TMI Blog2013 (11) TMI 1681X X X X Extracts X X X X X X X X Extracts X X X X ..... r II - 33,635,031/- 3. The Revenue has raised the following grounds to project its grievance on this issue:- (a) Whether on facts and circumstances of the case and in law, the Ld.CIT(A) justified in holding that the rejection of books of account in terms of Sec.145 of the Income Tax Act, 1961 was not justified without appreciating the fact that the assessee has failed to recognize revenue in terms of revised Accounting Standard, wherein revenue has to be recognized in the year in which it has earned and the same cannot be postponed to future. (b) Whether on facts and circumstances of the case and in law, the Ld.CIT(A) justified in deleting the addition of ₹ 3,36,35,031/- on account of income from the Ganga Tower II project, holding that it cannot be taxed in the current year, when the facts of the case show that even under project completion method, income is taxable in the current year as the project of the assessee is 67.32% complete. The Ld.CIT(A) has erred in observing that Assessing Officer made no attempt to show that substantial part of the project is complete. Further CIT(A) has erred in holding that no income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration was filed on 1-11-2004 declaring a loss of ₹ 35,80,734/-. During the said year, seven projects of the assessee under execution and in the return of income, profit of three projects namely Gopala, Atur Park and Kukreja Plaza aggregating to ₹ 35,41,190/- was offered by the assessee on estimated basis. The method of accounting stated to be followed by the assessee was mercantile and the Revenue in respect of three projects namely Atur Park, Gopala and Kukreja Plaza was claimed to be recognized by following percentage completion method. The Revenue from other projects was claimed to be recognized on project completion basis. According to the A.O., the revised Accounting Standard - 7 (AS-7) was notified and made effective from A.Y. 2004-05 and the profit of the assessee, therefore, was liable to be determined as per the said standard. He, therefore, required the assessee to furnish certain details relating to its projects under execution during the year under consideration. As stated by the A.O. in his order, the assessee however, did not produce some of the material details required by him and furnished only some details and that too at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 420, 421 (Bom)]. When an assessee bona fide changes his method of accounting thereafter or that he has in fact intends to adopt changed method of accounting thereafter or that he has in fact adopted it thereafter, that satisfies the requirement of section 145. Neither principle nor authority bars an assessee from substituting one method of accounting for another at his choice. A change in the method of the assessee's choice or the application of the first proviso to section 145 (1) [Indo-Commercial Bank Ltd. v. CIT (1962) 44 1TR 22, 36, 37 (Mad); Forest Industries Travancore Ltd. v. CIT (1966) 61 1TR 395 (All); Dr. ITR 329 (Ker); New Victoria Mills Co. Ltd. v. CIT (1966) (ITR) 395 (All); Once. having so changed the method of accounting, if the assessee continues with the changed method, it becomes his regularly employed method within the meaning of section 145(1) and the Assessing Officer is bound to base his assessment on the changed method provided that income can properly be deducted from such method. If, however, the changed method is not followed regularly by the assessee, the taxing authority cannot fall back upon the earlier method of accounting. This is so because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of section 145(1) and the Assessing Officer is bound to base. his assessment on the changed method provided that income can properly be deducted from such method. If, however, the changed method is not followed regularly by the assessee, the taxing authority cannot fall back upon the earlier method of accounting. This is so because in such a case it cannot be said that the assessee had followed the earlier method regularly in view of the intermediary changed method of accounting. Such a case will be a case falling under section 145(2) where no method of accounting has been regularly employed by the assessee entitling the assessing authority to make an assessment in the manner provided in section 144 (Reform r Mills P. Ltd. V. CIT (1978) 114 1TR 227, 230 (Cal) (v) The assessee has not followed the method of accounting regularly and has been changing the method of accounting from completion method to percentage method and then again, completion method for a particular project, and even in the percentage completion method, the rates are varying from year to year in the same projects. The assessee firm has estimated percentage of profit, which are even different in every year o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of project. 6.2 Moreover, the profit disclosed by the assessee on estimation basis in respect of various projects does not include profit on Ganga Tower II Project i.e. the said profit does not include profit estimation on Ganga Tower II project. The assessee has adopted a method of accounting, which is partially applied on some projects and not applied at all on one project viz. Ganga Tower II. As has already been stated earlier that where the assessee has substantially realized the construction work carried out by it by making agreements and receiving considerations under such agreements, the taxability of income on such estimation of profit on such receipts cannot be allowed to be postponed. 6.3 The assessee has not offered any profit on the sales consideration/ realisation from the Ganga Tower II project. The income under the percentage completion method discussed here-in-above is required to be computed in respect of the Ganga Tower II project. As has been discussed in the foregoing paragraphs, inspite of opportunities provided, the assessee has failed to or deliberately avoided furnishing the information and evidences regarding the projects called for vide no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars of the income, penalty proceedings u/s 271(1)(c) of the Act are hereby initiated. 7. Gopala Project. 7.1 The assessee has offered estimated profit of ₹ 29,68,807/- @ 20% of the addition during the year to the cost of project on percentage completion method. As is already discussed here-in-above, the said of offering profit on some percentage of addition to cost is not a method for computing profits of the assessee's business. In the profits of Ganga Tower II project have been computed in the paragraph supra, the profits of Gopala project are also computed as under: Total area constructed/under construction 45094 sq. ft. Total area sold upto 31-3-2003 31090 sq. ft. Total sales consideration of area sold ₹ 9,98,96,050 Average rate of booking made during the year ₹ 1,675 (average of first three and last three bookings Total estimated sales ₹ 12,33,52,750 (45094-31090)* 1675 + ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s project. No figures of the total projected sales, total projected cost, total estimated profits, total area of construction, etc. have been furnished. From the perusal of the records and information available with the Department, the following details have been ascertained and accordingly the profits of the project are being computed. Kukreja Plaza: Total projected cost of project ₹ 14,16,07,058 Ascertained from records Total area of construction 220228 sq. ft. Derived from information available Average rate of bookings for the year under consideration ₹ 850 Average of bookings done during the year Total area sold upto 31-3-2003 136354 sq. ft. Total estimated sales of the project ₹ 18,89,38,190 (220228-136354)* ₹ 850 + Rs. 11,76,46,290 Total estimated profits ₹ 4,73,31,132 Total cost of project incurred til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises is shown at ₹ 9,37,87, 104/- which is equivalent to the sales and other income booked by the assessee for the year ended 3 1.03.2005 in respect of the said project whereas the trading account prepared for the year ended 3 1.03.2005 for the Ganga Tower I project shows incurring of cost at only ₹ 31,513/- against the total cost of project incurred upto 31.O3.2004 at ₹ 6,43,59,132/-. The total area constructed for the said project is 53,605 sq.ft. out of which 52,480 sq.ft. was sold on or before 31-3-2004 and full sale proceeds amounting to 8,91,66,000/- were realized before the end of the year under assessment and other sums collected from these buyers were at ₹ 40,12,025/-. 10.2 On this project, profit shown on estimate basis in earlier years has already been included in the opening WIP shown at ₹ 6,43,59,132/-. Therefore, after adjusting the closing stock at cost for 1 125 sq.ft at ₹ 12,36,813/-, the profit on the said project not shown by the assessee comes tq. ₹ 3,00,22,193/-.The addition of ₹ 31,513/- to cost has not been explained by the assessee. The said addition is nothing but just image that the project has actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts and there is no change in the method of accounting. (c) The appellant is assessed under the Central circle IV since 1995 and its books of accounts have always been accepted save and except Asst. Year 2004-05. (d) in view of the above, the income i.e. loss of ₹ 35,80,734/- declared by the appellant as per its books of accounts and the returns of income should be accepted. 8. In support of the above arguments, alternative submissions were made by the assessee before the ld. CIT(A) in writing vide letter dated 14-3-2010 which were as under:- (a) The Assessing Officer has discussed the Issue In para 4 of his order and he has correctly quoted the method of accounting as mentioned in the Tax Audit Report i.e. the assessee is following the percentage of work-in-progress method in respect of Atur Park, Gopala and Kukreja Plaza and following the completion method in respect of Ganga Tower -- II. However, in para 4,2, the Assessing Officer has wrongly concluded that the firm is determining the revenue on various projects some times on the basis of project completion method and some times on percentage completion method. (b) This finding of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing no relevance as all primary details are filed vide three letters dated 25-11-2006, 27-11-2006 and 22-12- 2006. (d) The learned AR further claimed that the appellant firm has changed the method in respect of the newly started Madhuri project in asst. year 2000-01 and Ganga Tower-Il project in asst. year 2002 -03 arid the same has been accepted in these two years and, therefore, this is not the year in which the method has been changed in respect