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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The assessee has filed an appeal against the order of the Commissioner of Income Tax -3, Chennai in C. No. 3033(17)/CIT-III/263/2013-14, dated 18.11.2013 passed u/s. 263 of the Income Tax Act.
:-2-: I.T.A. No. 2192/Mds/2014
The assessee has raised the grounds challenging the jurisdictional u/s. 263 of the Act and also non compliance of twin conditions. The CIT failed to appreciate that the depreciation on developing and maintaining the roads dealt by the Assessing Officer and allowed the depreciation. Further, CIT failed to consider that the depreciation on leasehold rights inadvertently mentioned as leasehold land and the Ld. AO considered the facts and allowed the depreciation and prayed for set aside the Revision order of CIT.
Before we proceeded for hearing there is a delay of 225 days in 3. filing the appeal by the assessee. The ld. AR filed condonation petition and explained the circumstances for delay, which are not deliberate. Further, ld. DR of the assessee has no serious objections for condonation of delay. After hearing the submissions, we are satisfied with the Reasonable cause explained in affidavit for filing the Appeal Belatedly. Therefore, the delay is condoned and appeals are admitted.
The Brief facts of the case are that the assessee is a public limited company and engaged in the business of Improvement, Development and Implementation of Infrastructure Road Projects and joint venture with TIDCO and Infrastructure Leasing and Financial Services Ltd., and filed Return of income on 26.09.2009 declaring Nill income. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) was issued. The Ld. AR appeared from time to time and case was discussed. The Assessing Officer found that :-3-: I.T.A. No. 2192/Mds/2014 the assessee has claimed depreciation on Improvement of roads. Whereas, the assessee has claimed total depreciation of Rs. 2,42,99,403/-, and the actual depreciation as per Companies Act is Rs. 1,96,32,037/- and on perusal of further records, Assessing Officer found that the depreciation of Rs. 2,07,43,371/- was in respect of Roads improvement and Electrical Installation as Plant and Machinery. The Ld. AR submitted that in the assessee's own case, in earlier year depreciation was allowed by the co-ordinate bench of the Tribunal at 10% as against 15% claimed. Whereas, the Ld. AO has restricted depreciation @ 10% as applicable to building and disallowed excess depreciation of Rs. 68,61,960/- and passed order u/s. 143(3) dated 28.10.2011. Subsequently, Ld. CIT in the Revision proceedings issued show cause notice dated 28.10.2013 on the two issues, as the assessment order 143(3) of the Act passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Further, the Assessing Officer has allowed the depreciation at the rate of 10% on the Roads development maintained by the assessee, but actually the assessee is not the owner of the roads and secondly the assessee claimed depreciation on lease hold land and there are no findings by the Ld. AO in order and also depreciation cannot be allowed on the Land. The assessee filed written submissions on 05.11.2013 explaining that the assessee is eligible for depreciation on roads on par with the Plant and Machinery and relied on Tribunal decision in the assessee's own case in & 817/Mds/2007 for the assessment years 2003-04 &
:-4-: I.T.A. No. 2192/Mds/2014 2004-05 dated 24.10.2008, where the depreciation on roads shall be on par with rate of Buildings. Similarly, it has claimed the depreciation on leasehold rights were inadvertently mentioned as leasehold land and the said amount was amortised in the books of accounts and treated as intangible asset and claimed the depreciation rate @ 25%. The Ld. CIT considered the submissions and set aside the Assessment Order passed u/s. 143(3) of the Act dated 18.11.2013 and directed the Assessing Officer to make fresh assessment.
Aggrieved by the order, assessee filed an appeal before the Tribunal. The Ld. AR argued that the order passed by the CIT is not in accordance with the law as twin conditions of erroneous and prejudicial to the interest of the justice was not satisfied. The Assessing Officer has restricted depreciation on Roads at 10% based on decision of Tribunal in assessee's own case for earlier years. On other issue, the claim of depreciation on Leasehold land, the assessee stated that it is the Leasehold rights in the property and amortised and claimed depreciation treating as Intangible Asset.
Contra, the Ld. DR relied on the orders of the CIT.
We heard the rival submissions, perused the material on record and judicial decisions, the Ld. AR argued that the assessee is eligible for depreciation on road on par with the rate applicable to the Building. We find
:-5-: I.T.A. No. 2192/Mds/2014 the co-ordinate bench of the Tribunal in the assessee's own case Tamil Nadu Road Development Company Lts., Vs ACIT in & 817/Mds/2007, for the assessment years 2003-04 & 2004-05 dated 24.10.2008 has held that the "Road is not plant but after assessment year 1988-89 is included in the category of building and eligible for depreciation as such." We respectfully following the co-ordinate bench decision allow the ground of the assessee on depreciation on Road.
On the second issue of claim of depreciation on Leasehold rights in the property, we perused the Assessment Order, the Assessing Officer has not made any findings or reference of submissions on the disputed issue.
Further, the assessee has treated Leasehold right as Intangible Asset and claimed depreciation. The Ld. AR supported his arguments relying on the decision of Hon'ble Supreme Court in the case of CIT Vs. Max India Ltd., 166Taxman 0188, Held where two views are possible, and the ITO has taken one view, which CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of Revenue in the context of profits in realtion to provisions of section 80HHC(3) of the Act. Whereas, in the present case, the Assessing Officer has not adopted any methodology or taken view on claim of depreciation on Leasehold rights in the Assessment Order in respect of Intangible Asset. Considering apparent facts, material on record and judicial decision, we are of the opinion that this matter has to be re-examined by the :-6-: I.T.A. No. 2192/Mds/2014 Assessing Officer and we remit the Disputed issue of claim of depreciation on Leasehold rights to the file of the Assessing Officer to examine and verify the genuineness of facts and allow the claim as per the provision of law and assessee shall be provided adequate opportunity of hearing before passing the order.
In the result, the appeal of the assessee is partly allowed.
Order pronounced on Friday, the 23rd day of December, 2016 at Chennai.