAIM OF DEPRECIATION ON BUILDINGS WAS RS.6,88,24,128/-, WHI CH INCLUDED THE SUM OF DEPRECIATION OF RS.1,06,13,610/- ON LEASEHOLD BU ILDINGS. AS PER THE ASSESSEE, FEW OF THE LEASEHOLD BUILDINGS WERE LET O UT BY IT AND THERE WAS NO CLAIM OF DEPRECIATION ON SUCH LET OUT PROPERTIES . THE ASSESSEE ITSELF HAD DISALLOWED DEPRECIATION ON THE LET OUT LEASEHOL D BUILDINGS. AGAIN AS PER THE ASSESSEE, BREAK-UP OF THE DEPRECIATION, SUO MOTU DISALLOWED WAS SUBMITTED ALONGWITH THE RETURN OF INCOME FOR THE IM PUGNED ASSESSMENT YEAR ITSELF. FURTHER, AS PER THE ASSESSEE, IN SOME OF THE LEASEHOLD BUILDINGS THE ASESSEE HAD BY ITSELF INCURRED CERTAI N CAPITAL EXPENDITURE AND ON SUCH CAPITAL EXPENDITURE INCURRED IT WAS ENT ITLED FOR DEPRECIATION AS PROVIDED IN EXPLANATION 1 TO SECTION 32(1) OF TH E ACT. ASSESSEE ALSO POINTED OUT THAT A SIMILAR ISSUE HAD ALREADY COME U P BEFORE LD. CIT(APPEALS) IN ITS APPEAL FOR ASSESSMENT YEAR 1995 -96, WHEN IT WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR CONSIDER ATION AFRESH. FOR THE SAID ASSESSMENT YEAR, ASSESSING OFFICER HAD ACCEPTED THE CONTENTION OF THE ASSESSEE. 5. LD. CIT(APPEALS) AGREED WITH THE SUBMISSION MADE BY THE ASSESSEE THAT IT HAD BY ITSELF DISALLOWED DEPRECIATION OF RS .83,701/-, I.T.A. NOS.: 586 & 587/KOL./ 2011 ASSESSMENT YEAR : 1996-97 PAGE 1 TO 5 RS.17,16,490/- AND RS.72,84,255/- FOR THE PREMISES LET OUT BY IT. FURTHER AS PER THE LD. CIT(APPEALS), DEPRECIATION CLAIMED I N RESPECT OF LEASEHOLD PREMISES IN PRASAD NAGAR, NEW DELHI, BEHALA, BALURG HAT, GOA HOTEL AND CHOWRINGHEE SQUARE OUGHT NOT HAVE BEEN DISALLOWED, SINCE IT RELATED CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE ON SUC H PREMISES. CLAIM OF DEPRECIATION FOR SUCH CAPITAL EXPENDITURE CAME TO R S.96,365/-, RS.1,17,980/-, RS.2,18,612/-, RS.4,11,054/- AND RS. 1,22,884/- RESPECTIVELY. AS PER LD. CIT(APPEALS), ASSESSEE WAS THUS ENTITLED TO GET RELIEF OF RS.1,00,51,314/- OUT OF THE TOTAL DISALLO WANCE OF RS.1,06,15,610/- MADE BY THE ASSESSING OFFICER. HE DIRECTED THE ASSESSING OFFICER ACCORDINGLY. 6. NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE O RDER OF LD. CIT(APPEALS) SUBMITTED THAT THE LD. CIT(APPEALS) HA D NOT PROPERTY APPRECIATED THE ISSUES INVOLVED. ACCORDING TO HIM, ASSESSEE WAS NOT ENTITLED TO CLAIM DEPRECIATION ON LEASEHOLD BUILDIN GS. PER CONTRA, LD. A.R. SUPPORTING THE ORDER OF LD. CIT(APPEALS) PLACED CON SIDERABLE RELIANCE ON THE ORDER OF ASSESSING OFFICER FOR ASSESSMENT YEAR 1995-96 PLACED AT PAGES 77 TO 79 OF THE PAPER BOOK, WHEREIN ASSESSING OFFICER, PURSUANT TO THE DIRECTIONS OF LD. CIT(APPEALS) HAD ALLOWED THE CLAIM OF DEPRECIATION ON LEASEHOLD BUILDINGS AMOUNTING TO RS.1,04,66,814/ -. HE ACCORDINGLY CONTENDED THAT