DCIT, CIRCLE - 8(1), , KOLKATA vs. M/S. APEEJAY SURRENDRA PARK HOTELS LIMITED , KOLKATA

DCIT Cir-8(1), Kol. Vs. M/s Apeejay Surrendra Park Hotels Ltd. Page 2 Ground no. 1 of appeal in this case is regarding disallowance of Rs.5628718/- towards amortization of leasehold land. It has been submitted on this issue that the Hon'ble ITAT in assessee’s own case for A.Y 2009-10 in vide order dated 03/07/2013, has dismissed the appeal of the revenue on the said issue. The Hon'ble ITAT while deciding the issue regarding amortization of leashed lands has held in para No. 3 as under:- ‘We have heard the rival submissions and carefully consider the same along with the order of tax authorities below. We noted that the assessee has made the similar claim in the assessment years 2004-05, 2005-06, 2006-07, 2007- 08 & 2008-09 and the Assessing Officer while making the assessment under section 143(3) accepted the claim of assessee vide respective orders dated 18.12.2006, 31.12.2007, 26.12.2008, 15.12.2009 and 31.12.2010. There is no change in the facts during the impugned assessment year. The Assessing Officer, in our opinion, is bound to involved in this year are similar to the facts involved in those year. No doubt the principles of res judicate are not applicable to the income-tax proceedings as each of the assessment years is an independent assessment year, but there must be substantial ground for the revenue to differ if the view taken by the Assessing Officer in the preceding assessment year. Our aforesaid view is duly supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT-vs.- Hindsthan following the decision of the Hon'ble Jurisdictional High Court confirm the order of CIT(Appeals) in respect of the ground No. 1 delete the addition of Rs.58,66,864/- On perusal of the above order, it is observed that the issue has been decided in favour of the appellant. Further the department has also accepted the claim of the appellant on this issue in AY 2010-11 2011-12. Respectfully following the decision of the jurisdictional ITAT in assessee’s own case the claim of amortization of leasehold land of rs.5628718/- is hereby allowed.”

Suffice to say, it has come on record that CIT(A) has adopted judicial consistency on this first issue going by the co-ordinate bench’s order (supra) deleting the similar disallowance of amortization of leasehold land. The Revenue is fair enough in not pin-pointing any distinction on facts or law. We therefore rejected its instant first substantive ground.

Next comes sec. 2(24)(x) r.w.s. 36(1)(va) disallowance of ₹1,72,000/- in respect of employees contribution towards PF/ESI disallowed in assessment and deleted in the lower appellate proceedings. Suffice to say, we notice that the assessee had deposited the impugned sum before due date of filing return u/s 139(1) of the Act. The CIT(A) has followed hon'ble jurisdictional high court’s decision in decision in CIT vs. M/s Vijay Shree Ltd. (2011) 224 Taxman 12(Cal) has already decided the very issue in assessee’s favour as relied DCIT Cir-8(1), Kol. Vs. M/s Apeejay Surrendra Park Hotels Ltd. Page 3 upon in the CIT(A)’s findings. We therefore reject Revenue’s instant latter substantive ground as well.

Next comes the Revenue’s third substantive ground seeking to revive interest on long term loans to capital work-in-progress amounting to ₹2,02,28,759/- disallowed in the course of assessment and deleted in CIT(A)’s order reading as follows: “Ground No. 5 of appeal is regarding capitalization of interest with reference to capital work-in-progress. The Assessing Officer has observed that last year i.e. FY 2010-11 the appellant company capitalized interest of Rs.17650759/- towards work in progress. The Assessing Officer further observed that no such capitalization of interest was done in FY 2011-12. He accordingly estimated interest relating to capitalization of work in progress of rs.20228759/-. In this regard it has been submitted that during the previous year the appellant ha capitalized a sum of Rs.17802887/- with respect to interest on long term loans relating to capital work in progress. It has further been submitted that the capitalized interest is reflected in the depreciation and interest schedule of the balance sheet. In this case the appellant has suo moto capitalized interest on long term loan of Rs.17802887/-. Hence there is no case as stated by the Assessing Officer for interest payment not being considered in capital work in progress. The estimation of interest of Rs.20228759/- made by the Assessing Officer is therefore erroneous as the actual amount of interest of Rs.1782887/- has been capitalized. Accordingly the addition made b the Assessing Officer of Rs.20228759/- is hereby deleted.”

Learned CIT-DR vehemently contended that the Assessing Officer had rightly disallowed the impugned interest since there was no such capitalization in the relevant previous year. The same is found to be against the facts on record since the CIT(A) has made it clear that the assessee had suo motu capitalized interest on long term capital loans on ₹1,78,02,887/-. He has therefore deleted the impugned disallowance based on estimation only. We therefore conclude that the CIT(A) has rightly deleted the impugned interest disallowance.

The Revenue’s fourth substantive grievance seeks to restore the depreciation of ₹92,490/- in respect of software expenses. We notice from the CIT(A)’s detailed discussion that he has allowed the admissible 20% depreciation on the assessee’s software amounting to ₹46,62,451/- (including cost, training and travelling) expenses. The Revenue fails to dispute that the such impugned claim admittedly satisfies the relevant depreciation rate in the