AI Drafter 
TaxTMI 
TaxTMI 
2016 (6) TMI 25
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....O on the reasoning that these properties were not put to use in that year, but the same was allowed by Ld CIT(A). In AY 2007-08, the assessing officer has allowed the claim of depreciation. Thus, the depreciation came to be allowed both in AY 2006-07 and 2007-08. 3. In the year under consideration, the AO examined the claim of depreciation afresh and took the view that the cost of purchase of above said properties would include cost of land also. Accordingly he took the view that the depreciation claimed on the value relating to land is not allowable under the Act. The assessee submitted that such kind of segregation is not possible, as it has purchased flats only and not land, but the same was not acceptable to the AO. Accordingly he proceeded to arrive at the cost of construction on the basis of Ready Reckoner rate-2007 prescribed by the Stamp duty authorities under the Registration Act and determined the cost of construction of flats at Rs. 75.28 lakhs for both the properties. Consequently it was held that the balance portion of the cost of purchase represents land cost. Accordingly, the AO held that the depreciation is allowable on the above said amount of Rs. 75.28 lakhs on....
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....ion rendered by Hon'ble Supreme Court in the case of Mc Dowell & Co. Ltd Vs. CTO (1985)(22 Taxman 11) and held that the avoidance of tax by colourable devices should be discouraged. He further held that the true nature of transaction should be taken into consideration for income tax purposes and the transfer of land to the name of the assessee by way of registration is not a precondition to determine the ownership of the land. With regard to the contention that the depreciation has been allowed in AY 2006-07 and 2007-08, the Ld CIT(A) placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Karnani Properties Ltd (1971)(82 ITR 547 @ 554) and held that the principle of res-judicata shall not apply to income tax proceedings. The Ld CIT(A) placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Saharanpur Electric Supply Company Ltd Vs. CIT (1992)(194 ITR 294), wherein it was held that the definition of Written Down Value in section 43(6) envisages computation of actual cost in every assessment year. Original figure of actual cost can be altered for a current year on the basis of subsequent factual or legal information and that there is....
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....JCIT Vs. Rajesh Exports (9 SOT 28)(Bang.) as under:- "Under section 32(1) of the Act, the word "building" is to be interpreted as the superstructure and not land. Where the assessee purchases building and the purchase price (as per sale deed) is a composite one (sale deed does not indicate the prices of land and building separately), then no distinction at least in the consideration paid to the vendor can be made. However, if there is a clear cut identity in respect of price paid to the land and building (i.e., sale deed indicates price of land and building separately), then the Assessing Officer is right in allowing depreciation only on the building." The Ld A.R submitted that the above said ratio has been followed by the Delhi bench of Tribunal in the case of ITO Vs. Millennium Spire India Management (P) Ltd (ITA No.3297/Del/2013 dated 23.12.2014). 9. On the contrary, the ld D.R placed strong reliance on the decision rendered by the Ld CIT(A). He submitted that the costs of flats are not identical in all the areas and they would normally differ depending upon the area where it is located. He submitted that the difference mainly arises due to difference in the price....
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....rty hereby confirms unto the Purchaser on OWNERSHIP basis ALL that the said premises admeasuring 8977 sq. feet super built-up area (5811 sq. feet carpet area) on the 3rd Floor of the building known as 'Aman Chambers' (previously known as Kodak House) together with three (3) open car parkings in the compound of the building 'Aman Chambers' and amore particularly described in the Second Schedule hereunder written and hereinafter collectively referred to as "the said Premises", constructed on all that piece or parcel of land or ground bearing C.S. No. 1098 of Mahim Division, Final Plot No. 1121 of Town Planning Scheme, Bombay City No. IV and which 3rd floor premises are shown delineated on floor plan "A" thereof hereto annexed, surrounded by a red coloured boundary line TOGETHER WITH ALL AND SINGULAR the benefit of open parking spaces in the building compound, the benefit and access to common areas and facilities including high speed lifts, staircase and lobby, passages as also water, power, sewerages and all privileges, easements, advantages, rights members and appurtenances, whatsoever to and into the said premises or any part there of belonging to or any wise appert....
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....re anything about the value of land embedded in the cost of flat. 14. We notice that the Ld CIT(A) has referred to the decision rendered by Hon'ble Supreme Court in the case of Mc Dowell and Co. (supra). But we find that the assessee has not adopted any colourable device in this matter. The sale deed makes it clear that what was conveyed to the assessee was a flat and not land. Hence, in our view, the above said decision of Hon'ble Supreme Court shall not have any application to the facts of the present case. 15. In view of the above, we are of the view that there is no material available with the tax authorities to support their view. In our view, the decisions rendered by the Bangalore bench of tribunal in the case of Rajesh Exports and Delhi bench of Tribunal in the case of Millennium Spire India Management (P) Ltd (referred above) are applicable to the facts prevailing in the instant case. In the instant case, the assessee has paid the purchase price for purchase of flats and it is not discernible from the sale deed that it has paid anything separately for land. On the contrary, the sale deed makes it very clear that what was conveyed was only the super structure of the f....