M/S. SELVEL MEDIA SERVICES (P) LTD.,,KOLKATA vs. PR. CIT-4,, KOLKATA

At the outset itself, the Ld. DR brought to our notice that there is a delay of 57 days in filing assessee’s appeal. On being asked, the Ld. AR drew our attention to the condonation petition filed wherein we note that the assessee received the impugned order dated 26.12.2016 on 05.01.2017 and the assessee company immediately forwarded the order to Shri Naresh Roy, Advocate who has filed an affidavit wherein it has been stated that he had received the order on 05.01.2017 from assessee, but it got misplaced and, thereafter, he could lay his hand on the impugned order only on 24.10.2017 and, then immediately he forwarded the order to Shri Subash Agarwal, Advocate to prepare an appeal and the same was filed and thus there was a delay of 57 days. We note that the delay caused in preferring an appeal before the Tribunal is not because of the fault on the part of the assessee. The delay was caused because of the omission on the part of the Ld. AR for misplacing the

The assessee has preferred this appeal against the order of Ld. Pr. CIT-4, Kolkata wherein he has interfered with the order passed by the AO which was completed u/s. 143(3) of the Act on 17.03.2015. The Ld. Pr. CIT issued a show cause notice u/s. 263 of the Act dated 27.08.2015 wherein the Ld. Pr. CIT observed the following faults: “”In the instant case assessment was completed u/s 143(3) of the I. T. Act, 1961 on 17.03.2015 by the DCIT, Circle-12(2), Kolkata determining assessed income as Nil. 2. On perusal of the assessment records, it is seen that the assessee company in his computation of income & audited accounts claimed deduction u/s 80IA of the I. T. Act, 1961 on infrastructure facility rendered in respect of bus shelter, toilet block and foot over-bridges installed within no. of cities under contract with the concerned municipal authorities. 3. On examination of the case, it is seen that the assessee during the relevant previous year 2011-12 was engaged in the business of "outdoor advertising" which means that the assessee was not engaged in the business which could be admitted as the assessee was engaged in infrastructure development. Moreover, the construction and maintenance of the bus shelter, toilet block, foot over-bridges should not be prima-facie treated as 'road' within the meaning of explanation to sub-clause (c) of Clause (i) of sub section(4) of the section 80IA of the Income Tax Act, 1961. 4. However, the assessee claimed depreciation of hoarding structure @ 100% but since the hoarding structure is treated as "plant & machinery" and the said structure was used for less than 180 days, therefore, the assessee is entitled to depreciation @ 7.5%(50% of 15%) instead of 100%. 5. In light of the above, I am satisfied that prima facie the order dated 31.03.2015 passed u/s 143(3) of the Income Tax Act, 1961 is erroneous and prejudicial to the interests of the revenues. You are, therefore, requested to appear personally or through your authorized Representative before me at my room No. 4, 6th Floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069 on 14.09.2015 at 11.30 AM along with your written submissions, if any, to show as to why the assessment made u/s 143(3) on 31.03.2015 should not be revised u/s. 263 of the Income Tax Act, 1961.”

The assessee had replied to the aforesaid show cause notice which is found placed at pages 71 to 78 of the paper book. After perusal of the same, the Ld. Pr. CIT was pleased to hold that the AO’s order dated 17.03.2015 passed u/s. 143(3) of the Act was erroneous so far as prejudicial to the interest of the revenue and he was pleased to set aside the order back to the AO with a direction to examine and verify the issues raised in the aforesaid show cause notice. Aggrieved, the assessee is before us.

We note that the aforesaid order of the Tribunal has been challenged by the Department before the Hon’ble Calcutta High Court in ITAT No. 49 of 2010, GA No. 894 of 2010 wherein Hon’ble High Court after framing the following question has held as under: “The Revenue has preferred this appeal under Section 260A of Income Tax Act, 1961 against the order dated 30.9.2010 of the Income Tax Appellate Tribunal 'A' Bench, Kolkata for the assessment year 2004-05. The appellant proposed the following substantial questions of law;- i) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in quashing the revision order under section 263 of the Income-tax Act, 1961, passed by the Commissioner of Income-tax, on the ground that the Assessing Officer had taken one of the possible views while, in fact, the question is one of law and not fact and incorrect appreciation of law by the Assessing Officer is amenable to correction through the instrumentality of revision order under section 263 of the Act?" ii) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that automatic traffic signal and pedestrian foot bridge would constitute infrastructure facility defined in clause (a) of Explanation below sub-section (4) of section 80- IA of the Income-tax Act, 1961” Since, we are inclined to take the view that the Tribunal was right in holding that the automatic traffic signal and pedestrian foot bridge would constitute infrastructure facility as contemplated in clause (a) of the explanation to sub section (4) of Section 80-IA of the Income Tax Act, 1961, it is not necessary to answer question no. 1. Section 80-IA provides that where the gross total income of an assessee includes any profit and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as "the eligible business"), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. The relevant portion of sub-section (4) reads as under;- "(4) This section applies to- (i) any enterprise carrying on the business [ of (i ) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfills all the following conditions, namely:- (a) to (c) . …….

Therefore, the issue is no longer res integra and the view taken by the AO is as per the Tribunal as well as the Hon’ble High Court’s order, therefore, the action of the AO cannot be held to be erroneous so far as prejudicial to the interest of revenue and, therefore, we hold that Ld. Pr. CIT lacks revisional jurisdiction to interfere on this issue and therefore erred in doing so.

The next fault is in respect to depreciation of hoarding structure @ 100%. The Ld. Pr. CIT observed that the said structure was used for less than 180 days and, therefore, the assessee is entitled to depreciation @ 7.5% (50% of 15%) instead of 100%. It was brought to our notice by the Ld. AR that the question of depreciation was also decided by the Tribunal in favour of the assessee in assessee’s own case for AY 2005-06. It was brought to our notice that the Tribunal agreed with the claim of the sister concern M/s. Selvel Advertising Pvt. Ltd. which carried out the same business activity like that of the assessee and the Tribunal upheld the view that the hoardings are temporary asset for which 100% depreciation is justifiable and the Ld. AR drew our attention to the order passed in ITA No. 820/Kol/2008. It was also brought to our notice that there was no further appeal before the Hon’ble High Court challenging the Tribunal’s decision that the hoardings being temporary structure are eligible for 100% depreciation. Therefore, according to us, the view taken by the AO cannot be faulted with and, therefore, the Ld. Pr. CIT erred in holding the AO’s action of allowing the claim of 100% depreciation as erroneous so far as prejudicial to the interest of the revenue. Since we note that the hoardings being temporary structures are eligible for 100% depreciation as held by this Tribunal in assessee’s sister concern M/s. Selvel Advertising Pvt. Ltd. in ITA No. 820/Kol/2008, therefore, the view taken by the AO

In the light of the above, the AO’s order cannot be held to be erroneous so far as prejudicial to the interest of the revenue on both the issues discussed above. Therefore, Ld. Pr. CIT lacks jurisdiction to interfere with the order passed by the AO by invoking his jurisdiction u/s. 263 of the Act. Therefore, we quash the impugned order of the Ld. Pr. CIT. Appeal of assessee is allowed.

In the result, appeal of assessee is allowed. Order is pronounced in the open court on 19/09/2018 Sd/- Sd/- (M. Balaganesh) (A. T. Varkey) Accountant Member Judicial Member