DCIT 8(1), MUMBAI v. CRISIL LTD, MUMBAI

ITA 8372/MUM/2010 | 2006-2007
Pronouncement Date: 11-04-2014 | Result: Dismissed

Appeal Details

RSA Number 837219914 RSA 2010
Assessee PAN AAACT3151E
Bench Mumbai
Appeal Number ITA 8372/MUM/2010
Duration Of Justice 3 year(s) 4 month(s) 9 day(s)
Appellant DCIT 8(1), MUMBAI
Respondent CRISIL LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 11-04-2014
Date Of Final Hearing 30-12-2013
Next Hearing Date 30-12-2013
Assessment Year 2006-2007
Appeal Filed On 02-12-2010
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI .. . . . . BEFORE SHRI P.M. JAGTAP AM AND DR. S.T.M. PAVALAN JM ./ I.T.A. NO.8372/ MUM/2010 ( / ASSESSMENT YEAR : 2006-2007 D CIT 8 ( 1 ) ROOM NO. 210 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 20. / VS. M/S CRISIL LTD. 121/122 CRISIL HOUSE ANDHERI-KURLA ROAD ANDHERI (EAST) MUMBAI 400 093. ./ PAN :AAACT3151E ( % / APPELLANT ) .. ( &'% / RESPONDENT ) A PPELLANT BY SHRI RAJESH KUMAR R E SPONDENT BY : SHRI DHANESH BAFNA * / DATE OF HEARING : 07-04-2014 * / DATE OF PRONOUNCEMENT : 09-04-2014 [ / O R D E R PER P.M. JAGTAP A.M . : .. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - 16 MUMBAI DATED 09-09-2010 AND THE SOLITARY ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEPRECIATION ON THE PROPERTY O WNED BY ITS SUBSIDIARY M/S CRISIL PROPERTIES LTD. IS RAISED THEREIN BY WAY OF THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEPREC IATION ON PROPERTY AT ANDHERI NOT OWNED BY THE ASSESSEE BUT OWNED BY M/S. CRISIL PROPERTIES LTD. A SEPARATE ENTITY ASSESSABLE TO I NCOME TAX IRRESPECTIVE OF THE FACT THAT IT HAD BECOME A 100% SUBSIDIARY OF THE ASSESSEE COMPANY. ITA 8272/M/10 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING DEPRECIATION ON INVESTM ENT AND SHARES IN CO-OP SOCIETIES WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THE ASSESSEE COMPANY ACQUIRED 100% SHARE HOLDING OF ANO THER COMPANY NAMED CRISIL PROPERTIES LTD. DUE TO WHICH CRISIL P ROPERTIES LTD. BECAME 100% SUBSIDIARY OF THE ASSESSEE COMPANY. EVE N THOUGH CRISIL PROPERTIES LTD. BECAME 100% SUBSIDIARY OF THE ASSES SEE COMPANY IT STILL MAINTAINED A SEPARATE STATUS AS A LEGAL PERSO N AS A COMPANY UNDER THE COMPANY LAW AND ALSO FOR INCOME TAX PURPO SES M/S. CRISIL PROPERTIES LTD. CONTINUED TO BE A SEPARATE E NTITY ASSESSABLE TO INCOME TAX IRRESPECTIVE OF THE FACT THAT IT HAD BEC OME A 100% SUBSIDIARY OF THE ASSESSEE CRISIL LIMITED. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT RATING ADVISORY AND R ESEARCH AND INFORMATION SERVICES. THE RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION WAS FILED BY IT ON 30-10-2006 DECLARING TOTAL INCOME OF RS. 36 14 4 0 443/-. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE AMOUNT OF RS. 12 CR ORES INVESTED IN THE SHARES OF ITS SUBSIDIARY COMPANY M/S CRISIL PROPERT IES LTD. THE EXPLANATION OFFERED BY THE ASSESSEE IN THIS REGARD BEFORE THE A .O. WAS THAT THE SAID INVESTMENT APPEARING IN THE FORM OF SHARES WAS ACTU ALLY MADE IN THE BUILDING OWNED BY M/S CRISIL PROPERTIES LTD. AND DEPRECIATIO N ACCORDINGLY WAS CLAIMED ON THE SAID INVESTMENT REPRESENTING BUILDINGS. IT WAS ALSO BROUGHT TO THE NOTICE OF THE A.O. THAT A SIMILAR CLAIM OF THE ASSE SSEE FOR DEPRECIATION WAS ALLOWED BY THE TRIBUNAL CONSISTENTLY IN THE EARLIER YEARS I.E. ASSESSMENT YEARS 2002-03 TO 2005-06. SINCE THE SAID DECISION OF THE TRIBUNAL RENDERED IN THE EARLIER YEARS IN ASSESSEES OWN CASE WAS NOT ACCEPT ED BY THE DEPARTMENT AND APPEALS U/S 260-A WERE PREFERRED BEFORE THE HONBLE BOMBAY HIGH COURT THE ASSESSEES CLAIM FOR DEPRECIATION ON INVESTMENT MAD E IN THE SHARES OF CRISIL PROPERTIES LTD. REPRESENTING BUILDING WAS DISALLOWE D BY THE A.O. IN THE YEAR UNDER CONSIDERATION. ON APPEAL THE LD. CIT(A) DEL ETED THE SAID DISALLOWANCE MADE BY THE A.O. FOLLOWING THE ORDERS OF THE TRIBUN AL IN ASSESSES OWN CASE FOR THE EARLIER YEARS I.E ASSESSMENT YEARS 2002-03 TO 2005-06. AGGRIEVED BY ITA 8272/M/10 3 THE ORDER OF THE LD. CIT(A) THE REVENUE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES SIMILAR ISSUE INVOLVED IN THIS APPE AL OF THE REVENUE IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ;YEARS. THE COPIES OF THE SAID ORDERS ARE PLACED ON RECORD BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE AND A PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL F OR THE FIRST TIME IN A.Y. 2002-03 AND THE SAME WAS DECIDED IN FAVOUR OF THE A SSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARA 13 & 14 OF ITS ORDER DTD. 13- 1-2009 PASSED IN ITA NO. 6860/MUM/2005:- 13. WE HAVE VERIFIED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THEE IS NO DISPUTE THAT THE ASSESSEE ACQUIRED THE DEFACTO RIGHT TO USE THE BUILDING ON ACCOUNT OF ITS SHARE HOLDING IN M/S CRISIL PROPERTY PVT. LTD. IN THE ART ICLE OF ASSOCIATION OF M/S. CRISIL PROPERTIES PVT. LTD. CLAUSE NO.7 RUNS AS UNDER:- 7. THE COMPANY HAS CONSTRUCTED A BUILDING CALLED PINNACLE CHAMBERS CONSISTING OF A BASEMENT FOR PARKING OF CARS GROUND FLOOR FOR TWO SHOWROOM WITH ATTACHED BASEMENT FOR STORAGE AND SIX FLOOR WITH TWO OFFICE ON EACH F LOOR SITUATED AT PLOT NO.121/122 ANDHERI KURLA ROAD ANDHERI (EAST). MUMBAI. THE ENT IRE COST OF DEVELOPMENT OF THE SAID PROPERTY HAS BEEN FINANCED FROM CONTRIBUTIONS RECEIVED FROM THE EQUITY HOLDERS OF THE COMPANY. THE HOLDING OF SUCH NUMBER OF EQUITY SHARES IN THE CAPITAL OF THE COMPANY AS MAY BE DETERMINED BY THE BOARD OF DIRECTORS OF THE COMPANY FROM TIME TO TIME SHALL CONFER ON THE HOLDER THEREOF THE RIGHT TO USE AND OCCUPY E ITHER BY HIMSELF OR THROUGH HIS NOMINEE OR NOMINEES TO BE PREVIOUSLY APPROVED BY TH E BOARD OF DIRECTORS A LARGE OR SMALL OFFICE UNIT AND/OR COVERED AND/OR OPEN PARKIN G SPACE IN THE SAD BUILDING OF THE COMPANY AND IN SUCH OTHER PROPERTIES AT SUCH PLACE S AS THE COMPANY MAY HOLD AND UPON THE TERMS AND CONDITIONS AS SET OUT IN THE APP ENDIX I HERETO WHICH TERMS AND CONDITIONS THE BOARD OF DIRECTORS SHALL BE ENTITLED FROM THE TIME TO TIME TO VARY. 14. THE APPENDIX MENTIONED THEREIN GIVES THE DETAIL S OF THE RIGHTS HELD BY THE MEMBERS OF M/S. CRISIL PROPERTIES SOCIETY. ASSESSEE S CLAIM IS THAT BEING THE DEFACTO OWNER OF THE BUILDING DEPRECIATION OUGHT HAVE BEEN ALLOWED TO IT. IT IS NOT DISPUTED BY THE REVENUE THAT THERE WAS NO CLAIM OF DEPRECIATION BY M/S. CRISIL PROPERTIES LTD. ON ITA 8272/M/10 4 THIS PARTICULAR BUILDING. THERE IS ALSO NO DISPUTE THAT ASSESSEE WAS USING THIS PREMISES FOR THE PURPOSE OF ITS BUSINESS. SIMILAR ISSUE HAD COME UP BEFORE THE CO-ORDINATE BENCH IN DEEPAK FERTILIZERS AND PETROCHEMICALS CORPORATIO N LTD. CASE (SUPRA). THERE ALSO AO HAD OBSERVED THAT PURCHASES OF SHARES COULD NOT BE EQUATED WITH PURCHASE OF PROPERTY. THE ARTICLES OF ASSOCIATION HAD SIMILAR STIPULATION S THAT THE SHARE HOLDERS WOULD HAVE EXCLUSIVE RIGHT TO USE AND OCCUPY THE PREMISES IN T HE BUILDINGS SPECIFIED THEREIN. IN THE ARTICLES OF ASSOCIATION OF M/S. CRISIL PROPERTIES L TD. SIMILAR STIPULATION REGARDING HOLDING OF EQUITY SHARED CONFERRING RIGHT TO USE AN D OCCUPY AREAS WITHIN THE BUILDING HAS BEEN CLEARLY MENTIONED. BUT FOR SUCH SHARE HOLD ING ASSESSEE WOULD NOT HAVE HAD THE RIGHT OVER SUCH BUILDINGS USED BY IT. THUS THE ESSENTIAL CONDITION THAT IS REQUIRED TO BE SATISFIED UNDER SECTION 32 FOR A CLAIM OF DEPREC IATION HAS BEEN SATISFIED. HONBLE KARNATAKA HIGH COURT IN THE CASE OF SURANA PHARMACE UTICALS PVT. LTD. CASE SUPRA HELD AS UNDER:- ANY ONE IN POSSESSION OF PROPERTY IN HIS OWN TITL E EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THERE FROM AN D HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDING FOR THE PURPOSE OF SECTION 32(1) OF THE INCOME-TAX ACT 1961 THOUGH A FORMAL DEED OF TI TLE MAY NOT HAVE BEEN EXECUTED AND REGISTERED. RESPECTFULLY FOLLOWING THESE DECISIONS WE ARE OF T HE OPINION THAT ASSESSEE HAS TO SUCCEED IN ITS CLAIM FOR DEPRECIATION. GROUND NO.3 OF THE ASSESSEE THEREFORE STANDS ALLOWED. 4. THE ABOVE ORDER FOR A.Y. 2002-03 HAS BEEN SUBSEQ UENTLY FOLLOWED BY THE TRIBUNAL TO DECIDE THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEARS 2003-04 2004-05 AND 2005-06 VIDE ITS ORDER DATED 19-3- 2009 22-7-2009 AND 31-8-2009 PASSED IN ITA NO. 159 6/MUM/06 ITA NO. 574/MUM/2008 & ITA NO. 5258/MUM/2008 RESPECTIVELY. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF ASSESSMENT YEARS 2002-03 2003-04 AND 2004-05 WE RESPECTFULLY FOLLOW THE ORDERS OF T HE TRIBUNAL FOR THE SAID YEARS AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT( A) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON INVESTMENT MADE IN M/S CRISIL PROPERTIES LTD. REPRESENTING BUILDING. ITA 8272/M/10 5 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL 2014. . * 0 1 11-04-2014 * SD/- -SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 11-4-2014 [ .../ RK SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. 4 () / THE CIT(A)16 MUMBAI. 4. 4 / CIT -8 MUMBAI 5. 7 &9 9 / DR ITAT MUMBAI C BENCH 6. ; / GUARD FILE. / BY ORDER '7 & //TRUE COPY// / ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI