Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd Kolkata v. Acit Circle 3 Kolkata Kolkata

In The Income Tax Appellate Tribunal C Bench Kolkata Before Honble Shri N V Vasudevan Jm Shri M B Alaganesh Am I T A No 2049 Kol 20 14 Assessment Year 2005 0 6 Primarc Story Venture Pvt Ltd Vs Acit Circle 3 Kolkata Formerly Tiger Commerce Pvt Ltd Pan Aabct 8460 B Appellant Respon Dent For The Appellant Shri Manish Tiwa Ri Ar For The Revenue Shri David Z Chowngthu Addl Cit Sr Dr Date Of Hearing 21 11 2017 Date Of Pronouncement 06 12 2017 Order Per M Balaganesh Am 1 This Appeal By The Assessee Arises Out Of The Order Of The Learned Commissioner Of Income Tax Appeals I Kolkata In Short The Ld Cita In Appeal No 668 Cit A I C 3 2007 08 Dated 12 08 2014 Against The Order Pa Ssed By The Acit Circle 3 Kolkata In Short The Ld Ao Under Section 143 3 Of The Income Tax Act 1961 In Short The Act Dated 31 12 2007 For The Assessm Ent Year 2005 06 2 The First Issue To Be Decided In This Appeal Is As To Whether The Ld Cit A Was Justified In Confirming The Disallowance Of Depreci Ation In The Sum Of Rs 8 20 000 By The Ld Ao In The Facts And Circumstances Of The C Ase 2 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 2 3 The Brief Facts Of This Issue Is That The Assess Ee Purchased A Showroom Comprising Of Land And Building At No 8 Elgin Road On Outright Basis For Rs 3 28 00 000 The Assessee Claimed Depreciation On The Entire Sum Of Rs 3 28 00 000 At The Rate Applicable To Building The Ld Ao Sought For Bifurc Ation Of The Total Consideration Towards Land And Building Separately In View Of Fac T That The Assessee Is Not Entitled For Depreciation On Land Portion The Assessee Replied That No Such Bifurcation Is Possible In View Of Fact That The Entire Showroom Was Purchased By The Assessee On Outright Basis This Reply Not Being Satisfactory The Ld Ao Attri Buted 50 Of The Consideration Amounting To Rs 1 64 00 000 Towards Land And Dis Allowed Depreciation Thereon At 5 In The Sum Of Rs 8 20 000 1 64 00 000 5 In The Assessment This Action Was Upheld By The Ld Cit A Aggrieved The Assessee Is In Appeal Before Us On The Following Grounds 1 I That On The Facts And Circumstances Of The Cas E Ld Cit A Has Erred In Relying The Judgment In Cit Vs Alps Theatre 65 Itr 377 Sc Since The Assessee Purchased Showroom At 8 Elgin Road On Outright Bas Is And The Purchased Consideration Did Not Show Any Bifurcation For Land Cost Ii That On The Facts And Circumstances Of The Case Ld Cit A Is Wrong In Confirming The Action Of The Assessing Officer Who Disallowed Rs 8 20 000 Towards Depreciation Allowance On Showroom At 8 El Gin Road 4 We Have Heard The Rival Submissions We Find Tha T The Ld Ar Apart From Reiterating The Submissions Made Before The Lower Authorities P Laced Reliance On The Decision Of The Co Ordinate Bench Decision Of This Tribunal In The Case Of Ito Vs M S Shree Banke Behari Enterprises Pvt Ltd In I T A No 350 Kol 2 013 For Assessment Year 2009 10 Dated 26 08 2016 In Support His Arguments We Find The Fact Before This Tribunal In The Aforesaid Case Are As Under 8 It Was Observed By The Ao That Column No 14 An D Annexure A Are Missing From The Tax Audit Report With Regard To The Depreciatio N On Demand Assessee Has 3 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 3 Provided The Annexure Showing The Details Of Deprec Iation Claimed By It On Two Properties I E Ownership Flat 5 And Ownership Shop 10 Here Ao Observed That Depreciation Has Been Claimed On Land As Well Which Is Not Allowed Assessee Submitted That Price Paid Was For Specific Area Of Built Up Space Nothing Was Paid Specifically For Land And Thus Depreciation Is Allowed On Entire Value However The Ao Relying On The Judgment Of Honble Supreme C Ourt In The Case Of Cit Vs Aips Theatre 65 Itr 377 And Itat Bench Delhi In The Case Of Dcit Vs Capital Car Private Limited Reported 114 Itd 286 Delhi Has Assumed Th E One Third Value Of Property As Land And Thus Disallowed The Proportionate Deprecia Tion On Both The Property Amounting To Rs 2 65 903 114648 00 Plus 1 51 25 5 It Has Been Held By This Tribunal As Under 11 We Have Heard The Rival Contentions And Peruse D The Materials Available On