SANDEEP KUMAR,FARIDABAD V. ITO WARD 2(3), FARIDABAD

ITA 1543/DEL/2024

AI Insights

The case involves Sh. Surinder Malik, who appealed against the order of the Learned Commissioner of Income Tax (Appeals) which upheld the assessment order disallowing depreciation on a Hall and Sign Board at 15%. The assessee argued that these were tools of his business, thus should be depreciated at 15% as per the provisions applicable to 'plant'. However, the tax authorities and the Tribunal viewed the Hall and Sign Board as part of the building infrastructure, not qualifying as 'plant', and thus applicable for a lower depreciation rate. The Tribunal referenced several judicial precedents to support its decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23705 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-08-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2024
• Other Referred Cases: CIT Trivandrum vs. M/s Anand Theatres, CIT vs. Lake Palace Hotels & Motels (P.) Ltd., R.C. Chemical Industries v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APPELLANT ASSESSEE; MUNISH RAJANI
• Assessee Lawyers: S. KUMAR
• Keywords: Depreciation
• Section: 142(1); 143(2); 143(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE, SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.6421/Del/2017 (ASSESSMENT YEAR-2014-15) Sh. Surinder Malik D-39, Gulmohar Park New Delhi-110049 PAN:AAUPM0141Q Vs. Asst.CIT Circle-52(1) New Delhi (Appellant) (Respondent) Assessee by Shri S. Kumar, Adv. Respondent by Shri Munish Rajani, Sr.DR Date of Hearing 14/08/2024 Date of Pronouncement 18/10/2024 O R D E R PER VIMAL KUMAR, JM: 1. The appeal of the Assessee is against order dated 30/08/2017 of the Learned Commissioner of Income Tax (Appeals), New Delhi [hereinafter referred to as ‘Ld. CIT(A)’] arising out of Assessment Order dated 27/10/2016 of the Assistant Commissioner of Income Tax, New Delhi [hereinafter referred to as “Ld. AO”] for the Assessment Year 2014-15. 2 ITA No.6421/Del/2017 Surinder Malik vs. ACIT 2. Brief facts are that assessee filed return of income of Rs.41,29,030/- was filed on 28/11/2014. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred as “the Act”). The case was selected for limited scrutiny through CASS and notice u/s 143(2) of the Act dated 31/08/2015 was issued. Notice u/s 142(1) of the Act along with questionnaire was issued on 13/06/2016 and relevant details and documents were called for. The reason for selection of case in limited scrutiny was duly communicated to the AR on when he first appeared on change of incumbent. In compliance of notice, Sh. S. Kumar, Advocate, Authorized Representative for the assessee attended the proceedings from time to time and furnished written submissions and details. The assessee an individual during the relevant year had returned income under the heads Salary, House Property, Business & Profession, Capital gain and Other sources. On completion of assessment proceedings, addition of Rs.12,26,454/- was disallowed vide order dated 27/10/2016. 3. Appellant/assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 30/08/2017. 4. Being aggrieved appellant/assessee preferred present appeal with grounds as:- “a. That on the given facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeal) has erred in rejecting the claim of depreciation @ 15% on Hall and Sign Board, being used as tool of business. b. That the Ld. Commissioner Appeals was not justified in rejecting the claim of depreciation @ 15% on Hall and Sign Board used as tool of 3 ITA No.6421/Del/2017 Surinder Malik vs. ACIT business on the grounds which were non-existent either in assessment order or in any pleading made or available in the appellant proceedings. c. That on the facts and law as applicable in the case, the Ld. Commissioner Appeals as well as Ld. Assessing Authority erred in disallowing the claim of depreciation @ 15% on Hall and Sign Board as being tool of Business and not building. d. That the addition of Rs.12,26,454/- being the disallowed depreciation on tool of business may be deleted.” 5. Learned Authorized Representative for appellant/assessee submitted that the assessee is engaged in business of letting banquet hall for ceremonies and functions, had got constructed a modern air conditioned hall. The receipt subjected to depreciation on the said Hall and sign board @ 15% treating the said hall and sign board as Plant, being a tool for business. No depreciation was claimed on land on which the hall constructed. The claim of depreciation restricted to 10% rejecting the claim of appellant as Hall and Sign Board, both being tool of business is not as per record. 6. The Learned Authorized Representative for Department of Revenue submitted that Learned CIT(A) relying on the judgment titled as CIT Trivandrum vs. M/s Anand Theatres has upheld order of Ld. A.O. 6.1 Hon’ble High Court of Rajasthan in CIT vs. Lake Palace Hotels & Motels (P.) Ltd. [1997] 226 ITR 561 (Rajsthan) has held that the building which is used for accommodating the cinema-goers. The functional test requires to find out as to whether it is an apparatus with which the business is carried on or is it the setting or part of 4 ITA No.6421/Del/2017 Surinder Malik vs. ACIT the premises in which the business is carried on. If the functional test is applied, it would be found that it accommodates the machinery for exhibition of the film like any other factory where production is carried on and provides the accommodation to the public for viewing the picture and cannot be taken out from the definition of “building”., 6.2 Hon’ble High Court of Delhi in R.C. Chemical Industries v. CIT [1982] ITR 330 (Delhi) has observed that the building in question does not come within the expression “plant”. 7. From examination of record in light of aforesaid rival contention, it is crystal clear that appellant/assessee has challenged impugned orders by pleading that the claim of depreciation @ 15% on Hall and Sign Board being used at tool of business by the tax authorities is illegal. As per ratio of judgment in CIT Trivandrum vs. M/s Anand Theatres’s case (supra), Ld. CIT(A) upheld the order of Ld. AO. According to ratio of judgment in CIT vs. Lake Place Hotels & Motels (P.) Ltd., it is well settled that the functional test requires to find out as to whether it is an apparatus with which the business is carried on or is it the setting or part of the premises in which the business is carried on. If the functional test is applied, it would be found that it accommodates the machinery for exhibition of the film like any other factory where production is carried on and provides the accommodation to the public for viewing the picture and cannot be taken out from the definition of “building”. 5 ITA No.6421/Del/2017 Surinder Malik vs. ACIT 8. In view of the above material facts and well settled principle of law, the arguments of Learned Authorized Representative for assessee being devoid of merit are untenable. Therefore, grounds of appeal are unsustainable. 9. In the result, the appeal filed by the assessee is dismissed. Order pronounced on this day 18th October, 2024. Sd/- Sd/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 18/10/2024 Pk/sps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "