TMI Blog2019 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had not claimed any such land cost or constructed cost, since it had offered the lease premia in the form of rent in its hands from year to year. It was only after the order passed under section 263 of the Act, lease premia in totality was assessed in the hands of assessee in the year in which the assessee had entered into agreement of lease. The corresponding fall out to which is that the concept of matching principle has to be applied and where the assessee had entered into agreement to lease, then the cost of said assets needs to be allowed as deduction in its hands. Taxability of lease premium after spread over the period of 99 years - The question which arose was the assessability of lease premium in the hands of assessee i.e. whether it could be spread over the period of 99 years or the same has to be assessed in the hands of assessee in the year in which it enters into lease agreement. The assessee has clearly mentioned that the allotment of land was made by respective State Governments for development of area and has also pointed out that as in the case before the Hon ble High Court, there was no renewal clause after 99 years in the agreement. Further, in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no merit in the pleadings of learned Authorized Representative for the assessee in applying dictate of Hon ble High Court of Madhya Pradesh. Accordingly, this plea is dismissed. The grounds of appeal on merits are thus, allowed in favour of assessee. - ITA Nos.929 to 932/PUN/2014, CO Nos.78 & 79/PUN/2014 And ITA Nos.944 And 945/PUN/2014 - - - Dated:- 27-6-2019 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For The Appellant : Shri Kishore Phadke For The Respondent : Ms Nandita Kanchan, CIT-DR ORDER PER SUSHMA CHOWLA, JM: Out of this bunch of appeals, four appeals filed by assessee are against respective orders of CIT(A)-2, Nashik, all dated 26.02.2014 relating to assessment years 2003-04 to 2005-06 and 2008-09 against respective orders passed under section 143(3) r.w.s. 263 / 143(3) r.w.s. 254 / 143(3) of the Income-tax Act, 1961 (in short the Act ). The Revenue has filed Cross Objections and cross appeals against respective appeals of assessee. 2. Out of this bunch of appeals, against appeals filed by assessee in assessment years 2003-04 and 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing depreciation on leased assets amounting to ₹ 8,17,70,109/-. 8. The learned CIT(A) erred in law and on facts in conforming the decision of AO of not granting appropriate deduction of cost of land and cost of development of the constructed premises incurred during earlier period/years. 9. Without prejudice to ground no.5 and 6,The learned CIT(A) has erred in conforming the decision of AO in disallowing the depreciation on leased assets amounting ₹ 8,11,41,046/- as an application of income. He ought to have appreciated that depreciation on leased assets is allowable considering the CBDT circular no.2 of 2001 dated 9-2-2001. 10. The appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief. 4. The assessee has also raised additional grounds of appeal which read as under:- 11. The opening WDV of various assets as on 1/4/2002 (including the INFRASTRUCTURE assets created by the appellant) ought to be considered for the purpose of depreciation u/s 32 of the ITA, 1961. 12. Alternatively and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 set aside the assessment order for the year under consideration holding the same to be both erroneous and prejudicial to the interest of revenue, with direction to Assessing Officer to frame assessment de-novo after taking into account the facts of case and also submissions made by assessee. The Assessing Officer taking up assessment, issued notice of hearing to the assessee. During the course of assessment proceedings for assessment year 2008-09 it was noted that profit on sale of plots was recognized on notional 10% on the amount realized from the lease of plots of land. Similarly, profits on sale of plots for assessment year 2003-04 were recognized on similar lines i.e. @ 10% of amount realized during the year. The Assessing Officer also noted that assessee was charging transfer premium when the lease was assigned by lessee to another party, but only a part of transfer premium was treated as income for that year. The income of ₹ 22,01,555/- at 1/78th part of total receipts were recognized as transfer premium in the year under appeal. The Assessing Officer found that the assessee was entering into 99 years lease with buyers in respect of buildings and plots of land. