2010 (3) TMI 1248 - AT - Income Tax

Court upholds 25% depreciation on Golf Course, denies 100% on temp structures, remits interest disallowance issue. Revenue's appeals dismissed.

DCIT, Circle-4 (1), New Delhi Versus M/s Jaypee Greens Ltd.

The Court upheld the CIT(A)'s decision allowing 25% depreciation on Golf Course infrastructure, considering it a specialized structure. The claim for 100% ... - Issues Involved:1. Depreciation on Golf Course Infrastructure.2. Depreciation on Temporary Erected Structures.3. Disallowance of Interest Paid on Loans from Financial Institutions.Summary:1. Depreciation on Golf Course Infrastructure:The issue raised by the revenue was that the CIT(A) erred in allowing depreciation of Golf Course infrastructure at 25%. The assessee, engaged in running an 18-hole golf course, claimed depreciation at 25%, arguing that the golf course is a specialized structure with technical requirements, thus qualifying as 'Plant.' The AO disagreed, treating the golf course akin to a hotel building and allowing 20% depreciation for A.Y. 2002-03 and 2003-04, and 10% for A.Y. 2005-06. The CIT(A) supported the assessee's claim, stating the golf course is a specialized structure and should be treated as 'Plant.' The Tribunal upheld the CIT(A)'s order, noting no material change in facts or law from A.Y. 2001-02, where 25% depreciation was allowed. Consequently, the revenue's appeals were dismissed.2. Depreciation on Temporary Erected Structures:The assessee claimed 100% depreciation on various temporary structures, which the AO disallowed, allowing only 10% depreciation, arguing these were concrete structures used regularly and not temporary. The CIT(A) agreed with the AO, noting the structures were concrete and used for more than five years, thus not qualifying as temporary. The Tribunal upheld the CIT(A)'s order, finding no infirmity in treating the structures as non-temporary and allowing only 10% depreciation. Consequently, the assessee's appeals for A.Y. 2002-03 and 2003-04 were dismissed.3. Disallowance of Interest Paid on Loans from Financial Institutions:For A.Y. 2005-06, the assessee raised the issue of disallowance of Rs. 1,03,10,776/- on account of interest paid on loans, which was not adjudicated by the CIT(A). The Tribunal remitted the issue to the CIT(A) for consideration and a finding, ensuring the assessee is given adequate opportunity of being heard. Consequently, the appeal for A.Y. 2005-06 was allowed for statistical purposes.Conclusion:All the revenue's appeals were dismissed. The assessee's appeals for A.Y. 2002-03 and 2003-04 were dismissed, while the appeal for A.Y. 2005-06 was allowed for statistical purposes.