TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 1499
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....confirming the disallowance of the claim of the depreciation of Rs. 13,70,093/- in respect of residential properties. On the facts and circumstances of the case the appellant prays that the disallowance of depreciation of Rs. 13,70,093/- is not justified and the said disallowance may be deleted. 2. The Learned Commr. of Income Tax (Appeals) has erred in disallowing the sum of Rs. 22,32,084/- being the amortization of the premium paid on leasehold land on which the commercial complex has been constructed by the appellant. On the facts & circumstances of the case the appellant prays that the disallowance of the claim of amortization of land premium amounting to Rs. 22,32,084/- is not justified. 3. The Learned Commr. of Income Tax (Appeals) has erred in confirming the disallowance of depreciation of Rs. 2,28,820/- on toll road. Based on the facts & circumstances of the case the appellant prays that the claim of depreciation of Rs. 2,28,820/- be allowed. 4. On the facts and circumstances of the case the appellant submits that they have not received any income in respect of the Toll Road and the matter is in dispute. The Learned Commr. of Income Tax (Appeals) has erred in directin....
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....rther submitted that consequential order was passed by the Assessing Officer for the A.Y. 2004-05 vide order dated 31.12.2018 allowing depreciation. It is also submitted that identical issue which arose for the A.Ys. 2008-09 and 2009-10 and the appeals were heard by the Tribunal on 19.11.2019. 5. On the other hand, Ld. DR strongly supported the orders of the authorities below. 6. We have perused the order of the Tribunal for the A.Y. 2004-05 in ITA No. 3203/Mum/2008 and ITA.No. 3156/Mum/2008 dated 28.06.2017 wherein the Tribunal decided this issue in favour of the assessee at page No. 4 Para No. 3.2 observing as under: - "3.2 We have heard the rival contentions and perused the cited case laws. We find that Hon'ble Delhi High Court in the cited case laws has observed that under the new scheme of depreciation prescribed in amended Section 32, the depreciation is to be allowed on WDV of each 'block of assets' at such percentage as may be prescribed and therefore, with the introduction of concept of 'block of assets', an individual asset loses its identity and there was no requirement to compute depreciation for each and individual asset separately. Making these....
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.... assessee on residential premises, but verify the fact with regard to deduction claimed u/s 24(a) in the light of our discussions given hereinabove. In case, the assessee claimed deduction u/s.24(a), then the same needs to be disallowed." 8. We have observed that the Tribunal while disposing off appeal for the A.Y. 2005-06 to A.Y. 2007-08 directed the Assessing Officer to allow the depreciation as claimed by the assessee on residential premises, however, it was also directed to verify the fact as to whether deduction U/s.24(a) was claimed by the assessee or not and if it is claimed the same is to be disallowed. Similar view has been taken by the Tribunal in ITA.No. 3785 & 3786/Mum/2013 for the A.Y. 2008-09 and A.Y. 2009-10 by order dated 28.11.2019. As the facts being identical respectfully following the said decision, we direct the Assessing Officer to carry out similar exercise as directed by the Tribunal in the order dated 30.04.2019 passed for the A.Y.2005-06 to A.Y.2007-08 and decide accordingly. This ground is partly allowed. 9. Coming to Ground No. 2 of grounds of appeal the Ld. Counsel for the assessee fairly submitted that this ground relating to disallowance of amortiza....
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.... the cited decisions relied upon by respective representative, we find that since the assessee is not the owner of the toll road, depreciation thereupon could not be allowed to him in terms of decision of Hon'ble Bombay High Court in North Karnataka Expressway Ltd. Vs. CIT [supra]. However, depreciation on the same as intangible assets being 'any other business or commercial rights of similar nature' as per Section 32 would be available to the assessee in terms of decision of Special Bench of the Tribunal, Hyderabad rendered in Progressive Constructions Ltd. Vs. ACIT [ITA No. 1845/Hyd/2014 order dated 14/02/2017]. Respectfully following the cited decision, we direct so. The Ld. AO is directed to re-compute the same and grant depreciation thereupon as intangible assets. The assessee is also directed to substantiate his claim in this regard. The grounds of assessee's appeal stands allowed for statistical purposes." 12. The Tribunal for the A.Y. 2005-06 to A.Y. 2007-08 in ITA.Nos. 3339/Mum/2011, ITA.No. 3340/Mum/2011 and 3341/Mum/2011 dated 30.04.2019 at Para Nos. 31 & 32 considered this issue observing as under: "31. We have heard both the parties, perused mate....