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 17,57,19,565/- against which, the assessee had booked direct expenses of ₹ 11,73,40,782/- and indirect expenses of ₹ 9,74,658/-. Accordingly, surplus of ₹ 5,74,03,924/- was shown in the Receipt and Payment Account, which was claimed as exempt. The income of ₹ 17.57 crores comprised of income from development activities, interest accrued and rent accrued. The Assessing Officer noted that total interest accrued to ₹ 14.06 crores on term deposits held with the banks appearing under the head Investment in the Balance Sheet. Further, rent accrued was declared at ₹ 1,23,87,565/- which was the lease premium recognized on constructed properties. The Assessing Officer further noted that income from development activities was ₹ 2.26 crores. However, the income was not fully offered and since the assessee had not offered the profit recognized on sale of plots of ₹ 1.42 crores, income recognized on transfer premium of ₹ 22 lakhs (approx.) and lease premium on constructed properties of ₹ 1.23 crores, the assessee was asked to explain the nature of said entries. After considering reply of assessee and tax audit report and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and residential properties leased. 9. The plea of assessee on the other hand, was that it was operating lease and reference was made to Accounting Standard-19 and it was pleaded that one time premium charged at the beginning of lease was more than value of asset and where the life of building leased was typically 50 years or so, was much lesser than period of 99 years. The Assessing Officer however, observed that even as per AS-19, this would be financial lease and not operating lease. Hence, the claim of depreciation by assessee was found to be not in order by the Assessing Officer. It was further held that depreciation could be claimed by lessee but not the assessee. It was further held that there was no basis for spreading the premium received at the time of agreement, to 99 years on a straight line basis. The Assessing Officer observed that where the assessee was not required to provide any services to the lessee over the period of 99 years, even where the assessee may be generally engaged in development of land area falling in its jurisdiction, but the lease contract did not have even a single clause requiring the lessor i.e. assessee to provide any service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, 10% of amount received was treated as profit for the year. The assessee did not furnish cost details in respect of plots transferred in the current year. The assumption of assessee that cost increases in each year and profit remains exactly 10% was not supported or established by the accounting data of assessee and hence, was not accepted. Rejecting the explanation of assessee that percentage of application fund for assessment year was 106% and was above 100% for assessment year 2004-05, the Assessing Officer held that working of percentage of application of funds worked out by assessee was an incorrect method of accounting. 12. The next aspect which was taken up by the Assessing Officer was submission of assessee that it had been granted registration under section 12A of the Act and income would need to be computed in accordance with sections 11 to 13 of the Act. The assessee also submitted that it had filed an appeal before the Tribunal against order passed under section 263 of the Act. The Assessing Officer vide para 15.2 at page 28 notes that income of assessee became taxable after deletion of section 10(20A) of the Act w.e.f. 01.04.2003. Subsequently, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, held that 85% of surplus of income to the extent it exceeds the actual application to charitable purposes was taxable under section 11(2) of the Act and added ₹ 21.89 crores for the year under consideration. The income was assessed under sections 11 to 13 of the Act. However, defect in accounting method was held to be relevant for assessment under business income also. The Assessing Officer observed that since entire receipts were considered as taxable, expenditure considered as capital expenditure would not be allowed and taxable income was determined at ₹ 21.89 crores and the assessment was made under the head business income . 14. The CIT(A) notes that the assessee had furnished return of income in response to notice under section 148 of the Act at nil claiming exemption under section 11 of the Act. However, the order under section 143(3) r.w.s. 148 of the Act was passed assessing income at ₹ 7,42,84,300/-. The assessee filed an appeal against the said order of assessment and the CIT(A) allowed the issue of depreciation partially. Both the Department and assessee filed appeal to the Tribunal. Before the decision of Tribunal, Commissioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, income of Development Authority was exempt from income tax under section 10(20A) of the Act. However, from assessment year 2003-04, said exemption was removed by the Legislature and under the amended provisions, income of housing boards of States and Development Authorities was taxable. The assessee explained that Tribunal had granted registration under section 12A of the Act w.e.f. 01.04.2002 and appeals for four years starting from assessment years 2003-04 to 2006-07 had to be decided in line with directions of Tribunal allowing registration to assessee under section 12A of the Act. The assessee thus, explained its modalities of developing township and various expenditure incurred i.e. first allotment of land / tenements to various