JCIT, CHENNAI vs. CHENNAI CITY CENTER HOLDINGS P LTD., CHENNAI

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

Both the appeals of the Revenue are directed against the

respective orders of the Commissioner of Income Tax (Appeals) -1,

Chennai, dated 28.01.2016 and pertain to assessment years 2010-

11 and 2011-12. Since common issues arise for consideration in

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both the appeals, we heard these appeals together and disposing of

the same by this common order.

depreciation claimed by the assessee on windmill.

submitted that the assessee claimed depreciation on the civil work

made for installation of windmill, at the rate of 80%. According to

the Ld. D.R., the civil work is totally different from windmill,

therefore, the assessee cannot claim depreciation at the rate of

80% on the civil work carried out for installation of windmill.

Referring to the assessment order, more particularly para 7.4, the

Ld. D.R. submitted that the civil construction cannot be construed as

part and parcel of windmill. Therefore, the assessee is not eligible

for depreciation at the rate of 80%. At the best, the civil

construction can be construed as ordinary building used for

business and entitled for depreciation at the rate of 10%. Therefore,

according to the Ld. D.R., the CIT(Appeals) is not justified in

allowing the claim of the assessee.

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assessee submitted that the assessee has to necessarily erect the

windmill on the civil foundation. The windmill cannot exist without

any civil foundation. Therefore, it cannot be said that the civil

construction made by the assessee for the purpose of installing the

windmill is not part and parcel of windmill. According to the Ld.

counsel, without the civil construction, the windmill cannot exist.

Therefore, when the assessee constructed building for erecting the

windmill, according to the Ld. counsel, the building constructed by

the assessee for the purpose of windmill has to be construed as

part and parcel of the windmill. Therefore, according to the Ld.

counsel, the CIT(Appeals) has rightly allowed the claim of the

assessee.

perused the relevant material available on record. The question

arises for consideration is when the assessee constructed a building

for the purpose of erection of windmill, whether such a building

would form part of windmill? This Tribunal is of the considered

opinion that the windmill cannot exist without a civil foundation.

Therefore, the civil work / building constructed by the assessee for

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the purpose of installation of windmill has to be necessarily

construed as part of windmill. In other words, the windmill cannot

exist without civil construction. Therefore, the civil construction as

well as the windmill has to be construed as single unit for the

purpose of depreciation. Accordingly, the assessee is eligible for

depreciation at the rate of 80%. This Tribunal do not find any

reason to interfere with the order of the lower authority and

accordingly the same is confirmed.

submitted that the assessee-company let out a shopping mall and

earned lease rentals, which was offered under the head “income

from house property”. After claiming deduction under Section 24 of

the Income-tax Act, 1961 (in short 'the Act'), the assessee disclosed a loss of `13,43,88,740/- under the head “business”. The assessee

is also claiming depreciation on plant and machinery, DG sets,

HVAC and others. The Ld. D.R. pointed out that when the

assessee has classified the income from letting out the shopping

mall under the head “income from property”, depreciation cannot be

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allowed. The assessee cannot take a benefit of 30% deduction

under Section 24 of the Act and also depreciation under Section 32

of the Act. Section 32 of the Act, according to the Ld. D.R., is

available only when the income was computed under the head

“income from business”. Since the assessee itself declared the

income under the head “income from house property”, there cannot

be any claim of depreciation.

assessee submitted that the assessee is admittedly letting out the

shopping mall and also maintaining the shopping mall. The

assessee is claiming depreciation only on DG sets, HVAC and other

depreciable items, which are put to use for serving the common

area of the shopping mall. No doubt, according to the Ld. counsel,

the assessee is letting out the shopping mall and disclosed the

income as “income from house property” under Section 24 of the

Act. With regard to other activities and facilities specifically

provided to the lessee, the assessee accounted the profit as

business income. The other activities and facilities include

maintenance of building, provision for security, advertisement

boards and hoardings, windmill, maintenance of parking area,

6 I.T.A. No.1000/Mds/16

providing uninterrupted electricity, etc. The income from these

activities is classified as business income. According to the Ld.

counsel, the assessee is not claiming depreciation on the building of

the shopping mall. Depreciation was claimed only in respect of the

plant and machinery used for providing facilities in the common

area. Therefore, according to the Ld. counsel, the CIT(Appeals)

has rightly allowed the claim of the assessee.

perused the relevant material available on record. Admittedly, the

assessee is letting out shopping mall and maintaining the shopping

mall. The assessee disclosed the income from letting out the

shopping mall as “income from house property” under Section 24 of

the Act. Apart from letting out the property, the assessee also

claims that it provided facilities such as maintenance, security,

advertisement boards and hoardings, uninterrupted power supply

through windmill and DG sets, letting out professional, parking area,

etc. In respect of the plant and machinery used for providing these

activities / facilities, the assessee claims that the same are business

in nature and declared the income out of such activities as business

income. The assessee is claiming depreciation only in respect of

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those plant and machinery used for providing facilities to the lessee. When the assessee has not claimed depreciation in respect of the building and claims depreciation only in respect of plant and machinery used for providing common facilities, this Tribunal is of the considered opinion that the assessee is entitled for depreciation under Section 32 of the Act in respect of plant and machinery which is used for business of the assessee for providing facilities in the common area to the lessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

Order pronounced on 23rd September, 2016 at Chennai.

sd/- sd/- (अ�ाहम पी.जॉज�) (एन.आर.एस. गणेशन) (Abraham P. George) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member

चे�नई/Chennai, �दनांक/Dated, the 23rd September, 2016.

Kri.

8 I.T.A. No.1000/Mds/16

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-1, Chennai-34 4. Principal CIT-1, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.