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2022 (5) TMI 230 - AT - Income TaxClaim of depreciation on units leased to assessee - assessee company has taken the units on lease for a period of 95 years from SEEPZ Authority - HELD THAT:- Being a perpetual lease i.e. 95 years + 95 years, the assessee is nothing less than an owner of the units allotted to it. Therefore, the consideration paid by the assessee can reasonably include not only the cost of construction of the building but also the cost of proportionate land. This conclusion is also supported by the clause of sub–lease referred herein above, which specifically provides that the said 4 units were allotted to the assessee together with the proportionate land under the Tower No.II in Seepz++. Nominal yearly ground rental of Re.1/- charged to the assessee is at concessional rate in order to promote export industries in India. Otherwise, property having such an area i.e. 26168 sq.ft. at SEZ location fetch a very high rent. The reliance placed by the learned A.R. on judicial precedents to support its submission that the agreement should be read as a whole rather supports the fact that the consideration paid by the assessee was not only for the cost of construction of the 4 units but the same also included cost of proportionate land. To this extent, we do not find any infirmity in the impugned order passed by the learned CIT(A). Further, for bifurcating the consideration amongst the aforesaid two components, the learned CIT(A) has placed reliance on the stamp duty rate of proportionate land during the relevant period of acquisition of the said 4 units, which also we find to be quite reasonable, as only about 35% of the consideration was treated as cost of proportionate land. In view of the above, we find no infirmity in the order passed by the learned CIT(A) granting partial depreciation to an extent of Rs. 48,17,491 as against Rs. 65,61,664 claimed by the assessee. As a result, grounds raised by the assessee in appeal for assessment year 2010–11 are dismissed.
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