parties. It was then explained that the assessee carried out infra related expenses which included making roads, gardens, water tanks, streets, plantation, etc. These infra facilities were used by public, for which assessee was not charging any fees / toll charges. However, these infra expenses had to be considered for computing income in the hands of assessee. Another point which was raised by assessee was that the assessee created budget of expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of building lease revenue and in case the entire lease revenue received in a year needs to be considered as eligible revenue, then the quantum of revenue for past years regarding 1/99th revenue need to be removed on logical reasoning. Similar plea was raised in respect of creating entire proceeds on plots leased premium to account called as plots premium account . Every year 10% of said premium used to be taken to Profit and Loss Account. However, the Assessing Officer had added entire credits to plots premium account, which had resulted in double taxation. The next plea raised by assessee was that claim of depreciation on leased building. It was stressed that where the lease period was 99 years and the same was operating lease, then the lessee was required to vacate building / premises and handover the properties back to the assessee at the end of lease period. Since the income from use of property was being offered to tax, then related depreciation on the same ought to be considered before working out taxable income of assessee for the respective years. In this regard, assessee placed reliance on the ratio laid down in CIT Vs. Institute of Banking Personnel Selection reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h CIT(A) and then Assessing Officer on 11.02.2014 and 14.02.2014, respectively, requesting condonation of delay in filing the said Form No.10 late. Since the assessee had furnished Form No.10 late before the Assessing Officer, the CIT(A) was of the view that decision on Form No.10 and accumulation was yet to be taken and hence the issue raised was held to be premature and dismissed. Vis- -vis enhanced claim of accumulation of income, request being made in Form No.10, the CIT(A) observed that confusion in working out correct claim for accumulation appeared to be bonafide. Reference was made to CBDT circular No.273, dated 06.02.1980, which specifically allows the Assessing Officer and CIT(A) to accept belated submission of Form No.10 and allow the condonation of delay. Coming to last issue of depreciation on leased assets, this plea of assessee was also not accepted. The next plea of assessee which was raised was the aspect of WDV for the purpose of working out eligible depreciation. The Assessing Officer had re-worked the WDV of assets by considering explanation 4 to section 32 of the Act, wherein depreciation was to be compulsorily allowed for working out business income. It was pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade available to the assessee for development into a township. The assessee was carrying on two-fold activities i.e. offering plots of land on lease basis and also constructing premises and giving them to the ultimate user again on lease basis. The overall period of lease was 99 years and if it is transferred, then for balance period premium is received. In case it is transferred in midway then original lessee gets refund on proportionate basis for balance period of lease and purchaser pays market value of the premium for balance period of lease. The assessee was following mercantile / accrual system of accounting. Referring to the order of Assessing Officer, the assessee points out that it talks of the claim of assessee that corresponding cost be allowed. The Assessing Officer treated the assessee s lease as financial lease and did not allow depreciation on assets and / or corresponding costs. The learned Authorized Representative for the assessee stressed that in case lease premium is treated as income of assessee on accrual basis, then land cost needs to be allowed and also cost of construction on infrastructure is to be allowed along with depreciation on leasehold premises and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,23,99,72,278/- c) Infra and development - ₹ 3,91,90,091/- d) Office building (separately shown) - ₹ 18,73,149/- 21. The learned Authorized Representative for the assessee pointed out that properties constructed of ₹ 123.99 crores was shown as fixed assets; but in fact it was inventory cost of revised recognized income as held by the Tribunal. He further pointed out that arguments made before the CIT(A) get modified as the assessee was recognizing revenue year-wise and not on account of total premium receipts. Our attention was drawn to page 30 of order of CIT(A), where the land cost was never allowed as application of money, so depreciation claimed was perse for the first time. He further argued that even otherwise where the cost of asset was allowed as application of money, depreciation merits to be allowed. In this regard, reliance was placed on the decision of Hon ble Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or allowance for normal depreciation. c) CBDT Circular No.005P, dated 19.06.1968, wherein instructions were given with regard to assessability of income of charitable trust (paras 3 and 4) d) CIT Vs. Mumbai Metropolitan Regional Iron Steel Market Committee (2015) 378 ITR 103 (Bom) e) ACIT Vs. Punjab Urban Development Authority (2014) 100 DTR 118 (Chd)(Trib), wherein it was directed that corresponding expenditure which has been expended by assessee is to be allowed as deduction in cash system. 