9911796707
TMI Blog2005 (11) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) Whether the CIT(A) justified in directing to allow depreciation of Rs. 16,50,000 being the value of undivided right in land. 2. We have heard the learned DR Smt. Swati S. Patil and the learned counsel for assessee Shri S. Parthasarathi. The assessee has also filed paper book, which is on record and copy of the same was furnished to the learned DR. The learned DR vehemently submitted that the assessee is engaged in the business in the import, export and local sales of bullion and jewellery. During the course of assessment it was observed by the Assessing Officer that there was fall in the GP rate from 15.56 per cent in the preceding year to 4.49 per cent during the year. It was further noticed by the Assessing Officer that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed. The learned DR further submitted that the assessee had shown lower income and M/s. Rajesh Associates had disclosed very high income and had claimed deduction under section 80HHC. He further submitted that the assessee has sold 2,98,503 grams of bullion and 32,146.46 grams of 22 carat jewellery in domestic market. Apart from that the assessee has received making charges of Rs. 5,40,833 and interest income of Rs. 32,12,061 and on the said income deduction under section 80HHC was not available to the assessee. The assessee has diverted his income to its sister concern M/s. Rajesh Associates. Hence, for part payment of tax on these domestic transactions, the assessee sold jewellery to M/s. Rajesh Associates for cost, which was less th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disputed that M/s Rajesh Associates is a partnership firm in which the assessee has a share of 95%. The question is whether the Assessing Officer has rightly computed the cost. There is force in the argument of the learned counsel for assessee that as far as sale consideration of bullion and jewellery is concerned, it is effected on the basis of the prevailing market rates, which keeps fluctuating on day-to-day basis. The Assessing Officer has nowhere pointed that the assessee has sold bullion and jewellery at a price lower than the prevailing rate of bullion and jewellery on the date of sale. Another aspect to be seen here is M/s. Rajesh Associates has also been assessed and it disclosed substantial profit. The Assessing Officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration of land is shown separately. Whatever the Assessing Officer has done, he has rightly advances on the cost of land and rightly allowed depreciation on the cost of building. He, therefore, submitted that the CIT(A) was not at all justified because section 32 of the Act does not speak about the land and depreciation is allowable on the building, plant and machinery etc. On the other hand, the learned counsel for assessee submitted that though the cost of land and building is separately indicated it is part of the transaction. Moreover, the assessee uses the land for its business purpose. Most of the land is occupied by the structure and the assessee cannot use that land. The assessee is entitled to claim depreciation on the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of land separately and in respect of building separately. Moreover, it is seen that in Schedule "B" the area of each ground floor and basement is shown the cost is not worked out on the basis of built up area or super built up area which is normal practice. We, therefore, hold that by the Conveyance Deed dated 8-11-1996 the assessee has purchased land as well as business premises. 8. Now the question is if it is a land, then depreciation under section 32 of the Act is allowable. Section 32(1) reads as under: "32(1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets; (ii).............." 9. It is clear from a reading of section 32(1) that the word 'building' is used by the Legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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