Record At The Outset We Find That Assessee Claime D To Have Made The Investment In The Aforesaid Properties By Paying Composite Amount Ho Wever This Fact Has Not Been Brought On Record By Ld Ar Whether It Was Composit E Payment For The Land Building In The Instant Case The Ao Has Relied In The Order Of Cit Vs Aips Theatre 65 Itr 377 And Dcit Vs Capital Car Private Limited Reported S Upra For Disallowing The Depreciation However In Our View The Facts Were Di Fferent In That Case Because The Value For The Building And Land Was Separately Avai Lable But This Is No So In The Present Case The Details Of The Honble Supreme Court Deci Sion Stand As Under This Question Arose Out Of The Following Facts Th E Respondent M S Alps Theatre Hereinafter Referred To As The Assessee Carries On Business As Exhibitor Of Films The Ito Initiated Proceedings Under S 34 1 B Of The Indian It Act 1922 On The Ground That In The Original Assessment Depreciation Was Al Lowed On The Entire Cost Of Rs 85 091 Shown As Cost Of The Building Which Included Rs 12 000 As Cost Of Land The Ito By His Order Dt 22nd Feb 1959 Recomputed T He Depreciation Excluding Cost Of Land The Assessee Appealed To The Aac The Aac Uph Eld The Order Of The Ito The Assessee Then Appealed To The Tribunal Which Accept Ed The Appeal In Accepting The Appeal It Observed As Follows You Cannot Conceive Of A Building Without The Land Beneath It It Is Not Possible To Conceive Of A Building Without A Bottom What S 10 2 Vi Of The Act Says Is That Depreciation Will Be Allowed On The Bu Ilding The Word Building Itself Connotes The Land Upon Which Something Has B Een Constructed It Was Therefore Wrong On The Part Of The Authorities Bel Ow To Exclude The Valve Of The Land Upon Which Some Construction Was Made The Tru E Meaning Of The Word Building Means The Land Upon Which Some Construct Ion Has Been Made The Two Must Necessarily Go Together From The Above Details It Is Clear That The Facts A Re Different With The Instant Case Similar Facts Were There In The Case Of Dcit Vs Cap Ital Car Private Limited Reported However We Find That On Similar Facts Where The Rat Es Of The Building Are Composite With The Land Then The Hon Ble Tribunal Of Bangalor E Has Decided The Issue In Favour Of 4 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 4 The Assessee In The Case Of Cit Vs Rajesh Exports Ltd 2006 9 Sot 28 The Relevant Extract Is Reproduced Below Where The Assessee Purchase A Building And The Pur Chase Price As Per Sale Deed Is A Composite One Sale Deed Does Not Indicate The Pric Es Of Land And Building Separately Then No Distinction At Least In The Consideration P Aid To The Vendor Can Be Made And The Entire Amount Is Qualified For Depreciation Howeve R 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 Depreciation Is Availabl E Only On The Building In The Instant Case The Ld Ar Has Not Brought Pro Duced The Details Of The Payment Of The Composite Payment But He Requested To Restore The Issue To The Ao For Verification And The Ld Dr Raised No Objection If The Same Is R Estored To The Ao Therefore In The Interest Of Justice And Fair Play We Restore This M Atter To The File Of Ao With The Direction That In Case The Assessee Has Made The Composite Pa Yment For The Purpose Of Aforesaid Properties Then The Depreciation As Per The Order Of Ld Cit A Should Be Allowed Hence This Ground Of Revenues Appeal Is Allowed F Or Statistical Purpose Respectfully Following The Same We Deem It Fit And Appropriate To Remand This Issue To The File Of The Ld Ao With Direction To The Assess Ee To Furnish The Evidence In Support Of Bifurcation Of Consideration Towards Land And Build Ing We Agreed With The Fact That The Assessee Is Not Entitled For Depreciation On The La Nd Portion Hence Bifurcation Of The Consideration Into Land And Building Separately Bec Omes Necessary For Which Purpose We Are Remanding This Issue To The File Of Ld Ao Accordingly Ground No 1 Raised By The Assessee Is Allowed For Statistical Purposes 5 The Next Issue To Be Decided In This Appeal Is A S To Whether The Ld Cit A Was Justified In Confirming The Disallowance Of Rs 76 732 And Rs 40 000 Made U S 40 A Ia Of The Act In The Facts And