Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH : KOLKATA
Before: Hon’ble Shri Veeravalli Durga Rao, JM & Shri M.Balaganesh, AM ]
ORDER Per M.Balaganesh, AM
This is an appeal directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-4, Kolkata [ in short the ld CITA] in Appeal No. 1177/CIT(A)- 4/Circle-12/Kol/14-15 dated 04.08.2015 against the order passed by the DCIT, Circle- 12, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 03.03.2014 for the Assessment Year 2008-09.
The only issue to be decided in this appeal of the revenue is as to whether the Ld. CIT(A) was justified in directing the Ld. AO to allow 100% depreciation on hoarding structures in the facts and circumstances of the case.
The brief facts of this issue is that the Ld. CIT had passed an order u/s 263 dated 03.08.2012 wherein he had directed the ld. AO to make enquiries with regard to 100% depreciation claimed by the assessee on hoarding structures. The Ld. AO while giving
2 M/s Vantage Advertising Pvt. Ltd. A.Yr.2008-09 effect to the said order of the Ld. CIT, passed an order u/s 263/251/143(3) of the Act on 03.03.2014 wherein, he disallowed the excess depreciation on hoarding structures amounting to Rs. 4,34,51,894/-.
4. The Ld. CIT(A) duly appreciated the contentions of the assessee and directed the Ld. AO to delete the disallowance made on account of excess depreciation on hoarding structures. Aggrieved, the revenue is in appeal before us on the following grounds: 1. In the facts and circumstances of the case in law. The Ld. CIT(A) has erred in allowing 100% depreciation on Hoarding Structures.
2. In the facts and circumstances of the case in law, the Ld. CIT(A) has erred in overlooking the fact that in the process of earning the advertisement income, the assessee installed advertisement boxes and fixtures, as per the agreement with the concerned local authority, which constitutes the hoardings structures which had the enduring benefit and clearly fell under the block of asset plant and machinery on which depreciation was allowable @ 10%.
3. In the facts and circumstances of the case in law, the Ld. CIT(A) has erred in accepting that expenses incurred with respect to the hoarding structures will have to be treated as revenue in nature as per Sec. 37(1) of the Act whereas, since many previous years and subsequent years, the assessee has been claiming depreciation on hoarding structures for being the same as capital asset and the higher forum of appeal has given their verdict accordingly.
The appellant craves leave for leave to add/alter/modify the grounds of appeal.
We have heard the rival submissions. The Ld. AR before us stated that against the revision order passed by the Ld. CIT u/s 263 of the Act, the assessee preferred an appeal before this Tribunal and this Tribunal had disposed off the same in favour of the assessee by quashing the revision order and accordingly stated that the order passed by the Ld. AO pursuant to section 263 directions of the ld CIT is to be treated as infructuous. In response to this, the Ld. DR agreed to the same. We find that this Tribunal in had held as under:
3 M/s Vantage Advertising Pvt. Ltd. A.Yr.2008-09 “11. We have given a very careful consideration to the rival submissions. As we have already seen above that the facts of the case go to show that the AO made enquiries on this issue and after being satisfied with the claim of the assessee allowed the cal of depreciation on hoardings at 100%. Order of the AO was in tune with the order of the tribunal in the past which has been accepted by the revenue. In fact even for the subsequent A.Y.2009-10 the issue was before the tribunal and it had decided in favour of the assessee. In such circumstances we are of the view that the decision of the Hon’ble Calcutta High Court in the case of Russel Properties Pvt.Ltd (supra) will be applicable and the CIT could not have invoked his jurisdiction u/s 263 of the Act. The facts of the case before the Hon’ble Calcutta High Court was the Tribunal in the earlier AY of an Assessee held that maintenance and service charges received by an Assessee were assessable under the head "business" and not assessable under the head "property". Following the decision of the Tribunal, the ITO in a subsequent AY proceeded to assess such income under the head "business". The CIT in exercise of his powers u/s.263 of the Act felt that such income should have been assessed to tax under the head "property" as in respect of the prior years' findings reference application was pending before the High Court. The Hon’ble High Court had to decide as to whether in those circumstances, can it be said that the ITO who had accepted the Tribunal's decision as correct and applied that decision to the facts of this case acted erroneously and his such action caused prejudice to the interests of the Revenue. The Hon’ble High Court held that as a matter of fact whenever there is a decision of the higher appellate authority, the subordinate authorities are bound to follow the said decision if judicial discipline is to be maintained. In the aforesaid view of the matter the Hon’ble Court held that the conditions for exercise of the power under s. 263, namely, that there must be material for the CIT to consider that the order passed by the ITO was erroneous in so far as it is prejudicial to the interests of the Revenue were not fulfilled. The proposed exercise of the power under s. 263 was held to be illegal and without jurisdiction.
With regard to the policy guidelines on display of advertisement pointed out by the ld. DR as rightly contended by the ld. Counsel for the assessee this was only a draft policy 2009. In any event the CIT in the impugned order has not, on the basis of any material available before him, come to a conclusion that the hoardings on which the assessee claimed depreciation at 100% were structurally sound so as to be regarded any building. The decision of the ITAT Mumbai Bench in the case of Asian Advertising (supra) is a case where the question was whether hoardings constitute building or plant. In our view this cannot be said to be a precedent in so far as the issue involved in the present case is concerned. We are also of the view that the CIT in exercise of his powers u/s 263 of the Act has to come to a definite conclusion as to how the order of the AO was erroneous. He cannot set aside the order of AO and direct an enquiry on the question whether hoarding structure would be in the nature of purely temporary erection. In other words the CIT could invoke the jurisdiction u/s 263 of the Act only on a finding that hoardings were not purely temporary erection and such finding has to be sustainable in law. It is only then the CIT can make out a case that order of AO was erroneous. In the present case the CIT has not given such a finding. Even on this basis, we are of the view that order u/s 263 of the Act cannot be sustained.
For the reasons given above we hold that the order of AO which was sought to be revised in the impugned order of CIT was not erroneous. Therefore order u/s 263 of the Act cannot be sustained. The same is hereby quashed and the appeal of the assessee is allowed.” In view of the fact that section 263 proceedings had been quashed by this Tribunal as stated supra, the giving effect order pursuant to section 263 order, as rightly pointed out by the Ld. AR, becomes infructuous. Hence, we dismiss the appeal of the revenue on this ground without going into merits of the addition made in the assessment.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 08.12.2017