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TMI Blog2021 (5) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... from 01-04-2007 to 31-02-2008. We thus affirm both the learned lower authorities action disallowing assessee s depreciation claim in the given facts and circumstances. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. The Assessing Officer also failed to examine the applicability of Apex Court's judgment in 227 ITR 172 in the case of M/s. Tuticorin Alkali Metals Ltd." c) Order u/s.143(3) r.w.s. 263 was passed treating the interest income on deposits prior to commencement of business as income from other sources. d) The order u/s.263 was appealed against and the Hon'ble ITAT, Hyderabad, in ITA No.746/Hyd/2011 dated 06.06.2012, dismissed assessee's appeal by holding as under: "9. We have heard the arguments of both the parties and perused the record as well as the order find that at page 17 of the paper book, the assessee in his return of income has claimed loss from business at ₹ 50,020,948/- and has set off the other income of ₹ 11,139,164/- under the head income from other sources and claimed a loss of ₹ 38,881,784/-. The Assessing Officer in his order of assessment has disallowed claim of deprecation of ₹ 3,68,93,017/- and determined loss of ₹ 2788761/-. This loss of ₹ 27,88, 761/- has been arrived at after taking into account income of interest from deposits being 1,11,39,164/-. It is to be noted that the assessee itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s annual revenue for the first 33 years, and 3% of gross annual revenue for the later 33 years. g) As per the lease deed, the assessee has to develop 18-Hole Golf Course which was meant for people purchasing an Apartment, a Villa or a plot in Housing and Commercial Complex to he developed by M/s. Boulder Hills Leisure Pvt. Ltd., which is one of the three projects mentioned above. The Golf Course was not meant for general public as per the original understanding. However, since the project of Housing and Commercial facilities was stuck due to varied legal cases, the Golf Course was opened for public in later years. h) As per the lease deed dated 25.12.2005, clause 5.8, the lessee (M/s. Boulder Hills Leisure Pvt. Ltd.) is entitled to sublet the premises as under: "5.8. The Lessee shall be entitled during the Term to assign, sublease, licence, give on leave and licence, sublet or underlet the Demised Premises together with the structures thereon or any part or portion thereof, independent of the other portion or portions or any interest therein to separate parties and for this purpose APIIC shall assist the Lessee in demarcation of the portion or portions of the Demised P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies." I) As per the Assignment Deed clause 3.1.3, during the assignment period all building materials, other materials in the project land shall be considered the property of the assignee. m) As per clause 3.2.2, the assignee can create any charge on leasehold rights in favour of any financial institution/bank. Whereas the assignor cannot do so. n) As per clause 3.2.4, the assignee is entitled to further assign, sub-lease, license, give on leave and license, sublet the project land. o) The assessee receives yearly payment from M/s. Emaar MGF Land Pvt. Ltd., as under: 5% of gross annual revenue for the first 33 years 6% of gross annual revenue for the later 33 years Accordingly the assessee will receive 5% of the revenues whereas M/s. Emaar MGF Land Pvt. Ltd., will receive 95% of the revenues. p) The assessee received 5% of revenues of ₹ 13.21 lakhs during the F.Y. 2008-09 and M/s. Emaar MGF Land Pvt. Ltd., received total revenues of ₹ 2.64 crores out of which 5% of ₹ 13.21 lakhs was given to the assessee. 6. The appellant repeated the submissions made by him before the Assessing Officer which are summarized as under: a) That part of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of property assigned is mentioned at annexure enclosed to the deed. As per this annexure, what was assigned to M/s. Emaar MGF Land Pvt. Ltd., was 235 acres of land, i.e., whatever is taken on lease from the Government (APIIC) was in turn assigned to M/s. Emaar MGF Land Pvt. Ltd. There is no mention of any constructed area or any other specifications in the Annexure to this Assignment Deed. Hence the appellant's plea that certain developments/works were carried out on the part of the land is not correct is not backed by any evidence. Further, as per clauses 2.3 (b) and 2.4.4 of this deed, on the date of agreement, 03.11.2006, even the statutory permissions for developing the land were not taken which clearly means that the development/construction had not started by November, 2006. In these circumstances, the appellant's claim that crores of work was completed and was put to use before March, 2007 is devoid of any merit and is not supported by any evidence 7.2. Depredation schedule for A.Y. 2007-08 read as under: 7.3. Deprecation schedule for A.Y. 2008-09 read as under: 7.4. The nature of work involved here is to prepare the land suitable for Golf Course. The work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consultant by name Davis Langdon and Seah, Bangalore, stating that Phase-I of the Golf Course was completed by October, 2006, is not backed by any evidence and is only self serving. On the other hand it is contradicting several clauses of assignment deed which reveal that project was not started even in November, 2006. 7.7. The appellant's claim that the depreciation should be allowed as the asset was ready to be used is also factually incorrect as evident from the Assignment Deed. The entire land of 235 acres was handed over to M/s. Emaar MGF Land Pvt. Ltd., for development of Golf Course. The appellant's claim that it is ready to be used as no evidence. Even if it is ready to be used, no depreciation can be claimed as held in the case of CIT vs. Suhrid Geigy Ltd. (1982) 133 ITR 884 (Gun wherein it was held that mere preparation for use cannot amount to use itself. Depreciation can be claimed only if it is used for business and this can happen only when production commences. In the case of K.Sampath Kumar vs. CIT 158 ITR 25 (Mad.); CIT vs. Industrial Solvents and Chemicals (P) Ltd. 119 ITR 608 (Bom.). In these cases it was held that mere purchase and erection of Plant & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foregoing rival pleadings against and in support of the impugned depreciation disallowance. Ld.Counsel has been himself very fair in indicating at the outset that the issue of golf course being ready to use and operation thereof having been commenced in AY.2007-08 stands decided in Revenue's favour in the tribunal order (supra) and the tax appeal against the same is pending before the hon'ble jurisdictional high court. That being the case, we adopt judicial consistency and confirm the impugned depreciation disallowance. More so, in view of the fact that learned co-ordinate bench has already applied its mind and no evidence to the contrary has come from the taxpayer's side. Coming to the assessee's case that it had derived receipts in FY.2007-08, Mr.Raghuram made a valiant attempt to refer to the paper book on record. It, however, transpired during the course of hearing that the said receipts pertain to the period from 01-04-2008 onwards relevant to AY.2009-10 only than covering the period from 01-04-2007 to 31-02-2008. We thus affirm both the learned lower authorities' action disallowing assessee's depreciation claim in the given facts and circumstances. 6. These two assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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