Circumstances In The Case 6 The Brief Facts Of This Issue Is That The Ld Ao Observed That The Assessee Had Made Payment Of Rs 76 732 To M S Crossword Book Store S Ltd And Rs 40 000 To The Times Internet Without Deduction Of Tax At Source A Nd Accordingly Disallowed The Same U S 40 A Ia Of The Act Before The Ld Cit A The Assessee Pleaded That The Assessee Is Engaged In The Business Of Real Estate And Apart Fr Om This It Has A Franchisee License Of 5 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 5 The Book Stores Crossword Which Is Located At No 8 Elgin Road Kolkata It Was Pleaded That This Amount Of Rs 76 732 Represents Crossword Book Reward Programme Card Printing Charges On Which No Tax I S Liable To Be Deducted U S 194 C Of The Act In Other Words It Was Pleaded That The Sa Me Represents Purchase Of Printing Cards And Not Printing Charges And Hence Is Not Lia Ble For Deduction Of Tax At Source 7 With Regard To Payment Of Rs 40 000 To The T Imes Internet It Was Submitted That The Aggregate Payments Made Thereon Was Less Than 5 0 000 During The Year And There Was No Single Payment Which Was Made More Than Rs 20 000 In A Day Accordingly No Deduction Of Tax At Source U S 194 C Of The Act I S Warranted Thereon 8 The Ld Cit A Observed That No Details Of The N Ature Of Payments In Respect Of Rs 76 732 Together With Supporting Evidences Were Su Bmitted By The Assessee Except Making An Oral Statement Thereon Accordingly He C Onfirmed The Disallowance Of Rs 76 732 Made U S 40 A Ia Of The Act Similarly Wi Th Regard To Payment Of Rs 40 000 To The Times Internet He Observed That The Assessee Has Not Established With Evidences That Provision Of 194 C Of The Act Are Not Applicabl E To This Payment Accordingly He Upheld The Disallowance Made U S 40 A Ia Of The Act Aggrieved The Assessee Is In Appeal Before Us On The Following Grounds 2 A That On The Facts And Circumstances Of The Cas E Ld Cit A Is Wrong In Confirming Disallowance Of Rs 76 732 U S 40 A Ia Without Appreciating The Explanation Regarding Non Deduction Of Tds From Pay Ments To M S Crossword Bookstore Ltd B That On The Facts And Circumstances Of The Case Ld Cit A Is Wrong In Confirming Disallowance Of Rs 40 000 U S 40 A Ia Without Appreciating The Explanation Regarding Non Deduction Of Tds From Pay Ment To M S Times Internet 6 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 6 9 We Have Heard The Rival Submissions We Find That The Ld Ar Reiterated The Submissions Made Before Lower Authorities Alternat Ively Ld Ar Pleaded That This Issue Be Remanded To The File Of The Ld Ao For Examinatio N In The Light Of Second Proviso To Section 40 A Ia Of The Act To The Effect That In Ca Se If The Payees Have Included This Subject Mentioned Payments In Their Respective Retu Rns Then The Assessee Should Not Be Invited With Disallowance U S 40 A Ia Of The Act I T Was Further Pleaded That The Amendment Brought In Thereon In Section 40 A Ia Sec Ond Proviso Of The Finance Act 2012 Has Been Held To Be Retrospective In Operation By The Decision Of Honble Delhi High Court In The Case Of Ansal Land Mark Township Pvt Ltd Reported In 377 Itr 635 In Response To This Argument The Ld Dr Fairl Y Agreed For Setting Aside This Issue To The File Of The Ld Ao Accordingly We Remand This Issue To The File Of The Ld Ao To Decide The Same In The Light Of The Second Proviso To Section 40 A Ia Of The Act And In The Light Of Decision Rendered By The Honble Delhi Hig H Court Supra Accordingly Ground No 2 Raised By The Assessee Is Allowed For Statistical Purposes 10 Ground No 3 Raised By The Assessee Is General In Nature And Does Not Require Any Specific Adjudication 11 In The Result The Appeal Of The Assessee Is Al Lowed For Statistical Purposes Order Pronounced In The Court On 06 12 2017 Sd Sd N V Vasudevan M Balaganesh Judicial Member Accountant Member Dated 06 12 2017 Sb Sr Ps 7 Ita No 2049 Kol 2014 Tiger Commerce Pvt Ltd Now Primarc Story Venture Pvt Ltd A Yr 2005 06 7 Copy Of The Order Forwarded To 1 Tiger Commerce Pvt Ltd Now Primarc Story Vent Ure Pvt Ltd 6 A Elgin Road Kolkata West Bengal 700020 2 Acit Circle 3 P 7 Chowringhee Square Kolkata 700069 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