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TMI Blog2023 (11) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, the issue involved in the Ground No. 1 of the Assessee s appeal remanded to the file of the A.O. for de-novo adjudication with a direction to the assessee to substantiate its claim of unabsorbed depreciation. Accordingly, the Ground No. 1 of the assessee is partly allowed for statistical purpose. Depreciation on land computed by estimating the cost of land out of the total consolidated cost of hotel building complex - assessee vehemently submitted that the entire hotel building complex was purchased at consolidated value vide a registered deed without any mention of separate cost of hotel land, therefore, the reduction of depreciation made by the A.O. is bad in law - HELD THAT:- Merely because the parties have not specified the separate value of the land and building in the conveyance deed for the reasons based known to them, the same would not enable an Assessee to claim the depreciation on the land on which the assessee is not eligible to claim the depreciation. If the assessee is allowed to claim the depreciation on the land in the manner contended by the assessee herein, which would promote the mischief of not specifying the value separately which is basis on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd ground of appeal reproduced as under: That without prejudice to above Ground of Appeal and in consideration of the following case facts- That the return of income was filed with following facts Business Loss :Rs.52,30,679/- The C/f of the same was not claimed u/s 139 (3) of the Act, since return was filed after prescribed due date u/s 139 (1) of the Act). Un-absorbed Depreciation : to be carried forward (The claim of un-absorbed depreciation is Covered u/s 32 (2) of the Act and not 139 (3), hence its c/f was claimed, accordingly in the return of income. :Rs.15,82,50,014/- ii) Out of total depreciation in para (i) above, claim of depreciation dis-allowed by AO: Rs. 2,16,45,449/- iii) Remaining claim of un-absorbed deprecation to be c/f Rs.13,66,04,565/- On above case facts, the Ld. AO grossly erred: Firstly, erred in making the dis-allowance of the claim of carry forward of un-absorbed depreciation under in-applicable s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorbed Depreciation : to be carried forward for the year plus unabsorbed depreciation b/f Rs. 15,82,50,015/- (The claim of un-absorbed depreciation is covered u/s 32 (2) of the Act and not 139 (3), hence its c/f was claimed, accordingly in the return of income. :Rs.29,92,74,700/- ii) Out of total depreciation in para (i) above, claim of depreciation dis-allowed by AO: Rs. 4,11,26,450/- iii) Remaining claim of un-absorbed deprecation to be c/f Rs. 25,81,48,250/- On above case facts, the Ld. AO grossly erred: Firstly, erred in making the dis-allowance of the claim of carry forward of un-absorbed depreciation under in-applicable section 139 (3), while c/f of un-absorbed depreciation is covered u/s 32(2) of the Act and is allowable. Secondly, erred in making the dis-allowance of the claim of c/f of un- absorbed depreciation Rs. 29,92,74,700/- (as in para (1) above instead of Rs. 25,81,48,250/- (as in para iii) above. Thirdly, erred in computing the taxable income for the year at Rs. 4,11,26,450/- (being the disallowed part of depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 30 th September, 2010 but the assessee had filed return of income on 28/01/2013, further it is also observed that though the assessee Ld. AR contended that assessee has not claimed business loss and the claim of assessee was unabsorbed deprecation, but it is found that as per the assessment order, the assessee had claimed loss of Rs. 15,82,50,014/- , and it is not coming forth clearly as to the loss claimed by the Assessee was either business loss or unabsorbed depreciation. Therefore, in our opinion, the issue involved in Ground No. 1 requires to be adjudicated afresh by the A.O. Accordingly, the issue involved in the Ground No. 1 of the Assessee s appeal remanded to the file of the A.O. for de-novo adjudication with a direction to the assessee to substantiate its claim of unabsorbed depreciation. Accordingly, the Ground No. 1 of the assessee is partly allowed for statistical purpose. 7. Ground No. 2 regarding disallowance of Rs. 2,61,45,449/- being depreciation on land computed by A.O. by estimating the cost of land out of the total consolidated cost of hotel building complex . The Ld. CIT(A) has aggregated total cost into estimated cost of land and hotel building. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. and observed that the land cost are not being eligible for depreciation was rightly covered out of the total consideration for the purpose of depreciation u/s 32 of the Act . During the year under consideration, the assessee purchased a built-up hotel building complex for Rs. 197,39,24,155/- and claimed depreciation of Rs. 99,86,96,208/- at 10% on the purchase of hotel building complex. During the assessment proceedings, the A.O. bifurcating the cost of hotel building complex into the land and building and disallowed depreciation of Rs. 2,16,45,499/- out of the total depreciation claimed in the building complex . It is the specific case of the assessee that the building complex purchased in a composite sale agreement, wherein a particulars of payment mentioned in a standalone consideration with no bifurcation made between the amount attributable to the value of the land and that of the value of the building and therefore no segregation required to be made between the land and building for the purpose of depreciation u/s 32 of the Act. We have gone through the conveyance deed produced by the assessee along with the paper book wherein the land and building constructed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties thereon that the assessee had acquired the ownership for the plots at measuring 1.9903 acres (equal to 15 caan 19 marlas) and also acquired ownership over the building constructed thereon. Though the parties for the conveyance deed have not specified the actual amount paid to the land and the building separately, the land and building are separately identifiable by going through the recitals of the sale deed. Apart from the same, the assessee himself for the purpose of registration of the conveyance deed, paid stamp duty proportionately to the building and to the land. Further, the assessee himself vide his reply dated 08/03/2013 had furnished the cost of land as Rs. 43,29,09,957/- @ Rs. 42,000/- per square yard. 13. Even the land despite forming part of composite unit does not merge with the building per-se and the land retains its independent identity. Merely because the parties have not specified the separate value of the land and building in the conveyance deed for the reasons based known to them, the same would not enable an Assessee to claim the depreciation on the land on which the assessee is not eligible to claim the depreciation. If the assessee is allowed to clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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