A DIFFERENT VIEW COULD NOT HAVE BEEN TAKEN FOR THE IMPUGNED ASSESSMENT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR ASSESSMENT YEAR 1995-96, A SSESSING OFFICER HAD ALLOWED THE CLAIM OF DEPRECIATION ON LEASEHOLD BUIL DINGS WHILE GIVING EFFECT TO THE DIRECTIONS OF LD. CIT(APPEALS) FOR TH AT YEAR. ADMITTEDLY NO APPEAL WAS FILED BY THE REVENUE AGAINST THE ORDER O F LD. CIT(APPEALS) FOR THE ASSESSMENT YEAR 1995-96. FOR THE IMPUGNED ASSES SMENT YEAR ALSO, THERE IS A CLEAR FINDING BY LD. CIT(APPEALS) THAT T HE ASSESSEE ITSELF HAD DISALLOWED DEPRECIATION TOTALLING TO RS.90,84,446/- . LD. CIT(APPEALS) WAS OF THE VIEW THAT THE CLAIM OF DEPRECIATION ON CAPIT AL EXPENDITURE INCURRED I.T.A. NOS.: 586 & 587/KOL./ 2011 ASSESSMENT YEAR : 1996-97 PAGE 1 TO 5 ON LEASEHOLD BUILDINGS AT NEW DELHI, BEHALA, BALURG HAT, GOA HOTEL AND CHOWRINGHEE SQUARE COULD NOT BE DISALLOWED. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE CAPITAL E XPENDITURE CLAIMED ON LEASEHOLD BUILDINGS WAS NOT CORRECT. ASSESSEE BY IT SELF HAD DISALLOWED DEPRECIATION TO THE EXTENT IT WAS NOT AS PER THE AC T. FOR THE ASSESSMENT YEAR 1995-96 SIMILAR CLAIM STOOD ALLOWED BY THE ASS ESSING OFFICER. WHEN THE SET OF FACTS ARE SUCH THAT THE POSITION REMAINE D UNCHANGED AND UNDERLYING FEATURES PERMEATED THROUGH A NUMBER OF Y EARS, IT WOULD NOT BE CORRECT TO DISTURB THE CONSISTENT METHODOLOGY AD OPTED. WE ARE, THEREFORE, OF THE OPINION THAT LD. CIT(APPEALS) HAD RIGHTLY GIVEN RELIEF TO THE ASSESSEE. RESULTANTLY, GROUND NO. 1 OF THE REVE NUE STANDS DISMISSED. 8. IN ITS GROUND NO.2, GRIEVANCE OF THE REVENUE IS THAT RS.41,23,756/- STOOD ALREADY INCLUDED IN UNABSORBED DEPRECIATION O F RS.7,80,10,520/- CLAIMED FOR CARRYING FORWARD AND, THEREFORE, THE DI RECTION GIVEN BY THE LD. CIT(APPEALS) FOR INCLUSION OF SUCH AMOUNT ONCE AGAI N IN THE CARRIED FORWARD UNABSORBED DEPRECIATION WAS NOT CORRECT. 9. LD. A.R., AT THE OUTSET, FAIRLY AGREED THAT THE GROUND TAKEN BY THE REVENUE IS JUSTIFIED AS THE SUM OF RS.41,23,756/- S TOOD ALREADY INCLUDED IN THE UNABSORBED CARRIED FORWARD DEPRECIATION OF R S.7,80,10,520/-. SINCE LD. A.R. HAS ACCEPTED THE CLAIM OF THE REVENUE, GRO UND NO. 2 OF THE REVENUE STANDS ALLOWED. 10. SINCE ITA NO. 587/KOL/2011 IS A DUPLICATION OF APPEAL NO. 586/KOL/2011, FORMER APPEAL FILED BY THE REVENUE IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, ITA NO. 586/KOL/2011 IS PARTLY ALLOW ED, WHEREAS AS ITA NO. 587/KOL/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF NOVEMBER, 2013. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 21 ST DAY OF NOVEMBER, 2013 I.T.A. NOS.: 586 & 587/KOL./ 2011 ASSESSMENT YEAR : 1996-97 PAGE 1 TO 5 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.