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TMI Blog2022 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has given a finding that similar issue has been decided against the assessee. However, nothing was brought to our notice about the final outcome of the same. We therefore deem it proper to restore the issue to the file of the AO with the direction to verify the record and decide the issue afresh and as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground of appeal No.2 is accordingly allowed for statistical purposes. Disallowances of depreciation on lease hold rights @ 25% - Since according to the AO the premium paid by the assessee to acquire the lease hold rights should be amortized over a period of 33 years and depreciation on the same is not allowable, therefore, he issued a show-cause notice to the assessee to explain as to why depreciation should not be disallowed - HELD THAT:- We find the issue stands decided in favour of the assessee in assessee s own case in the immediately preceding assessment year [ 2021 (8) TMI 1328 - ITAT HYDERABAD] wherein the issue in assessee s favour that a right to operate any asset forms an intangible asset u/s.32(1)(ii) of the Act entitled for depreciation.- Decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,93,68,763/-), u/s.35(2AB) of the Income Tax Act. But as per the Form 3CL, the total eligible deduction for the AY 2015-16 was mentioned at Rs. 1,34,14,000/-. Therefore; the eligible deduction @ 200% of Rs.1,34,14,000/- comes to Rs. 2,68,28,000/- only. 4. He therefore issued a show-cause notice to the assessee to explain as to why the excess claim of Rs.25,40,763/- should not be disallowed. The assessee submitted that he has no objection to the proposed addition. The AO, therefore restricted the claim of deduction u/s. 35(2AB) to Rs.2,68,28,000 and disallowed an amount of Rs. 25,40,763/-. 5. Before the ld.CIT(A), the assessee challenged the disallowances of Rs.25,40,763/-. It was submitted that out of the total Revenue Expenditure of Rs. 1,42,74,409/- and total Capital Expenditure of Rs. 4,09,973 incurred by the appellant, the DSIR certified an amount of Rs. 1,30,05,000/- as the Revenue expenditure and Rs. 4,09,973 as the Capital Expenditure eligible for weighted deduction. The shortfall amount not certified by DSIR is Rs. 12,69,409/- for Revenue expenditure incurred by the assessee company. 5.1 It was argued that the Assessing Officer has disallowed the entire weighte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out whether the amount has really gone for the purpose of business or not [CIT vs. S. Krishna Rao (1970) 76 ITR 664 (AP), CIT vs. Raman Raman Ltd. (1969) 71 ITR 345 (Mad), Pioneer Spring Steel Concern P. Ltd. vs. CIT (1982) 135 ITR 522 (Cal), D.N. SinhaPvt. Ltd. vs. CIT (1976) 102 ITR 491 (Cal); RamanlalKamdar vs. CIT (1976) 103 ITR 489 (Mad)].The AR never explained whether the business carried on by the appellant and the income generated by it has any relation or connection with such expenditure claimed. The Assessing Officer had come to the conclusion that the expenses which are claimed are not related to the business activities of the appellant. My predecessor in case of the appellant for earlier years has also dismissed the issue against the appellant. Hence ground no 2 3 are dismissed. 7. Aggrieved with such order of the ld.CIT(A), the assessee is in appeal before the Tribunal. 8. We have heard the rival arguments made by both the sides, perused the orders of the Ld. AO and ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee before the AO as well as the ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the ld.CIT(A) in confirming the disallowances of depreciation on lease hold rights amounting to Rs. 77,85,255/-. 11. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has claimed an amount of Rs. 77,85,255/- as depreciation on lease hold rights i.e @ 25% of Rs.3,11,41,018/-. Since according to the AO the premium paid by the assessee to acquire the lease hold rights should be amortized over a period of 33 years and depreciation on the same is not allowable, therefore, he issued a show-cause notice to the assessee to explain as to why depreciation of Rs. 77,85,255/- should not be disallowed. Rejecting the various explanations given by the assessee, the AO disallowed an amount of Rs.77,85,255/- by observing as under:- 3.1. The above reply of the assessee has been carefully examined and the same is not acceptable as the lease period is 33 years and the benefit is extended to 33 Years. The lease premium paid is a capital expenditure and hence to be capitalized and the assessee is eligible for depreciation. The lease premium paid is nothing but a rent for the premises and it is neither a right nor an intang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue by observing as under:- 5. The Revenue s vehement contention in support of the impugned disallowance is that the assessee ought to have amortized the same u/s.35 of the Act. We find no merit in the instant contention per se in view of the fact that neither there is any specific provision in the Act nor is any CBDT circular to this effect. Hon'ble apex court s recent decision in Taparia Tools Ltd. Vs. JCIT (2015) [372 ITR 605] (SC) rather holds that the claim of revenue expenditure is not to be denied merely because the same could also be split over a period of years. Coupled with this, this tribunal s Special Bench in ACIT Vs. Progressive Constructions Ltd., (2018) 92 taxmann.com 104 (Hyd) decides the issue in assessee s favour that a right to operate any asset forms an intangible asset u/s.32(1)(ii) of the Act entitled for depreciation. 6. Learned departmental representative at this stage sought to highlight the fact that the assessee in the instant case has taken land on lease to set up an SEZ and therefore, the same ought not to be taken as eligible for depreciation. We find no substance in the instant last plea as well as the assessee has claimed the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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