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2020 (4) TMI 611 - AT - Income TaxDepreciation on office buildings - absence of segregation of the value of land, depreciation was being claimed on the basis of total cost paid to the India Habitat Centre - HELD THAT - When the assessee bank does not have any segregation value of land and building of the said premises and it has paid composite price, the entire depreciation claim is allowable under Section 32 of the Act. So, following the aforesaid decision rendered by the Co-ordinate Bench of the Tribunal in CIT vs. Rajesh Exports Ltd. 2005 (11) TMI 362 - ITAT BANGALORE and when it is categoric case of the assessee that the purchase price of land and building is composite one and it has no segregation of value of land and building separately, disallowance made by the AO/ CIT (A) is not sustainable in the eyes of law. - Decided in favour of assessee.
Issues:
1. Disallowance of depreciation on office buildings 2. Segregation of the value of land for depreciation 3. Leasehold land subject to amortization 4. Illegal additions by authorities 5. Request for additional submissions and early hearing Analysis: (A) Disallowance of Depreciation: The appeal was filed against the disallowance of depreciation on office buildings amounting to ?36,40,145 by the Assessing Officer. The appellant argued that the depreciation was wrongly disallowed as it was considered attributable towards the cost of land. The appellant contended that since there was no segregation of the value of land, depreciation was being claimed based on the total cost paid to the India Habitat Centre. Additionally, the appellant argued that the land being leasehold should also be subject to amortization, and thus, the total cost paid for the premises should be considered for the allowance of depreciation. (B) Assessment Order: The Assessment Order dated 31.03.2015 under Section 143(3) of the Income Tax Act disallowed the depreciation amount on office premises at India Habitat Centre. The appellant then filed an appeal before the Learned Commissioner of Income Tax (Appeals), who restricted the disallowance to ?36,40,145 and deleted the remaining amount. (C) Appeal to ITAT: The appellant further appealed to the Income Tax Appellate Tribunal (ITAT) challenging the impugned appellate order. During the appellate proceedings in ITAT, the appellant submitted a synopsis and copies of relevant orders to support their case. (D) Arguments Before ITAT: During the hearing before the ITAT, the Authorized Representative for the assessee argued that the issue of depreciation amount was in favor of the assessee based on previous orders. The Senior Departmental Representative for Revenue also agreed that the issue was in favor of the assessee based on the previous orders. (E) ITAT Decision: After hearing both sides and reviewing the records, the ITAT found that the issue was squarely covered in favor of the assessee by previous orders. The ITAT noted that no distinguishing facts were presented to warrant a different view. The ITAT referred to a previous order in the assessee's own case where the issue of depreciation on office building was discussed. The ITAT decided in favor of the assessee and directed the Assessing Officer to allow the depreciation claim. (F) Conclusion: The ITAT allowed the appeal filed by the Assessee, directing the Assessing Officer to allow the depreciation claim of ?36,40,145. The order was pronounced in the open court on 10/02/2020.
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