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TMI Blog2019 (3) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding action of AO for making disallowance u/s 14A while computing book profit u/s 115JB. 3. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in confirming the depreciation of Rs. 1,04,28,596/-, at the rate of 25% on lease-hold right acquired in respect of land at Dahej SEZ (being an intangible asset), on opening WDV calculated on the basis of claim made by the appellant during assessment proceedings for A.Y, 2011-12. The claim shall be duly allowed." 3. At time of hearing, the ld.counsel for the assessee did not press ground no.1, hence, it is rejected. 4. Ground nos.2 and 2.1: 5. Brief facts of the case are that the assessee has filed its return of income on 29.09.2012 declaring total loss at (-) Rs. 6,66,96,895/-. On scrutiny of the accounts, it revealed to the AO that the assessee has dividend income of Rs. 85,06,365/- which is claimed as exempt. He examined the expenses required to be disallowed in relation to earning of this income under section 14A r.w. rule 8D. The ld.AO has worked out expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully following the above decision of the Special Bench, we allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules. 10. In the next ground issue involved is, whether depreciation at the rate of 25% on leasehold right acquired in respect of land at Dahej SEZ is admissible to the assessee or not. 11. The ld.counsel for the assessee at the very outset contended that the ld.CIT(A) has not recorded any independent finding in this year, but simply followed the findings of her predecessor in the Asstt.Year 2011-12. In the Asstt.Year 2011-12 appeal has been heard by the Tribunal and outcome of that be followed. 12. We find that the ITAT has decided similar issue in the Asstt.Year 2011-12 in ITA No.1562/Ahd/2015 vide order dated 19.3.2019. The discussion made by the Tribunal on this issue reads as under: "8. We have heard the rival contentions and perused the materials availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired the right to use such lease land after registering the lease deed with Dahej SEZ. But in our considered view the registration of the deed does not change the character of the lease premium. 9.1. At this relevant point of time, we find it important to refer the judgment of the Hon'ble Gujarat High Court in the case of DCIT Vs. Sun Pharmaceuticals industries ltd supra wherein it was held as under: "The assessee-company claimed deduction of a sum of Rs. 48,02,616 being payment to Gujarat Industrial Development Corporation (GIDC). The Assessing Officer called upon the assessee to substantiate the said claim. It was contended that the lease rent in respect of the land allotted to the assessee-company being very nominal. i.e., at the rate of Rs. 40 per year, the said payment was nothing else but advance rent and, hence, allowable as revenue expenditure. After going through the lease agreement the Assessing Officer disallowed the claim holding that the assessee had acquired a benefit of enduring nature in the form of use of land for a period of 99 years; that the land had been transferred through a registered deed involving transfer of immovable property; and, thus, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as well as sun Pharma on account of such land taken on these. 11.1. We also note that claim for treating such premium as revenue expenses was made 1st time before the Ld.CIT (A) which was duly admitted as per the provisions of law by him. But after admitting the claim of the assessee, the same was rejected by the Ld.CIT (A) for the reasons discussed here-in-above. Regarding this, we note that the Ld.CIT (A) has not called for any remand report from the AO on the issue of such premium payment as revenue expenditure. Thus there remains no ambiguity that the AO did not verify this fact. In our considered view, the Ld.CIT (A) should have called for the remand report from the AO on the impugned issue of such premium paid on the leased land. Thus we are inclined to restore this issue to the file of AO to decide the matter afresh in the light of the judgment of Hon'ble Gujarat high court in the case of Sun Pharma as discussed above. 11.2. We are also conscious of the fact that the issue of remand report is not arising from the order of authorities below. However, to meet the end of justice, we are of the view that the fair opportunity should also be given to the AO. 11.3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset. The only advantage which the assessee derived by spending the money was that it got the lease of a new building at a low rent. From the business point of view, therefore, the assessee got the benefit of reduced rent. The High Court had, therefore, rightly considered this as obtaining a business advantage. The expenditure was, therefore, to be treated as revenue expenditure. Since the asset created by spending the amounts did not belong to the assessee but the assessee got the business advantage of using modern premises at a low rent, thus, saving considerable revenue expenditure for the next 39 years, both the Tribunal as well as the High Court had rightly come to the conclusion that the expenditure should be looked upon as revenue expenditure." 11.6. For the time being, we are not inclined to adjudicate the issue raised by the assessee in its grounds of appeal whether the assessee is entitled to depreciation on the payment of such premium on the land taken on lease. As such we keep the issue open. 11.7. It is also important to note that, in case the AO allows the deduction to the assessee treating the amount of premium as revenue expenses than he will ensure t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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