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....claim the depreciation on the toll road. After considering the cited decisions relied upon by respective representative, we find that since the assessee is not the owner of the toll road, depreciation thereupon could not be allowed to him in terms of decision of Hon'ble Bombay High Court in North Karnataka Expressway Ltd. Vs. CIT [supra]. However, depreciation on the same as intangible assets being 'any other business or commercial rights of similar nature' as per Section 32 would be available to the assessee in terms of decision of Special Bench of the Tribunal, Hyderabad rendered in Progressive Constructions Ltd. Vs. ACIT [ITA No. 1845/Hyd/2014 order dated 14/02/2017]. Respectfully following the cited decision, we direct so. The Ld. AO is directed to re-compute the same and grant depreciation thereupon as intangible assets. The assessee is also directed to substantiate his claim in this regard. The grounds of assessee's appeal stands allowed for statistical purposes." 32. In this view of the matter and consistent with view taken by the Co-ordinate Bench of the Tribunal in assessee's own case for earlier period, we restore this issue to the file of the AO and direct him to dec....
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....ng Officer. It is also submitted that for the A.Y. 2005-06 to A.Y. 2007-08 the Tribunal restored this matter to the file of the Assessing Officer. 18. On a perusal of the order of the Tribunal for the A.Y. 2008-09 and A.Y. 2009-10 we observe that the Tribunal restored this issue to the file of the Assessing Officer following its earlier order for the A.Y. 2004-05 and A.Y. 2005-06 to 2007-08 observing as under: - "11. Ld. Counsel for the assessee submitted that Ground No.3 of grounds of appeal is relating to disallowance U/s. 14A r.w.s 8D(2)(iii) of I.T. Rules in respect of interest and the Tribunal for the A.Y. 2004-05 in ITA No. 3203/Mum/2008 and ITA.No. 3156/Mum/2008 dated 28.06.2017 set-aside the matter to the file of the Assessing Officer. It is also submitted that for the A.Y. 2005-06 to A.Y. 2007-08 the Tribunal restored this matter to the file of the Assessing Officer. 12 On the other hand, Ld. DR strongly supported the orders of the authorities below. 13. We have heard the rival submissions and perused the orders of the authorities below and the decision of the Tribunal in assessee's own cases. For the A.Y. 2004-05 the Tribunal at Para No. 6.2 held as under: "6.2. ....
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....rd to quantification of average value of investment considering the investment made in group/associate concerns for strategic investment purpose and also the element of commercial expediency in making investment. We find that the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. vs CIT (supra) had considered the issue of disallowance of expenses incurred in relation to exempt income including interest in light of arguments of the assessees that strategic investments made in group/associate concerns for the purpose of holding controlling interest cannot be considered for determination of average value of investments and held that even though investment are made in group/associate concerns for the purpose of holding strategic investment disallowances contemplated u/s 14A of the Act triggers the moment the assessee earned exempt income. However, the Hon'ble Court has not touched the concept of commercial expediency and consideration of disallowance on actual dividend yielding investment. Further, various Hon'ble Court including the High Court of Bombay in number of cases had held that only investment which yield exempt income needs to be included in average value of investme....
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....iness purpose only. Alternatively, it was submitted that there is error in calculation of the Assessing Officer and if the correct method of calculation is applied the proportionate interest works out to only Rs..11 Crores and not Rs..30.01 Crores and requested the Ld. CIT(A) that if entire addition is not deleted Assessing Officer may be directed to rectify and compute the disallowance at Rs..11 Crores as calculated by the assessee. 43. Before us, Ld. Counsel for the assessee submitted that the loan was given to employee's welfare trust for the benefit of employees and therefore the said loan is for the purpose of business of the assessee and hence no disallowance is warranted. 44. On the other hand, Ld. DR strongly supported the orders of the authorities below. 45. We have heard the rival submissions and perused the orders of the authorities below. This aspect of the matter has been considered by the Ld. CIT(A) and sustained the disallowance to the extent of Rs..11 Crores as requested by the assessee observing as under: - "14.3. I have considered all the facts that appellant presented before me and I have examined evidences. The appellant had provided during appellate pro....