Of these two newly started projects. Further, the method cannot be changed in respect of the earlier projects which were in progress as the appellant firm has already declared the income on percentage of work in progress basis in earlier years. Further, the profit in respect of these two projects is already declared in respect of Madhuri project in the asst. year 2003- 04 which has been accepted by the department and in respect of Ganga Tower-Il project in the asst. year 2005-06 and the appellant firm is following the completion method in respect of projects undertaken subsequently. (e) The learned AR stated that the completion method for computing the profit by a builder is a very much recognized method which has been accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's own case and the Tribunal has accepted this system. The percentage of work in progress to be taken as Gross Profit is decided by the appellant firm on the basis of the progress of a particular project, saleability of the project, market conditions, etc. In this regard, the following orders of the Tribunal were referred to : (i) Order dated 29-12-2005 passed by the Tribunal in the case of assessee firm for asst. year 1999-2000 wherein the issue was estimating the profit @ 20% of work in progress in respect of the project - Atur Park and @ 15% of the work in progress in respect of the project Kukreja Plaza as against 12.5% declared by the assessee for both projects. These two projects were in progress during this asst. year (Page Nos. 314-319). (ii) Order dated 14-7-2004 passed by the Tribunal in the case of the assessee firm for asst. year 1997-98 wherein again the issue was estimating the profit @ 20% of work In progress in respect of the project Atur Park and @ 15% of the work in progress in respect of the project Kukreja Plaza as against 12.5% declared by the assessee for both projects. These two projects were in progress during this asst. year. (Page Nos. 320-32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. The Appellant further submits that the appellant with the Department since last several years u/s.143 (3) and has submitted all the relevant details regarding projects in each assessment years. Some additions were made in the assessment orders against which appeals were filed and the additions were deleted in appeal. The Department has gone to ITAT, which was also decided in favour of the appellant. 6. In view of above, we hereby request your honour to consider the additional evidence under Rule 46 A and decide on the facts and circumstances of the case. 11. The submissions made by the assessee vide letter dated 14-3-2007 and additional evidence filed vide letter dated 17-6-2007 were forwarded by the ld. CIT(A) to the A.O. who submitted his remand report dtd. 30-1-2009 to the ld. CIT(A) offering his comments as under:- 1. At the outset, it is submitted that the assessing officer perused the details of income returned by the appellant in respect of the projects Gopala, Atur Park, Kukreja Plaza, Ganga Tower - I, and Ganga Tower II and observed that as per Tax Audit Report, the assessee had submitted a note on the method of accounting wherein it was mentioned that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal constructed area, built-up area, carpet area, saleable area of each project / building (x) Number of units constructed (xi) Cheque numbers of payments received. Since the aforesaid details were not submitted in toto and the required evidences were not produced and since the income / profit as per the provisions of the Act as well as that required the revised Accounting Standard had not been observed and also the method of accounting employed was such that profits could not be correctly derived at therefrom the assessee was required to explain why the account be not derived at therefrom, the assessee ws required to explain why the accounts be rpt rejected as per the provisions of section 145(3) and the accounts be not rejected as per the provisions of section 145(3) and assessment be completed in the manner provided u/s 144. After considering the assessee's submissions on the issue, it was held that the only acceptable and proven method for taxing the income of the Real Estate Developer is that estimate of profit has, to be made for the entire project which is required to be revised every year depending on the prevailing cost and possible project realization. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of Ganga Tower - II project was considerable. It is al a seen from the above statistics as per the Tax Audit Report that the assessee has not offered any estimated profit in respect of Ganga Tower II project during the year as in the projects Gopala, Atur Park and Kukreja Plaza. It is stated in the Tax Audit Report that the revenue in respect of Ganga Tower -II site will be determined on completion contract basis. In respect of the projects Gopala, Atur Park and Kukreja Plaza the assessee has offered revenue in respect of construction work-in-progress on percentage completion method by declaring the relevant percentages as mentioned above on the cost of construction incurred during the year at varying rates. Moreover, perusal of such percentage of profits declared during the A.Y.2003-04 2004-05 in respect of these 3 projects as tabulated hereinabove shows that no consistent pattern of declaring percentage profits have been followed as also no valid justification for adopting the said percentages have been submitted and evidences adduced. The assessee has declared percentage profit in respect of Gopala, Atur Park and Kukrej Plaza at varying percentages during the year. