DCIT, Circle - 14(1), Kolkata , Kolkata V. M/s. Millennia Infrastructure Pvt. Ltd., , Kolkata

ITA 857/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0287 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHU MALATI GHOSH
• Assessee Lawyers: D S DAMLE
• Keywords: Business income; Depreciation; Additional evidence
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.857/KOL/2018 ( / ASSESSMENT YEAR:2014-15) DCIT, CIRCLE-14(1), KOLKATA VS. M/S MILLENNIA INFRASTRUCTURE PVT. LTD. ECOSPACE BUSINESS PARK, BLOCK-2B, PREMISES NO. IIF/12, ACTION AREA- II, NEWTOWN, KOLKATA-700156. ./ ./PAN/GIR NO.: AAECM 3318 C (ASSESSEE) .. (REVENUE) ASSESSEE BY :SMT. MADHU MALATI GHOSH, ADDL. CIT SR . DR RESPONDENT BY : SHRI D.S. DAMLE, AR / DATE OF HEARING : 16/04/2019 /DATE OF PRONOUNCEMENT : 28/06/2019 / O R DE R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2014-15, IS DIRECTED AGAINST THE ORDER PASSED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, KOLKATA, WHICH IN TURN ARISE OUT O F ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) DATED 22/12/2016. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. WHETHER ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A), KOLKATA ERRED IN DELETING THE DISALLOWA NCE OF RS. 89,58,536/- ON ACCOUNT OF DEPRECIATION WITHOUT APPRECIATING THE FI NDINGS OF THE A.O. M/S MILLENNIA INFRASTRUCTURE PVT. LTD. ITA NO.857/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 2 2. WHETHER ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A), KOLKATA ERRED IN DELETING THE DISALLOWANCE OF RS. 89,58,536/- WITHOUT FULFILLING THE NECESSARY REQUIREMENT UNDER RULE 46A(3) WHILE TAKING INTO ACCOUNT ADDITIONAL EVIDENCE PRODUCED BY THE AP PELLANT. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD MODIFY O R ALTER ANY OF THE GROUNDS OF APPEAL AND /OR ADDUCE ADDITIONAL EVIDENC E AT THE TIME OF HEARING OF THE CASE. 4. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE A SSESSMENT PROCEEDINGS A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED A DEDUCTION O F RS. 1,16,62,157/- ON ACCOUNT OF DEPRECIATION AS PER INCOME TAX ACT WHICH INCLUDE D DEPRECIATION UPON BUILDINGS. WITH REGARD TO HOUSE PROPERTY INCOME I.E . RENTAL INCOME 30% STANDARD DEDUCTION WAS CLAIMED AS PER 3CD FROM OF AUDIT AND DEPRECIATION ON BUILDING OF RS. 89,58,536/- HAS BEEN CLAIMED AT THE SAME TIME WHICH IS NOT ALLOWABLE. THE ASSESSEE SUBMITTED ITS EXPLANATION BEFORE A.O. REG ARDING CLAIM OF DEPRECIATION THROUGH LETTER DATED 20.12.2016 WHICH SHOWS THE CL AIM OF DEPRECIATION ON ECOHUB AND FURTHER STATES THAT BLOC-1A AND BLOCK-IB ARE ON RENT, BLOCK-2A, BLOCK-2B ARE SOLD BY THE ASSESSEE. ON CONTRARY THE INCOME TAX RE TURN FILED BY THE ASSESSEE AT SCHEDULE HP, THREE PROPERTIES HAVE BEEN MENTIONED A S BLOCK-IA, BLOCK-IB, BLOCK- 2A. THUS, THE CLAIM OF THE ASSESSEE IN REGARD TO BL OCK-2A DOES NOT MATCH RATHER DIFFERS WITH ITS OWN VERSION. MOREOVER, TILL SUBMIS SION OF LETTER DATED 20.12.2016 THE ASSESSEE USED TO MAINTAIN ITS REGISTERED OFFICE AT BLOCK-2B THOUGH AS PER SUBMISSION THE ENTIRE SPACE IN TOWER 2B HAS ALREADY BEEN SOLD. HENCE THE AMOUNT OF RS. 89,58,536/- WAS ADDED BY ASSESSING OFFICER T O THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE FACTS OF THE CASE IS THAT THE AP PELLANT HAD PURCHASED LAND M/S MILLENNIA INFRASTRUCTURE PVT. LTD. ITA NO.857/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 3 ADMEASURING 10 ACRES FROM WBHIDCO ON FREEHOLD BASIS , ON THE CONDITION THAT THE APPELLANT WOULD SET UP A COMMERCIAL PROJECT