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.... by the Trust. 24. Ld. Counsel for the assessee further referring to page no. 84 of the Paper Book submitted that Income of IL&FS Investment Trust-I in F.Y.2010, had earned a Net Surplus of Rs..10.19 Crores. Further, it had an accumulated retained earning brought forward of earlier years of Rs..9.38 Crores, which pertains to income earned in earlier years. The accumulation of previous years' earnings and current year's net surplus was shown as "Earning available for Appropriation. (Rs..19.56 Crores). Referring to Page 80 of the Paper book, Ld. Counsel for the assessee submitted that while computing taxable income of the Trust, earning available for Appropriation amounting Rs..19.56 Crores was inadvertently considered as Income for FY 2010 instead of Net Surplus of Rs..10.19 Crores. Hence there is an excess income offered for tax amounting Rs..9.38 Crores and requested to allow reduction from taxable income of Rs..9.38 Crores offered excess for IL&FS Investment Trust-I. 25. Ld. Counsel for the assessee referring to Page 93 of Paper book submitted that Income of IL&FS Investment Trust-V in FY 2010, had earned a Net Surplus of Rs..4.37 Crores. The same was pertaining to Int....
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....Counsel for the assessee submitted that this ground has been dismissed by the Ld.CIT(A) observing that assessee has not pressed this issue in the course of the appellate proceedings. Ld. Counsel for assessee submitted that the instructions from the assessee are that assessee never made any submissions before the Ld.CIT(A) withdrawing its claim for deduction u/s. 36(1)(vii) of the Act. 30. Considering the submissions of the Ld. Counsel for assessee, we restore this issue to the file of the Ld.CIT(A) to examine the submissions of the assessee as to whether this ground was not pressed or not. If the assessee has not given in writing withdrawing this claim before the Ld.CIT(A), the Ld.CIT(A) may decide this issue on merits after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. 31. Ground No. 9 of grounds of appeal is relating to levy of interest u/s.234B of the Act and this ground is only consequential and need not be adjudicated. 32. Now we take up the appeal of the assessee in ITA.No. 7091/Mum/2014 for the A.Y. 2011-12. 33. The assessee has raised the following grounds in its appeal: - "1. On the facts & circumstance....
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....ppeal and the decision taken therein shall apply mutatis mutandis for this year also i.e. A.Y. 2011-12. We order accordingly. 35. Ground No. 2 of Grounds of appeal for the A.Y. 2011-12 is relating to depreciation on toll road. This ground is similar to Ground No.3 in the appeal for the A.Y. 2010-11 which has been decided while disposing off the appeal and the decision taken therein shall apply mutatis mutandis for this year also i.e. A.Y. 2011-12. We order accordingly. 36. Ground No. 3 of Grounds of appeal for the A.Y. 2011-12 is relating to notional interest income in respect of toll road from Madhya Pradesh State Industrial Development corporation. This ground is similar to Ground No.4 in the appeal for the A.Y. 2010-11 which has been decided while disposing off the appeal and the decision taken therein shall apply mutatis mutandis for this year also i.e. A.Y. 2011-12. We order accordingly. 37. Ground No. 4 of Grounds of appeal for the A.Y. 2011-12 is relating to disallowance of interest u/s. 14A of the Act. This ground is similar to Ground No.5 in the appeal for the A.Y. 2010-11 which has been decided while disposing off the appeal and the decision taken therein shall apply m....
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..... CIT(A) erred in deleting the accrued income of Rs..1,50,00,000/-from Toll Road without appreciating the fact that assessee having followed the mercantile system of accounting continues to hold the right to receive income from toll road. 5. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the club expenses of Rs. 18,48,238/-without appreciating the fact that the assessee has failed to prove that the expenses are incurred wholly and exclusively for the purpose of business." 6. "On the facts and in the circumstances of the case and in law, the LD. CIT(A) erred in deleting the disallowance of Rs. 6,60,80,000/-claimed u/s 36(l)(viii) without appreciating the fact that there has been reorganization of the business of the assessee and the eligible business to claim the said deduction has changed rendering it disallowable. 7. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in directing the AO to verify the income of Rs. 24,80,16,267/- accruing to the assesses as per AIR-ITS details which is erroneous and tantamount to the setting aside of the order and to this extent the order of the CIT(A) is pervers....
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.... which were not filed before the AO which led the AO to believe that the same expenditure, being capital in nature, was not allowable to the Assessee. The assessee provided the details thereof before Ld. CIT(A) who noted that the impugned expenses were in the nature of AMC Charges, internet access charges, lease line expenses, anti-virus expenses, charges for link facility, software charges for accounting package and therefore, being revenue in nature and hence allowable to the assessee. 20.1 The Ld. DR has contended that no details were filed by the assessee before Ld. AO and therefore, the assessee has rightly been saddled with impugned additions and Ld. CIT(A) erred in providing relief to the assessee. The Ld. AR placed reliance on the findings of Ld. CIT(A) and drew our attention to details of expenses as placed in Page No. 543 of the paper-book to support the contention that impugned expense, being revenue in nature, were allowable to the assessee and the Ld. CIT(A) provided relief to the assessee after due appreciation of the material facts. 20.2 We have considered the rival contentions and inclined to agree with the findings of Ld. CIT(A) who after appreciating the relev....
