JAIPRAKASH AGRI INITIATIVES CO. LTD.,NEW DELHI vs. DCIT, CIRCLE- 13(1), NEW DELHI

PER N. K. BILLAIYA, AM:

1. That the learned assessing officer [AO] and the Commissioner of Income Tax (Appeals) [CIT(A)] has erred to disallow Rs.

2,599,450 on account of depreciation (& additional depreciation) allegedly claimed in respect of land whereas factually no such depreciation was claimed in computing the declared total income.

2. That in making the said disallowance the learned officers below have failed to notice that assessee's balance sheet shows cost of land as Rs.45,27,755/- at start of the year and as Rs.54,16,005/- at close of the year after addition of Rs.8,88,250/- during the year. No depreciation in respect of land was provisioned or claimed.

2) The land for the Unit had earlier been acquired by the transferor associate company in two parcels. One parcel of 10 acres was acquired at a cost of Rs.21,50,435/- while the other of 8 acres was acquired at a cost of Rs.23,77,320/-. Thus the total cost of Unit's land was Rs.45,27,755/-. 3) On slump sale to the assessee, the Unit's land came to be owned by the assessee even though no separate instrument of transfer of land was executed. The land was reflected in the assessee's books at the aforesaid book value of Rs.45,27,755/-. 4) Subsequently for availing a secured loan the assessee needed at least one parcel of the land registered in its name. It was for this purpose that the 10 acre piece of land was got registered in its name in the year 2011. 5) During registration the value of the land for stamp duty purposes was taken at Rs.1,25,84,000/-. The consideration, which actually was the book value at which the said land was transferred, was hypothetically mentioned in the deed as Rs.69,90,000/-. The registration deed therefore showed as if the cost of the 10 acre parcel of land to the assessee (including stamp duty) was Rs.74,27,000/- whereas the actual cost thereof remained Rs.21,50,435/-. 6) No accounting cognizance was taken of the hypothetical amount of Rs.69,90,000/- mentioned in the registration deed. However, the stamp duty cost actually incurred of Rs.4,37,000/- was duly debited to Misc. Expenses in the books of the assessee.

7) The learned assessing officer, having directly received information about the aforesaid registration and in the absence of debit of Rs.74,27,000 in the land account of the assessee, assumed that the same would have been debited to depreciable Plant & Machinery. It disallowance of Rs.25,99,450 (35% of 74,27,000). 8) The above facts are verifiable. Even assuming without prejudice that the assessee failed to adequately explain the circumstances of the impugned registration during assessment and first appeal, yet no disallowance as made can be sustained because the same is based on a demonstrably wrong and counterfactual presumption. DISALLOWANCE OF INTEREST 4. That the learned A.O. and CIT(A) have erred in adding Rs.1,09,085/- to assessee's total income on account of alleged difference in the interest receipt as per 26AS statement of Rs.12,46,061 / - and interest receipt as per Profit & Loss A/c of Rs.11,36,976/-.

3. At the very outset the counsel for the assessee stated that the CIT(A) dismissed the appeal exparte. It is the say of the Counsel that if one more opportunity is given then the assessee would be in a position to explain the facts of the case and has a very good chance of convincing the CIT(A) to delete the impugned additions/disallowance made by the AO. Though the DR strongly supported the findings of the lower authorities, but agreed to restore the appeal to the files of the CIT(A).

5. In the interest of justice and fair play we deem it fit to restore this appeal to the files of the CIT(A). The CIT(A) is directed to decide the appeal on merits after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to avail this fresh opportunity given to it.