2017 (12) TMI 530 - AT - Income Tax

Disallowance of depreciation - bifurcation of the total consideration towards land and building separately in view of fact that the assessee is not entitled for depreciation on land portion - Held that - As relying on case ITO Ward-7 (3) , P-7, Kolkata Versus M/s Shree Banke Behari Enterprises Pvt. Ltd 2016 (10) TMI 582 - ITAT KOLKATA we deem it fit and appropriate to remand this issue to the file of the Ld. AO with direction to the assessee to furnish the evidence in support of bifurcation of consideration towards land and building. We agreed with the fact that the assessee is not entitled for depreciation on the land portion. Hence, bifurcation of the consideration into land and building separately becomes 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. TDS u/s 194C - Disallowance made u/s 40a(ia) - Crossword Book Reward Programme Card printing charges - Held that - DR fairly 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 40a(ia) of the Act and in the light of decision rendered by the Hon ble Delhi High Court in the case of Ansal Land Mark Township Pvt. Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT - Ground no. 2 raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of depreciation on a showroom.
2. Disallowance of expenses under section 40a(ia) of the Income Tax Act.

Issue 1: Disallowance of Depreciation on a Showroom:
The appeal concerned the disallowance of depreciation amounting to ?8,20,000 by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) (CIT(A)) regarding the purchase of a showroom comprising land and building. The AO sought bifurcation of the total consideration for depreciation purposes, attributing 50% towards land and disallowing depreciation thereon. The assessee claimed no bifurcation was possible as the entire showroom was purchased outright. The Tribunal referred to a Co-ordinate Bench decision involving similar facts and remanded the issue to the AO to provide evidence of bifurcation, emphasizing that depreciation on the land portion was not allowable.

Issue 2: Disallowance of Expenses under Section 40a(ia):
The second issue involved disallowance of ?76,732 and ?40,000 under section 40a(ia) of the Act for non-deduction of tax at source on payments to Crossword Book Stores Ltd. and Times Internet, respectively. The CIT(A) confirmed the disallowance due to lack of supporting evidence from the assessee. The Tribunal, upon hearing the arguments, remanded the issue to the AO for reconsideration in light of the second proviso to section 40a(ia) and a retrospective amendment cited from a Delhi High Court decision. The Tribunal allowed the appeal for statistical purposes, setting aside the disallowances for further examination by the AO.

In conclusion, the Tribunal's judgment addressed the disallowance of depreciation on a showroom and the disallowance of expenses under section 40a(ia) of the Income Tax Act, remanding both issues to the Assessing Officer for further verification and consideration based on legal provisions and precedents cited during the proceedings.