Dcit Cir 12 2 Kolkata Kolkata v. M S Vantage Advertising Pvt Ltd Chennai

In The Income Tax Appellate Tribunal A Bench Kolkata Before Honble Shri Veeravalli Durga Rao Jm S Hri M Balaganesh Am I T A No 1320 Kol 20 15 Assessment Year 2008 0 9 Dcit Circle 12 2 Kolkata Vs M S Vantage Advertising Pvt Ltd Pan Aabcv 1202 B Appellant Respondent For The Appellant Shri Sallong Yad En Addl Cit For The Revenue Shri P Jhunjhunwala Ad Vocate Date Of Hearing 04 12 2017 Date Of Pronouncement 08 12 2017 Order Per M Balaganesh Am 1 This Is An Appeal Directed Against The Order Pas Sed By The Learned Commissioner Of Income Tax Appeals 4 Kolkata In Short The Ld C Ita In Appeal No 1177 Cit A 4 Circle 12 Kol 14 15 Dated 04 08 2015 Against The Order Passed By The Dcit Circle 12 Kolkata In Short The Ld Ao Under Section 14 3 3 Of The Income Tax Act 1961 In Short The Act Dated 03 03 2014 For The Assessm Ent Year 2008 09 2 The Only Issue To Be Decided In This Appeal Of T He Revenue Is As To Whether The Ld Cit A Was Justified In Directing The Ld Ao To All Ow 100 Depreciation On Hoarding Structures In The Facts And Circumstances Of The Ca Se 3 The Brief Facts Of This Issue Is That The Ld Ci T Had Passed An Order U S 263 Dated 03 08 2012 Wherein He Had Directed The Ld Ao To Ma Ke Enquiries With Regard To 100 Depreciation Claimed By The Assessee On Hoarding S Tructures The Ld Ao While Giving 2 Ita No 1320 Kol 2015 M S Vantage Advertising Pvt Lt D A Yr 2008 09 2 Effect To The Said Order Of The Ld Cit Passed An Order U S 263 251 143 3 Of The Act On 03 03 2014 Wherein He Disallowed The Excess Deprec Iation On Hoarding Structures Amounting To Rs 4 34 51 894 4 The Ld Cit A Duly Appreciated The Contentions Of The Assessee And Directed The Ld Ao To Delete The Disallowance Made On Account Of Ex Cess Depreciation On Hoarding Structures Aggrieved The Revenue Is In Appeal Bef Ore Us On The Following Grounds 1 In The Facts And Circumstances Of The Case In La W The Ld Cit A Has Erred In Allowing 100 Depreciation On Hoarding Structures 2 In The Facts And Circumstances Of The Case In La W The Ld Cit A Has Erred In Overlooking The Fact That In The Process Of Earning The Advertisement Income The Assessee Installed Advertisement Boxes And Fixtures As Per The Agreement With The Concerned Local Authority Which Constitutes Th E Hoardings Structures Which Had The Enduring Benefit And Clearly Fell Under The Block Of Asset Plant And Machinery On Which Depreciation Was Allowable 10 3 In The Facts And Circumstances Of The Case In La W The Ld Cit A Has Erred In Accepting That Expenses Incurred With Respect To Th E Hoarding Structures Will Have To Be Treated As Revenue In Nature As Per Sec 37 1 Of The Act Whereas Since Many Previous Years And Subsequent Years Th E Assessee Has Been Claiming Depreciation On Hoarding Structures For Being The S Ame As Capital Asset And The Higher Forum Of Appeal Has Given Their Verdict Acco Rdingly 4 The Appellant Craves Leave For Leave To Add Alte R Modify The Grounds Of Appeal 5 We Have Heard The Rival Submissions The Ld Ar Before Us Stated That Against The Revision Order Passed By The Ld Cit U S 263 Of The Act The Assessee Preferred An Appeal Before This Tribunal And This Tribunal Had Disposed Off The Same In Favour Of The Assessee By Quashing The Revision Order And Accordi Ngly Stated That The Order Passed By The Ld Ao Pursuant To Section 263 Directions Of Th E Ld Cit Is To Be Treated As Infructuous In Response To This The Ld Dr Agreed To The Same We Find That This Tribunal In I T A No 2044 Kol 2013 Had Held As Und Er 3 Ita No 1320 Kol 2015 M S Vantage Advertising Pvt Lt D A Yr 2008 09 3 11 We Have Given A Very Careful Consideration To The Rival Submissions As We Have Already Seen Above That The Facts Of The Case Go To Show That The Ao Made Enquiries On This Issue And After Being Satisfied With The Claim Of The Assessee Allowed The Cal Of Depreciation On Hoardings At 100 Order Of The Ao Was In Tune With The Order Of The Tribunal In The Past Which Has Been Accepted By The Revenue In Fact Even For The Subsequent A Y 2009 10 The Issue Was Before The Tri Bunal And It Had Decided In Favour Of The Assessee In Such Circumstances We Are Of Th E View That The Decision Of The Honble Calcutta High Court In The Case Of Russel P Roperties Pvt Ltd Supra