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit on the basis of percentage of work in progress every year. However, in respect of new projects started from asst. year 2001-02 onwards, the firm has adopted completion method of accounting for computing the profit and because of this reason, the 'Madhuri' project which was started in the asst. year 2001-02 and completed in asst. year 2003-04, the firm has followed completion method and the AO has accepted the same and thereby, not computed any profit in the asst. year .2001-02 and 2002-03 when the said project was in progress end accordingly, the profit in this project was declared in asst. year 2003-04 when he project was completed. (2) Similarly, in the Ganga Tower - II project, which was started in asst. Year 2002-03, the AO has not estimated any profit on the basis of percentage of work in progress in asst, years 2002-03 and 2003-04 and the firm has declared the total profit on completion of the project in the asst. year 2005-06. _ (3) In para 6 of the said letter, we have given the complete summary as to the asst. year in which the projects were undertaken, method of computing the profit adopted and in which asst. year the projects were completed. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, and - the use by others of enterprise resources yielding interest, roya1ties and dividends. Therefore, AS-9 is also not applicable on the firm. 5.18 In para 4, the AC has mentioned that the firm has not supplied the various details as called for by his predecessor during the course of' the assessment proceedings and again in view of the revised Accounting Standard -- 7, the books of accounts of the firm are rejected and provisions of Sec. 145(3) are applied. Appellant's submissions (1) In this respect, we submit that facts mentioned In our reply, in paras 4.1 and 4.2 under Ground No. 2, are not considered by the AO as he has kept silent and not commented on the real facts mentioned therein. In these paras, it is clearly mentioned that all the required details are filed before the AO and these unwanted details asked by the AO were not supplied as these are the lengthy details and the firm was not able to supply the same in a short period before 31-12-2006 when the assessment 'was getting time barred. As submitted in these paras, the firm is doing the business since asst. year 1986-87 and these details are supplied in the respective assessment year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercn tile system of accounting since inception, for last number of years and the said method has not been changed. 3. Mercantile system of accounting means all the receipts and payments for expenses are accounted on accrual basis and not on receipts basis. The said system is being followed by the assessee firm since inception and has not been changed. 4. In the case of a builder, completion of a particular project takes 'number of years, wherein many buildings are constructed and a complete complex is also provided including amenities like garden, playground, etc. (f a project takes a number of years to be completed, there is no certainty of the expenses and receipts from the project. Due to changes in the regulations of the 8MC and other laws, there is no certainty of expenses which accrue during the work in progress of the project. Similarly, there is a variation in the price of the flats which are constructed and sold from time to time looking to the prevailing property market conditions depending upon the slump/boom in the property market. 5. As per the Accounting Standard -- 7 issued by the Institute of Chartered Accountants of India, it is provided that there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en accepted by the department in respect of the projects completed in the asst. years 2 005-06. 9. We again repeat that these are the methods of computing the profit in the case of a builder under special circumstances as mentioned above and this Is not a change in the method of accounting as the appellant is always following the mercantile system of accounting all these years. 13. After considering the submissions made by the assessee, the comments of the A.O. in the remand report, counter comments offered by the assessee and the material available on record, the ld. CIT(A) held for the following reasons given in para 5.23 that the methods of accounting followed by the assessee to recognize its income from different projects was correct and the A.O. was not justified in rejecting the book results:- I have carefully considered the issues raised in the assessment order, submissions of the Appellant, comments of the Assessing Officer in the remand report and various letters of the appellant following the remand report. It is very apparent both from assessment order and the remand report on the one hand,. and various submissions made by the learned AR both before the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. No such fallacy or incongruity in accounting of expenses or receipts was proved even during the remand proceedings. 