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....e Ld. AR for the assessee, at the time of hearing, submitted that this issue is covered in favour of the assessee by the decision of Hon'ble Bombay High Court in asessee's own case for AY 1997-98 in Income Tax Appeal No.2402 of 2013 where under identical set of facts, the Hon'ble High Court by following its earlier decision in the case of Otis Elevator Co. (India) Ltd. vs CIT (1992) 195 ITR 682 (Bom.) held that Club membership fee paid to the club is in the nature of revenue expenditure, which is allowable as deduction. 70. Having heard both sides and considered the material available on record, we find that Hon'ble Bombay High Court has considered an identical question of law in assessee's own case for AY 1997-98 and by following its earlier order in case of Otis Elevator Co. (India) Ltd. vs CIT (1992) 195 ITR 682 (Bom.) held that expenditure incurred on club facilities is revenue in nature, which is allowable deduction. Therefore, respectfully following the decision of the Hon'ble Bombay High Court in assesseee's own case, we direct the AO to delete the additions made towards disallowance of payments to Clubs." 51. We observe that Tribunal has taken similar vie for the A.Y. 20....
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....ial and non-banking company, and thus is nowhere engaged in directly providing long term finance as specified for the- eligible business in section 36(l)(viii). Therefore, the deduction claimed by the assessee of Rs. 63000000/- is disallowed and added to the income of the assessee. Penalty proceedings initiated separately for furnishing inaccurate particulars of income / concealment of income. (Addition: Rs. 63000000/-)" 69. On appeal the Ld. CIT(A) allowed the claim for deduction U/s.36(1)(vii) of the Act holding that the assessee fulfills the conditions of section 36(1)(viii) of the Act. 70. Before us the Ld. DR strongly placed his reliance on the order of the Assessing Officer and on the other hand Ld. Counsel for the assessee placed reliance on the order of the Ld. CIT(A). 71 We have heard the rival submissions and perused the orders of the authorities below. We observe from the order of the Ld.CIT(A) that considering the submission and evidences produced by the assessee the Ld.CIT(A) held that the assessee is entitled for deduction U/s.36(1)(vii) of the Act observing as under: - "13.1. The facts of the case were that the A.O. has disallowed the claim of the appellant....
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....s two conditions i.e. one is appellant should be specified entity and 2nd condition is extend loans for infrastructural facilities for a long term basis i.e. above 5 years. I had examined appellant's detailed submissions produced before me alongwith the loans extended by the appellant. The appellant had advanced loans for infrastructural facilities to group entities which are developing the infrastructural facilities in separate company. This separate company formed as group entity develops infrastructural facility and income from this accrues to this group entities. The appellant's extended loan for development of infrastructural facilities on long term basis which is the 2nd condition which appellant has to fulfill to claim sec.36(l)(viii). As appellant is fulfilling the condition of specified entity and extending the loan for infrastructural facilities though they are group companies which are themselves developing infrastructural facilities, the appellant is eligible for deduction u/s.36(l)(viii). Hence this ground of appeal is allowed." 72. On a careful perusal of the order of the Ld.CIT(A), we do not see any infirmity in the order of the Ld.CIT(A). The findings of....
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.... to 25% and peripherals to 15%. On appeal the Ld.CIT(A) allowed the claim of the assessee. 62. Ld. DR vehemently supported the orders of the Assessing Officer. Ld. Counsel for the assessee placed reliance on the order of the Ld.CIT(A). 63. We have heard the rival submissions, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A) we find that depreciation on computer and peripheral as claimed by the assessee was allowed by the Ld.CIT(A) considering the submissions of the assessee and following the decision of the Special Bench of Mumbai in the case of the DCIT v. Datacraft India Ltd [133 TTJ 337] observing as under: - "15.3 I have considered the facts and circumstances of the case. The appellant had installed ERP accounting software for the business which is directly helpful for the appellant's conducting of the business. The appellant accounting purpose for the depreciation of the software as per Rule 5 Part D(i) w.r.t. 02.04.2005, 60% depreciation is provided for the software. Hence, A.O. is directed to allow depreciation @ 60%. These grounds of appeal are allowed. I have considered the facts and circumstances of the case. Printers, sc....