Will Be Applicable And The Cit Could Not Have Invoked His J Urisdiction U S 263 Of The Act The Facts Of The Case Before The Honble Calcutta High Court Was The Tribunal In The Earlier Ay Of An Assessee Held That Maintenance And Service Charges Received By An Assessee Were Assessable Under The Head Business And Not A Ssessable Under The Head Property Following The Decision Of The Tribunal The Ito In A Subsequent Ay Proceeded To Assess Such Income Under The Head Bus Iness The Cit In Exercise Of His Powers U S 263 Of The Act Felt That Such Income Sho Uld Have Been Assessed To Tax Under The Head Property As In Respect Of The Prior Year S Findings Reference Application Was Pending Before The High Court The Honble High Cou Rt Had To Decide As To Whether In Those Circumstances Can It Be Said That The Ito Wh O Had Accepted The Tribunals Decision As Correct And Applied That Decision To Th E Facts Of This Case Acted Erroneously And His Such Action Caused Prejudice To The Interes Ts Of The Revenue The Honble High Court Held That As A Matter Of Fact Whenever There Is A Decision Of The Higher Appellate Authority The Subordinate Authorities Are Bound To Follow The Said Decision If Judicial Discipline Is To Be Maintained In The Aforesaid Vi Ew Of The Matter The Honble Court Held That The Conditions For Exercise Of The Power Under S 263 Namely That There Must Be Material For The Cit To Consider That The Order Passed By The Ito Was Erroneous In So Far As It Is Prejudicial To The Interests Of The Revenue Were Not Fulfilled The Proposed Exercise Of The Power Under S 263 Was Held To Be I Llegal And Without Jurisdiction 12 With Regard To The Policy Guidelines On Displa Y Of Advertisement Pointed Out By The Ld Dr As Rightly Contended By The Ld Counsel For The Assessee This Was Only A Draft Policy 2009 In Any Event The Cit In The Impugned O Rder Has Not On The Basis Of Any Material Available Before Him Come To A Conclusion That The Hoardings On Which The Assessee Claimed Depreciation At 100 Were Structur Ally Sound So As To Be Regarded Any Building The Decision Of The Itat Mumbai Bench In The Case Of Asian Advertising Supra Is A Case Where The Question Was Whether Ho Ardings Constitute Building Or Plant In Our View This Cannot Be Said To Be A Prec Edent In So Far As The Issue Involved In The Present Case Is Concerned We Are Also Of The V Iew That The Cit In Exercise Of His Powers U S 263 Of The Act Has To Come To A Definite Conclusion As To How The Order Of The Ao Was Erroneous He Cannot Set Aside The Orde R Of Ao And Direct An Enquiry On The Question Whether Hoarding Structure Would Be In The Nature Of Purely Temporary Erection In Other Words The Cit Could Invoke The J Urisdiction U S 263 Of The Act Only On A Finding That Hoardings Were Not Purely Temporary Erection And Such Finding Has To Be Sustainable In Law It Is Only Then The Cit Can Mak E Out A Case That Order Of Ao Was Erroneous In The Present Case The Cit Has Not Give N Such A Finding Even On This Basis We Are Of The View That Order U S 263 Of The Act Ca Nnot Be Sustained 4 Ita No 1320 Kol 2015 M S Vantage Advertising Pvt Lt D A Yr 2008 09 4 13 For The Reasons Given Above We Hold That The O Rder Of Ao Which Was Sought To Be Revised In The Impugned Order Of Cit Was Not Errone Ous Therefore Order U S 263 Of The Act Cannot Be Sustained The Same Is Hereby Quashed And The Appeal Of The Assessee Is Allowed In View Of The Fact That Section 263 Proceedings Ha D Been Quashed By This Tribunal As Stated Supra The Giving Effect Order Pursuant To Section 263 Order As Rightly Pointed Out By The Ld Ar Becomes Infructuous Hence We D Ismiss The Appeal Of The Revenue On This Ground Without Going Into Merits Of The Add Ition Made In The Assessment 6 In The Result The Appeal Of The Revenue Is Dism Issed Order Pronounced In The Court On 08 12 2017 Sd Sd Veeravalli Durga Rao M Balaganesh Judicial Member Accountant Member Dated 08 12 2017 Sb Sr Ps Copy Of The Order Forwarded To 1 Dcit Circle 12 2 Kolkata Aayakar Bhawan P 7 6 Th Floor Chowringhee Square Kolkata 700069 2 M S Vantage Advertising Pvt Ltd C 56 First A Venue Anna Nagar East Chennai 600102 3 C I T A Kolkata 4 C I T Kolkata 5 Cit Dr Kolkata Benches Kolkata True Copy By Order Senior Privat E Secretary Head Of Office D D O Itat Kolkata Benche S