5.23.5 The claim of the appellant that Accounting Standard AS7 is applicable only to the cases of the contractors, is absolutely correct. In a contract system, the payments are received on the basis of work-in- progress V and such receipts are irretrievably earned by the contractors. The applicability of AS-7 is clearly mentioned in the said accounting standard itself, which is reproduced as under:- Accounting Standard (AS)-7, Construction Contracts(revised 2002), issued by the. Council of the Institute of Chartered Accountants of India, comes into effect in respect of all contracts entered into during accounting periods commencing in ir after 1-4- 2003 and is mandatory in nature from that date. Accordingly, Accounting Standard (AS-7), Accounting for Construction Contracts issued by the Institute in December, 1983 is not applicable in respect of such contracts. Early application of this Standard is, however, encouraged: 5.23.6 In the, case of builders, however, risk and reward are not transferred by construction. If market situation gets adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risk and reward are transferred and both percentage completion and project completion are well recognized methods for showing profits by the builders. Therefore, the conditions enumerated in sub-section 3 of section 145 can not be said to have been proved to be violated. The action of the learned Assessing Officer in rejecting the Books of Account of the appellant form u/s 145 of the Income tax Act was, therefore, not justified and the second ground of appeal is allowed accordingly. 14. After accepting the methods of accounting followed by the assessee, the ld. CIT(A) considered the issue of estimation of income of the assessee from different projects and found of such consideration that the income estimated by the assessee from different projects was fair and reasonable for the following reasons given in his impugned order:- Ganga Tower : 6.6.3 It is further seer that the income from Ganga Tower - II has been declared by the appellant in subsequent year relevant to A.Y.2004-05, and accepted by the learned Assessing Officer as such. There is nothing on record to show that any attempt is made the Assessing Officer to establish that substantial part of this, project: has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, then the extra income not shown, will get accumulated to be included at the end of the project. Similarly, If it had overstated its income over these years, the appellant would end-up showing less income in the concluding year. In other words, if the Assessing Officer has not found any receipt other than the ones shown by the appellant in all these years, or If he has not proved any inflation of expenses in respect of the project, the over-all income of the project cannot be disturbed. Since the income as shown has been accepted by the respective Assessing Officers as such till the A.Y.2003- 04, and the project has been shown to be Completed in the period relevant to A.Y.2005-06, no useful purpose is served by merely disturbing the revenue realization in the year under consideration. It is a fact that the appellant has shown very small increment in the work- in-progress for A.Ys 2004-05 and 2005-05, but that cannot justify the income shown for AY.2005-06 to be shifted to A.Y.2004-05 in respect of this project for two reasons. The first reason is that the increment in work-in-progress is small not only for A.Y.2005-06 but also for A.Y.2004-05. The second reason is that the compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. occupation certificate is received the balance profit is declared. The same was also accepted by the Assessing Officer in this subsequent year. But, the learned Assessing Officer did not accept the Appellant's method of computing profit. 9.6 Since the Method of accounting the profit on percentage basis to the cost incurred on the project during the year has been accepted by the ITAT in the case of the appellant as well as group concerns and the facts are identical to the Ground No. 4 of this very appeal, the AO is directed to delete the addition of ₹ 3,57,00,636/- being the estimated profit of Gopala Project added by the A.O. 15. The ld. CIT(A) thus accepted the income offered by the assessee from different projects by following the methods of accounting consistently over the years and deleted the addition made by the A.O. by estimating the income from the said projects at higher values. Aggrieved by the order of the ld. CIT(A) giving relief to the assessee on this issue, the Department has raised its grievance in the present appeal filed before the Tribunal. 16. The ld. D.R. submitted that the seven projects of the assessee under execution during the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions. He submitted that the project completion method, on the other hand, was found to be more appropriate and the same accordingly was adopted by the assessee to recognize the income from the projects which started after 31-3-2000. He contended that the methods adopted by the assessee for different projects, however, were consistently maintained by the assessee project-wise and, therefore, the entire income from the said projects was finally assessed to tax. He submitted that even the project completion method followed by the assessee in respect of certain projects commencing after 1-4-2000 was accepted by the A.O. in A.Y. 2003-04 as well as assessment years 2005-06 and 2006-07. He contended that there