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Depreciation not allowed in respect of long term lease hold properties including lease for perpetuity-Depreciation allowed only with regard to capital expenditure for any structure by way of addition and/or alteration

HIGH COURT OF CALCUTTA

 

IT Appeal No. 305 of 2003

 

Peerless General Finance & Investment Co. Ltd..........................................................Appellant.
v.
Commissioner of Income-tax, Kolkata-1 ....................................................................Respondent

 

KALYAN JYOTI SENGUPTA, ACTG. CJ.
AND JOYMALYA BAGCHI, J.

 
Date :OCTOBER  12, 2012 
 

Section 32 of the Income Tax Act, 1961 —Depreciation

Depreciation not allowed in respect of long term lease hold properties including lease for perpetuity - Depreciation allowed only with regard to capital expenditure for any structure by way of addition and/or alteration

facts

Assessee is in appeal before the Court against the order of Tribunal. Tribunal declined depreciation in respect of the long term leasehold properties including lease for perpetuity and restricted the depreciation only with regard to capital expenditure for any structure by way of addition and/ or alteration.

held

That Tribunal was right in restricting the depreciation only with regard to capital expenditure for any structure by way of addition and/ or alteration and disallowing the depreciation claim for leasehold properties having perpetual lease. In the result, appeal was answered in favour of Revenue.


JUDGMENT


Joymalya Bagchi, J. - This appeal is directed against the order of the learned tribunal passed on June 30, 2003 in respect assessment year 1995-96. The appeal was admitted in respect of the following substantial questions of law :


"I.

 

Whether on the facts and in the circumstances of the case the Tribunal erred in delivering from its decision deleting similar addition in appeal for the assessment year 1991-92 in the set of facts and circumstances, admitted by the Assessing Officer to be same as those in earlier year and perversely remitted the issue involving addition of interest of Rs. 17,00,87,612/- for re-determination on account of interest free loans to subsidiaries ?

II.

 

Whether the Tribunal erred in reversing the deletion of the addition of Rs. 2,00,20,000/-under Section 94 and remitting the matter for re-determination when Section 94 cannot attract the transfers of sale and buyback of the units of U.T.I., such units not being security, as judicially held, within its meaning under Explanation (b) below Section 94 read with Section 32 (3) of the Unit Trust of India Act ?

III.

 

Whether on the facts and in the circumstances of the case the Tribunal erred in holding that the dividend of Rs. 91,00,000/- declared on the units of U.T.I., after purchase of the units by the assessee but before their registration in the name of the assessee as the transferee, accrued to the assessee, though an unregistered, special regard being had to the fact that units of the UTI not being shares do not attract Section 8 of the Act ?

IV.

 

Whether the Tribunal erred in declining depreciation of Rs. 99,44,579/- in entirety in respect of the long-term leasehold properties including the lease for perpetuity and restricting the depreciation only with regard to capital expenditure for any structure by way of addition and/or alteration?"

2. At the outset Mr. Bagchi, learned senior counsel, appearing for the appellant assessee submits upon instruction that his client is not willing to proceed with respect to the question formulated in Clauses (I), (II) and (III). We, therefore, refrain ourselves from expressing our opinion with regard to the said questions of law formulated in (I), (II) and (III).

3. With regard to the questions of law formulated in Clause (IV) it appears that the same question had been agitated on behalf of the appellant assessee in I.T.A. No. 302 of 2003 in relation to the assessment year 1993-94. By judgement and order dated 17.05.2012 we decided the said questions of law as against the appellant assessee and in favour of the revenue.

4. We do not find any reason to differ from our decision in our earlier judgement dated 17.05.2012, in respect of the present assessment year. Accordingly, we dismiss the appeal by holding the question formulated in Clause (IV) is decided against the appellant assessee for the reasons recorded in our earlier judgement and order dated 17.05.2012 in I.T.A. No. 302 of 2003.

K.J. Sengupta, ACJ. - I agree.

 

[2013] 217 TAXMAN 251 (CAL)

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