AJANTA NETWORK,BANGALURU vs. INCOME-TAX OFFICER, WARD-2(2)(4), BENGALURU

This appeal is filed by the assessee which is directed against the order of ld. CIT(A)-7, Bangaloredated 06.10.2017 for Assessment Year 2012-13.

The grounds raised

The appeal was first fixed for hearing on 22.02.2018 and on that date, the ld. AR of assessee requested for adjournment and on his request, the hearing was adjourned to 19.03.2018. The date of hearing was pronounced in the open court and notice of hearing was also sent to assessee by RPAD because on that date, none had appeared on behalf of the assessee. In spite of this, none appeared on this date also i.e. 19.03.2018 and therefore, the appeal was heard ex-parte qua the assessee. The ld. DR of revenue supported the orders of authorities below.

I have considered the submissions of ld. DR of revenue and gone through the orders of authorities below. I find that only one issue is involved regarding disallowance of Rs. 22,48,889/- out of depreciation on building. This issue was decided by CIT(A) in para 6 of his order which is reproduced hereinbelow. “6. The submission of the appellant has been considered. Depreciation is allowable in respect of building, machinery, plant or furniture owned by the assessee and used for the purpose of the business or profession in terms of section 32 of the Income-tax Act, 1961 Depreciation is allowable as a deduction both according to accountancy principles and according to the Act, because otherwise one would not have a true picture of the real income of the business. But land does not depreciate, and if depreciation was allowed it would give a wrong picture of the true income. Therefore, there is no rate of depreciation prescribed for land. Therefore, the claim of depreciation on land by the appellant and the argument that the cost of land is an integral part of the building and cannot be separated for the purpose of claiming depreciation is not correct. The Supreme Court of India in the case of Alps Theatre 65 ITR 377 has held that cost of land is not entitled to depreciation along with cost of building standing thereon. The ITAT Delhi in case of Capital Cars Pvt Ltd 114 ITD 286 has also decided in similar line. The assessee itself before the AO has submitted the valuation of the godown and guest house buildings. Under such circumstances, the assessee is bound by the working of the value of the land and the super structure submitted by itself. In view of above, the decision of the AO is found to be correct.”

I find that the ld. CIT(A) has followed the judgment of Hon’ble Apex Court rendered in the case of Alps Theatre (supra) and theTribunal order rendered by Delhi Bench in the case of Capital Cars Pvt. Ltd. (supra) and therefore in my considered opinion, there is no infirmity in the order of CIT(A). Hence I confirm the same.

In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on the date mentioned on the caption page.