FOR HOUSING IT & ITES PROJECTS. THE APPELLANT HAD SET UP REAL ESTATE PROJECT BEARIN G THE NAME & TITLE 'ECOSPACE- BUSINESS PARK' WHICH CONSISTED OF 4 OFFICE TOWERS F OR HOUSING IT & ITES INDUSTRIES. THE SAID TOWERS WERE NAMED AS TOWER 1A, TOWER 1B, TOWER 2A & TOWER 2B RESPECTIVELY. THE IT TOWERS WERE INTENDED TO HOUSE IT & ITES INDUSTRIES WHICH IN TURN WERE TO EMPLOY SEVERAL HUN DRED EMPLOYEES; IT WAS NECESSARY TO PROVIDE FACILITIES FOR FOODING, RECREA TION, CONVENIENCE SHOPPING ETC. THE APPELLANT HAD CONSTRUCTED A SMALL BUILDING NAME D AS 'ECOHUB' WITHIN THE PROJECT AREA. SUBSEQUENTLY, AFTER THE DEVELOPMENT O F 4 IT TOWERS WAS COMPLETE, THE APPELLANT COMPANY HAD SOLD THE ENTIRE SELLING A REA COMPRISED IN TOWERS 2A & 2B AND PROFITS DERIVED ON SUCH SALE WAS OFFERED TO TAX UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS' IN THE EARLIER YEARS. THE CONSTR UCTED SPACES COMPRISED IN TOWERS 1A & 1B WERE HOWEVER LEASED OUT TO NUMEROUS IT & IT ES COMPANIES AND THE RENTAL INCOME DERIVED FROM LEASING OF THE CONSTRUCT ED SPACES WAS DISCLOSED IN THE INCOME TAX RETURN UNDER THE HEAD 'HOUSE PROPERTY'. THE COST OF DEVELOPMENT & CONSTRUCTION OF TOWERS 1A & 1B WAS DECLARED AND DIS CLOSED IN THE BALANCE SHEET UNDER THE HEAD 'INVENTORIES'. AS AT 31.03.2014 VALU E OF 'INVENTORY' IN THE BALANCE SHEET WAS SHOWN AT RS.205.40 CRORES AND IN RESPECT OF THE SAME NO DEPRECIATION WAS CLAIMED BY THE APPELLANT. THE APPELLANT IN RESP ECT OF TOWERS 1A & 1B WHICH PRODUCED THE RENTAL INCOME ASSESSABLE UNDER THE HEA D 'HOUSE PROPERTY' AND HAVING COST OF RS.205.40 CRORES DID NOT CLAIM ANY D EPRECIATION. 8. WE NOTE THAT THE ASSESSING OFFICER IN THE ASSESS MENT ORDER HAD STATED THAT THE APPELLANT IN HIS BALANCE SHEET HAD SHOWN THAT INCOM E FROM HOUSE PROPERTY WAS RECEIVED FROM BLOCK 1A, BLOCK-1B AND BLOCK-2A. HOWE VER, THIS FINDING OF THE AO IS NOT SUPPORTED BY THE BALANCE SHEET OF THE APP ELLANT. THE APPELLANT IN HIS BALANCE SHEET HAD SHOWN RENTAL INCOME ONLY FROM BLO CK-1A AND BLOCK-1B. AS DISCUSSED, BLOCK-2A AND BLOCK-2B WERE SOLD. THE CON TENTION OF THE AO THAT THE APPELLANT STILL MAINTAINING REGISTERED OFFICE AT BL OCK-2B CANNOT BE A GROUND TO HOLD THAT TOWER-2B HAD NOT BEEN SOLD. IN ANY CASE, THESE FINDINGS HAVE NO BEARING ON THE ISSUE UNDER APPEAL WHICH IS CLAIM OF DEPRECI ATION ON BUSINESS INCOME M/S MILLENNIA INFRASTRUCTURE PVT. LTD. ITA NO.857/KOL/2018 ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 4 44 4 EARNED FROM ECOHUB. THE AO HAD NOT DISPUTED THE FAC TS THAT THE APPELLANT IS EARNING BUSINESS INCOME FROM ECOHUB. THE APPELLANT HAD ENTERED INTO AGREEMENT WITH M/S CHOICEST ENTERPRISE PVT LTD TO OPERATE AND MAINTAIN THE RECREATIONAL FACILITIES IN ECOHUB. THE LESSOR AS PER AGREEMENT W OULD PAY 12% OF THE GROSS REVENUE GENERATED TO THE APPELLANT. THE BUILDING WA S OWNED AND CONSTRUCTED BY THE APPELLANT. THE INCOME EARNED WAS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND ACCEPTED BY THE DEPARTMENT IN THE PREV IOUS YEARS. THEREFORE, THE APPELLANT WAS ENTITLED TO CLAIM DEPRECIATION AS PER SECTION 32 OF THE I TACT, 1961. WE NOTE THAT AFTER GOING THROUGH THE FACTS AND CIRC UMSTANCES, AS NOTED ABOVE, THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 89,58,53 6/-. THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 28.06.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 28/06/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-14(1), KOLKATA 2. M/S MILLENNIA INFRASTRUCTURE PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES