2017 (9) TMI 1145 - AT - Income Tax

Allowing depreciation at a rate of 100% on Hoardings Structure - Held that - As in assessee s own case for A.Y.2009-10 and 2010-11 2015 (5) TMI 682 - ITAT KOLKATA the assessee is entitled for depreciation on hoardings. which are temporary structures, and CIT(A) has rightly allowed the same. This common issue of both the appeals of revenue is dismissed. Allowing the deduction claimed by the assessee u/s 80IA - Held that - As in assessee s own case for A.Y.2009-10 and 2010-11 2015 (5) TMI 682 - ITAT KOLKATA assessee claimed deduction under section 80-IA in the assessment year 2004-05, i.e., that was the initial assessment year and in that year the matter regarding the claim of deduction has become final for the reason that the hon ble Calcutta High Court has confirmed the allowance of deduction and the Revenue has not carried the matter before the hon ble Supreme Court. Whereas the Revenue has referred to the decision of hon ble Karnataka High Court in the case of CIT v. Skyline Advertising P. Ltd. 2015 (5) TMI 669 - KARNATAKA HIGH COURT but that cannot be considered as precedent because the jurisdictional High Court has taken a view in favour of the assessee and that also in the assessee s own case. That means the initial assessment year i.e., 2004-05, once the claim of deduction in respect to pre-requisite conditions for allowance of deduction has been satisfied, the same cannot be questioned in future years unless and until the Revenue disturbs the initial assessment year . Similar are the facts in the case of sister concerns of the assessee, i.e., Selvel Transit Advertising Pvt. Ltd. In term of the above - Decided in favour of assessee Allowing TDS payment made by assessee company for hoarding advertisement charges u/ s 194C OR 194I - Held that - As in assessee s own case for A.Y.2009-10 and 2010-11 all the assessments were completed under section 143(3) of the Act. No disallowance of these expenses was made all through. But in this year and in subsequent in the assessment year 2010-11 this disallowance was made. Thus we accept the contention of the assessee s counsel as regards to consistency that once on similar facts the Revenue has accepted the payments as contractual payments now they cannot deviate - Decided in favour of assessee. Interest on delay payment of TDS as allowable expenditure u/s 37 - Held that - We are of the view that the amount in question cannot be equated to a sum paid on account of tax levied on profits and gains of business or profession and therefore could not have been disallowed u/s 40(a)(ii) of the Act. It cannot be disputed that otherwise the payment of interest was wholly and exclusively for the purpose of carrying on the business of the assessee and therefore allowable as deduction u/s 37(1) of the Act

Summary

Issues Involved:
1. Depreciation on Hoardings Structure.
2. Deduction under Section 80IA.
3. TDS Payment on Hoarding Advertisement Charges.
4. Interest on Delay Payment of TDS.

Issue-wise Detailed Analysis:

1. Depreciation on Hoardings Structure:
The primary issue was whether the Assessee could claim 100% depreciation on hoardings, which it classified as temporary structures. The AO argued that these hoardings should be considered as plant and machinery, thus allowing only 15% depreciation. The CIT(A) sided with the Assessee, referencing a prior decision of ITAT for A.Y. 2005-06, which allowed 100% depreciation on similar hoardings. The Tribunal, agreeing with the CIT(A) and following its own previous rulings for A.Y. 2009-10 and 2010-11, upheld the Assessee's claim for 100% depreciation on hoardings, dismissing the revenue’s appeal.

2. Deduction under Section 80IA:
The Assessee claimed a deduction under Section 80IA(4) for income derived from developing and maintaining infrastructural facilities, specifically roads and foot bridges. The AO denied this claim, stating that the income from advertisement hoardings did not qualify as income derived from infrastructural facilities. However, the CIT(A) allowed the deduction, referencing a prior decision for A.Y. 2010-11. The Tribunal, agreeing with the CIT(A) and referencing its own previous decisions, upheld the Assessee’s eligibility for the deduction under Section 80IA(4). The Tribunal noted that the Assessee had consistently been allowed this deduction since A.Y. 2004-05, and this position had been confirmed by the Hon'ble Calcutta High Court.

3. TDS Payment on Hoarding Advertisement Charges:
The issue was whether TDS on payments made to advertising agencies should be deducted under Section 194C (contractual payments) or Section 194I (rent). The AO treated these payments as rent, resulting in a higher TDS rate and disallowed the expenses under Section 40(a)(ia) for short deduction of TDS. The CIT(A) deleted this disallowance, noting that similar disallowances had been deleted in previous years (A.Y. 2009-10 and 2010-11). The Tribunal upheld the CIT(A)’s decision, emphasizing consistency and referencing the Hon'ble Calcutta High Court’s ruling that short deduction of TDS does not warrant disallowance under Section 40(a)(ia).

4. Interest on Delay Payment of TDS:
The AO disallowed a sum of ?7,82,561/- paid as interest on delayed TDS payments, treating it as akin to a tax levied on profits and gains, which is not deductible under Section 40(a)(ii). The CIT(A) allowed the deduction, considering the interest as a business expense under Section 37(1). The Tribunal upheld the CIT(A)’s decision, stating that the interest on delayed TDS payment could not be equated to a tax on profits and gains and was allowable as a business expense.

Conclusion:
The Tribunal dismissed the revenue's appeal on all grounds, upholding the CIT(A)'s decisions in favor of the Assessee on issues of depreciation on hoardings, deduction under Section 80IA, TDS payment classification, and interest on delayed TDS payments.