TMI Blog2014 (11) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... ISBT – Asset owned by Delhi Vidyut Board or assessee company – Held that:- CIT(A) rightly was of the view that there is no doubt that the expense on electric sub-station was incurred wholly and exclusively for the purpose of business - assesseeis entitled to claim the entire expense as revenue – relying upon CIT Vs Saw Pipe Ltd. [2007 (1) TMI 101 - DELHI HIGH COURT] – expenses on electric sub-station was incurred wholly and exclusively for the purpose of business - the assessee was entitled for deduction of entire expenditure, though, it claimed only depreciation treating the expenditure in capital field – Decided against revenue. Misc. income not offered for taxation disallowed – Held that:- CIT(A) rightly held that the assessee had capitalized two sectors of their construction projects namely Vishwavidyala – Kashmere Gate sector and Inderlok – Rithala sector - In the subsequent assessment year the appellant had capitalized two more sectors Kashmere Gate – Centre Secretariat sector and Barakhamba – Dwarka sector - this method of accounting has consistently been followed by assessee - the interest on advance pertained to construction work – the order of the CIT(A) is upheld – D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case and in law was justified in deleting the addition of ₹ 12069934/- made on account of disallowance of depreciation on the asset owned by NBCC, not by the assessee company. ii) Whether the Ld. CIT(A) under the facts and circumstances of the case and in law was justified in deleting of disallowance of ₹ 13756398/- made by the AO on account of disallowance of depreciation on installation of electric sub-station at ISBT owned by Delhi Vidyut Board, not by the assessee company. iii) Whether the Ld. CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of ₹ 92959567/- made by the AO on account of disallowance of Misc. income which was not offered by the assessee for taxation. iv) Whether the Ld. CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of ₹ 2281852/- made by the AO on account of disallowance of excess provision of leave encashment u/s 43B(f) of the I. T. Act, 1961. 4. Brief facts apropos Ground No. 1 are that the Assessing Officer noticed that the auditor of company qualified in his report for depreciation provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e name of DMRC Ltd. As per the evidence submitted the appellant had intimated the earlier AO in the A. Y. 1997-98 vide letter dated 24.8.1999 that the building was purchased at a cost of ₹ 16.73 crores and the payment was made through cheque No. 108570 dated 31.3.1997 to Land Development Officer, Ministry of Urban Development. The evidence submitted indicates that Ministry of Urban Development had allotted office space to DMRC Ltd. in the complex constructed by NBCC and the payment was made by the DMRC Ltd. directly to the Government of India to be adjusted against the various dues outstanding against NBCC for the allotment of land for construction for the above complex. A letter No. J-13026/6/97-LD dated 17.3.1997 of Ministry of Urban Affairs to Land Development Officer indicates clearly that Land belongs to the Government and NBCC was to be compensated only for the cost of construction. The office space occupied by DMRC was earmarked for the Government and the same was provided to DMRC by the Government of India due to DMRC s social objectives and also due to the fact that DMRC is a joint venture of Government of India. The letter also indicated that it was the responsibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as capital expenditure on assets not owned by the company but the depreciation on this capital expenditure was claimed. As per facts on records, this payment was made to Delhi Vidyut Board for installation of electric sub-station at ISBT for smooth running of train operations as company had incurred the whole expenditure from its own source and the assets were wholly and exclusively used by DMRC, therefore, depreciation was claimed. The Assessing Officer disallowed the depreciation on the capital expenditure incurred by the assessee observing that the assets were owned by the DVB. The ld. CIT(A) allowed the assessee s claim following the order for assessment year 2003-04 inter alia observing that the option before the AO, in view of the Hon ble Delhi High Court decision in the case of CIT Vs Saw Pipes Ltd. 300 ITR 35 was to either allow the entire expenses as Revenue expenditure or to grant depreciation as claimed by the assessee. He, accordingly, allowed the assessee s claim for depreciation of ₹ 1,37,56,398/-. 8. We have considered the submissions of both the parties and perused the record. The ld. Counsel pointed out that for assessment year 2003-04 the department d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in schedule-9 but did not add back the miscellaneous income (including interest on advance from vendors) of ₹ 9,29,59,567/-. He, accordingly, made an addition of this amount to the total income. Before ld. CIT(A), the assessee had pointed out that the interest on advance pertaining to construction work had been capitalized considering the same as capital receipts. These interests on advances were reduced from project cost and depreciation was claimed only on balance amount. Ld. CIT(A), taking note of the fact that the assessee was consistently following this method of capitalizing interest on advance as it pertained to their construction work, deleted the addition made by Assessing Officer. 11. We have considered the submissions of both the parities. Schedule-9 to the profit and loss account deals with other income earned by the assessee which is reproduced here under:- Particulars For the Year ended on 31.3.2004 For the Year ended on 31.3.2003 Deferred Government Grant 6,839,221 Misc. income (including interest on advance from vendors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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