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Income Tax Appellate Tribunal, ‘B’ BENCH : CHENNAI
Before: SHRI B.R. BASKARAN & SHRI S. S. GODARA]
PER S.S.GODARA, JUDICIAL MEMBER This Revenue’s appeal for assessment year 2010-11, is directed against order of the Commissioner of Income-tax (Appeals)-I Coimbatore dated 20.11.2013, passed in Appeal No.59/12-13, deleting depreciation disallowance @ 50% of ` 17,00,423/-, in proceedings under section 143(3) of the Income-tax Act, 1961 (in short the ‘Act’).
I.T.A.No.255/14 :- 2 -:
Facts of the case are in a narrow compass. The assessee/ 2. an ‘individual’ is engaged in the business of bore wells, hotel and real estate. He runs Cheran Hotel. The assessee had filed his return on 15.10.2010 admitting income of ` 24,89,490/-. The Assessing Officer took up ‘scrutiny’. He inter alia noticed depreciation claim @ 10% amounting to ` 34,00,845/- qua the aforesaid hotel building. The assessee pleaded to have inaugurated the hotel on 7.9.2009. He placed on record invitation card and other evidence in support. It was explained that the hotel business had been done from January 2010.
Relevant VAT documents and returns filed were enclosed. The Assessing Officer observed in assessment order dated 26.6.2012 that hotel in question had been put to use only in November 2009 i.e less than 180 days u/s 32 of the Act. This made him to restrict the impugned depreciation claim from ` 34,00,845/- to 50% thereof i.e ` 17,00,423/-. The balance amount stood disallowed/added in the assessee’s taxable income.
The CIT(A) has accepted the assessee’s contentions as under:
I.T.A.No.255/14 :- 3 -:
Ground Nos.9, 10 & 11: These grounds of appeal is regarding the disallowance of depreciation. The appellant in the grounds of appeal submitted that the claim of depreciation on Hotel Cheran at ` 34,00,845/- has been disallowed at the rate of 50% merely stating that the Hotel was put to use only from the month of January. The appellant submits that the hotel was put to use on and from 07.09.2009 i.e from the date of inauguration. The hotel was run on trial basis to address the teething troubles and also to know the taste of the people for stabilizing the restaurant.
I have gone through the grounds of appeal and also the order of the Assessing Officer. The Assessing Officer in his order stated that the Hotel Cheran was put to use only in the month of November 2009 onwards for lodging purposes and from January 10 for restaurant purposes. The assessee before the Assessing Officer filed the invitation card showing that the hotel was inaugurated on 07.09.2009. Even though the hotel was occupied for lodging purpose from November 2009 as stated by the Assessing Officer in the order, the hotel was inaugurated on 07.09.2009 and the hotel was functional from 07.09.2009. The Assessing Officer has not disputed the fact that the hotel was inaugurated on 07.09.2009. The occupation of rooms cannot be a criteria for allowing depreciation on the asset i.e. the hotel. The Assessing Officer is directed to allow the claim of depreciation of the appellant. These grounds of appeal are ALLOWED.”
Therefore, the Revenue is in appeal.
We have heard the Revenue and gone through the case file.
The present case was listed for hearing along with the assessee’s two appeals I.T.A.Nos.2203 & 2204/Mds/2014 for assessment years 2009- 10 and 2010-11. He has filed an adjournment letter. The case record reveals that he had also challenged this very CIT(A)’s order in I.T.A.No.2211/Mds/2013 alleging lack of opportunity of hearing. A co-
I.T.A.No.255/14 :- 4 -: ordinate bench of the 'tribunal' restored the issue back to the CIT(A).
The lower appellate authority has reiterated the earlier findings in its consequential order dated 1.8.2014 (subject matter of appeal I.T.A.No.2204/Mds/2014). In these circumstances, we do not find any justification in either accepting the assessee’s adjournment petition or the Revenue’s plea to remit back the case to CIT(A). Therefore, the present case file is delinked and being decided separately.
Now we come to the merits of the case. The Revenue 5. submits that the Assessing Officer had rightly concluded that the assessee’s hotel had been put to use for less than 180 days for disallowing depreciation @ 50%(supra). The CIT(A) observes that the assessee’s hotel had been inaugurated on 7.9.2009. It has also been held that it was functional from the said date itself. The Assessing Officer appears to have taken inauguration of lodging facility date in November 2009 for partly disallowing the claim. The Revenue challenges this finding by making oral submissions only. No supportive evidence or material had been filed. Therefore, we find no reason to interfere with the lower appellate order. The Revenue’s grounds are rejected.
I.T.A.No.255/14 :- 5 -:
The Revenue’s appeal is dismissed.