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TMI Blog2017 (7) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of a sum of Rs. 25,59,084/- on account of depreciation and computing the income under the head house property as against the claim of the claim of the appellant that such income be assessed under the head income from business and profession, more so when there was no incriminating material found during the course of search. 3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making the impugned disallowance. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. The main grievance of the assessee in this appeal relates to the sustenance of the disallowance made by the AO and considering the income as income from house property instead of business income claimed by the assessee. 4. Facts of the case in brief are that a search and seizure operation u/s 132 of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red separately) Rs.632000/- (-) Rs.2593190/- Add : Deprecation (-) Rs. 2559084/- Rs.34106/- Income from house property Less: Rs.632000/- Deduction u/s 24 Rs.189600/- Rs.442400/- Total income Rs. 4,08,294/- Rounded off Rs. 4,08,290/- 5. Being aggrieved the assessee carried the matter before the ld CIT(A), and submitted as under:- "Ld. AO has disallowed depreciation amounting to Rs. 22,58,435/- on the wound that assessee is deriving rental income and, therefore, such rental income is to the assessed under the head house property and depreciation claimed in profit and loss account in respect such property cannot be allowed. Firstly, It is submitted with great that Ltd. AO made impugned disallowance in the proceedings u/s 153A which according to the appellant could not have been so made because there was no incriminating material found during the course of search. It has been held in following judicial decisions that jurisdiction to make any addition or disallowance can be assumed in proceedings u/s 153A only when there is incriminating material discovered during the course of search. Releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous and academic only. Consequently appeals preferred by the assessee for the A.Y. 2003-04, 2004-05, 2005-06 and 2006-07 are dismissed. "MGF Automobiles Ltd. Vs. ACIT, ITA Nos. 4212 & 4213/DEL/2011 In present case it is apparent that on the date of search be on 12/09/2007, the assessments for assessment year 2004-05 and 2005-06 were already completed. There was no incriminating material found during search for these years as is apparent from arguments of LD. AR and from records and Ld. Departmental Representative did not bring to our notice regarding any incriminating material having been found during search. Therefore, following the judicial precedents, we are of the opinion that though assessments for the above year were bound to be reopened but additions could be made only if some incriminating documents was found during search. M/s. Tar annum Zafar Khan Vs. ACIT, ITA Nos. 5888 to 5890/Mum/2009 18.3 One more reason is there that most of the additions have been made in the routine manner as the issue has not been discussed in right perspective in taking into consideration the submission and other evidences filed. It is also a matter of fact that no incriminating mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the AO by observing in para 4.3 of the impugned order as under:- I have considered the assessment order, written submission and arguments of Ld. AR during the appellate proceedings, The main arguments of the Ld. AR is that the addition u/s 153 A cannot be made without any incriminating evidence gathered as a result of search and seizure operation. He has relied upon various judicial pronouncements cited supra in para 4.2 of the order. I have considered these judicial pronouncement. Ld. AR has filed copy of acknowledgement for Return of income for impunged assessment year. It may be mentioned her that for A. Y 2011 -12 being search Assessment Year, the provisions of section 153A does not apply. Hence, the Assessing Officer has power to assess total income irrespective of the seized material. Further, for A.Y, 2010-11 also time barring date for issuance of notice u/s 143(2) has not expired. As due date for the filing return of income is September 2010 and search u/s 132(2) took place on 21-1-2013 against the assessee. Hence this assessment also cannot be considered as closed assessment. Therefore, the ruling of various judgment relied upon by the Ld. AR. are not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;Income from House Property". In this regard, rely on the decision of hon'able jurisdictional High Court in the case of CIT Vs. Discovery Estates (P) Ltd, (2013) 356 ITR 0159 (Del.). In that case also, the assessee was engaged in the business of construction. Therefore, the facts are identical to the present case. The reliance of Ld. AR on the decision of hon'able Supreme Court in the case of l.C.D.S Ltd. cited supra is misplaced as the issue is not claim of depreciation but head of income under which rental income is to be assessed. Once it is decided that the rental income is assessed under the head 'income from house property', the deduction is allowed under that head only and, therefore, question of allowing depreciation u/s 32 being business head does not arise." 7. Now the assessee is in appeal. The ld counsel of the assessee reiterated the submission made before the lower authorities. He further submitted that similar disallowance was made in the subsequent assessment years i.e. 2012- 13 and the addition made by the AO was deleted. Copy of the said order dated 29.01.2016 was furnished which is placed on record. It was also stated that department has not pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant did not find favour with the A.O. as well as before Ld. CIT(A) in A.Y, 2010-11 & A.Y, 2011- 12, and the main argument, were that the A.O. cannot make the addition u/s 153A/143(3), since no incriminating documents were found during search and seizure action u/s 132 on 21.01.2011. (iv) It has been submitted by the appellant that this issue involved here, is squarely covered by the ratio laid down in the case of M/s. Chennai Properties & Investments Ltd v. Commissioner of Incometax, Central -III, Tamil Nadu, (2015) 6 taxmann.com 456 (SC). In the facts and circumstances of the case, I agree with the submission/argument of the appellant, since the issue involved, is covered by ratio laid down in the above Supreme Court decision (supra). Therefore, with due respect, I beg to differ from the decision of vide order dated 23.01.2014, Ld. CIT(A) in assessee's own case for A.Y, 2010-11 & A.Y. 2011-12, as at that time the above decision of the Hon'ble Supreme Court was not available: "11. We are conscious of the aforesaid dicta laid down in the Constitution Bench judgment. It is for this reason, we have, at the beginning of this judgment, stated the circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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