was thus no justification in the action of the A.O. to change the said method only in A.Y. 2004-05 which resulted in double addition. He invited our attention to the copies of assessment orders for assessment years 2003-04, 2004-05, 2005-06 2006-07 placed in his paper book to show that there was no addition made by the A.O. on account of income offered by the assessee from different projects thereby accepting the method followed by the assessee. As regards AS VII relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. was not justified in rejecting the book results of the assessee on the basis of change in the method adopted by the assessee or to different method allegedly followed by the assessee. It was also observed that even the change in the method of accounting adopted by the assessee was properly justified before the ld. CIT(A) by explaining with the help of results of one project to show that how the project completion method was more proper method to recognize the income from the projects in the change market condition. It was also pointed out by the assessee before the ld. CIT(A) that the revised AS VII relied upon by the A.O. was not applicable in the case and the same not being notified by the Central Government u/s 145(2), it was not mandatory. We, therefore, uphold the impugned order of the ld. CIT(A) accepting the method of accounting followed by the assessee to recognize its income from business income after holding that the A.O. was not justified to reject the book result declared by the assessee as per the said method. 19. Having held that the method adopted by the assessee to recognize the income from the project under execution during the year under consideration w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 3 crores from the said project in the year under consideration by treating the said project as completed in that year when the said profit was duly offered by the assessee in A.Y. 2005-06 on the basis of completion certificate received and the same was accepted by the A.O. This action of the A.O. also resulted in double addition of the same income in the hands of the assessee which was not justified as rightly held by the ld. CIT(A). Similarly, the profit from Kukreja Plaza project was declared by the assessee in A.Y. 1994-95 by following percentage completion method aggregating to ₹ 1.73 crores and the balance profit from the said project amounting to ₹ 0.89 crores was offered by the assessee in A.Y. 2006-07 when the said project was completed. The entire income of the assessee from the said project thus was already assessed to tax in the hands of the assessee as per the method consistently followed and there was no justification in the action of the A.O. in bringing to tax the said profit again in the hands of the assessee in the year under consideration which clearly resulted in double addition of the same income. The position as regards to Gopala Project was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee holding that there was nothing brought on record by the A.O. to establish that the expenses so claimed by the assessee were either bogus or were not incurred for the purpose of business. Since the impugned order of the ld. CIT(A) deciding the main issue in favour of the assessee upheld by us, the consequential relief allowed by him to the assessee by allowing the deduction on account of business expenses of ₹ 36,37,375/- is liable to be sustained as a corollary. We order accordingly and dismiss ground No. 'g' of Revenue's appeal. 22. In ground No. (h), the Revenue has challenged the action of the ld. CIT(A) in allowing 50% of depreciation amounting to ₹ 27,59,570/- claimed by the assessee in respect of hotel business. 23. During the year under consideration, the assessee had started a new business in the name of K. Stars Hotel. Investment of ₹ 8,34,82,152/- in fixed assets was stated to be made by the assessee for the said business and depreciation thereon was claimed by the assessee to the extent of ₹ 55,19,141/-. While examining the claim of the assessee for the said depreciation, the A.O. found that purchases of Air conditioners a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the hotel business was started on 17-1-2004 and the assets thus were put to use for the said business from that date. Neither the A.O. in his remand report submitted to the ld. CIT(A) nor the ld. D.R. at the time of hearing before us has been able to bring anything on record to dispute this position. We, therefore, find no justifiable reason to interfere with the order of ld. CIT(A) directing the A.O. to allow the claim of the assessee for depreciation on the assets put to use for hotel business to the extent of 50% as the use of the said asset was for less than 180 days during the year under consideration. We, therefore, uphold the order of ld. CIT(A) dismissing ground No. h of the Revenue's appeal. 27. As regards ground No. (i), it is observed that the issue involved therein relating to assessee's claim for loss pertaining to the hotel business is similar to the one involved in ground No. (h) inasmuch as the ld. CIT(A) after having accepted that the hotel business of the assessee was commenced during the year under consideration, allowed the claim of the assessee for ₹ 8,18,327/- for the year under consideration. As we have upheld the findings of ..... 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