22. The learned Authorized Representative for the assessee here stressed that where the assessee was following mercantile system of accounting, then expenses are to be allowed in the hands of assessee on matching principle. Further, the depreciation had to be allowed in case of financial lease. In this regard, reliance was placed on the ratio laid down in I.C.D.S. Ltd. Vs. CIT (2013) 29 taxmann.com 129 (SC). The learned Authorized Representative for the assessee stressed that it was rightful owner and only the enjoyment rights were given to lessees but the ownership rights remained with assessee. Our attention was drawn t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the first time in assessment year 2003-04, the Balance Sheet was prepared with approximate figures and the opening balances were not disturbed by the Assessing Officer/CIT(A). It was also stressed by him that in the hands of assessee what is to be charged is the income and not the receipts, so proportionate cost merits to be allowed on matching principle. Coming to next issue of non-filing of form No.10, reliance was placed on the ratio laid down in CIT Vs. Mumbai Metropolitan Regional Iron Steel Market Committee (2015) 378 ITR 103 (Bom). 25. The learned Authorized Representative for the assessee was directed to file calculation of allocable expenditure with necessary certification on the next date of hearing. The learned Authorized Representative for the assessee filed area measurements working in respect of area sold during different assessment years and also area constructed before 2002 but not sold upto assessment year 2013-14. Another statement was filed regarding distribution of area after 31.03.2002; both for residential, commercial and housing scheme. The learned Authorized Representative for the assessee further sought time to furnish evidence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Pune Bench of Tribunal in Bhagini Nivedita Sahakari Bank Ltd. Vs. DCIT (2018) 100 taxmann.com 375 (Pune-Trib.). On the last date of hearing, the learned Authorized Representative for the assessee furnished tabulated details and pointed out that the land utilized for the purpose was 179.02 Hectors, which was valued at ₹ 1.74 crores, cost of construction of same was ₹ 12.92 crores. This cost of land and cost of construction was to be apportioned over the period from 01.04.2002 to 31.03.2014 on the basis of land transferred and tenements sold. The learned Authorized Representative for the assessee also pointed out that there was still balance area available with the assessee of 55.37 Hectors and constructed area of 2171 sq.mtrs. The learned Authorized Representative for the assessee also referred to second note on the addition on account of infra cost and it was pointed out that same was proportionate over the whole construction cost and was already added. However, depreciation on such infrastructure and development has to be allowed. It was also pointed out by the learned Authorized Representative for the assessee that the assessee had already claimed expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for this, suitable directions be granted. 28. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is multi-fold, wherein the first ground which has been raised in all the years by the assessee is that since it was extended arm of State Government of Maharashtra and consequently, income of assessee was not taxable under the Income Tax Act. We find no merit in the said plea raised by assessee and the same is decided against assessee. 29. Now, the next step to be considered in the present set of facts is the computation of income in the hands of assessee, wherein it has raised two principal issues; (a) that the lease premium if it is taxed in the hands of assessee on the date of its accrual i.e. the date when it has entered into agreement, then matching principle has to be applied and the corresponding cost have to be allowed to the assessee. It has also raised the issue of not only allowing minimum cost i.e. cost of land and construction as deduction but it has also raised the issue of allowing depreciation on infra cost and depreciation on the building as the assessee continues to be owner of buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s explained that in case of business undertaking held under trust, its income would be the income as shown in accounts of the undertaking. Under section 11(4) of the Act, it is provided that any income of business undertaking, determined in accordance with provisions of the Act, which is in excess of income as shown in its accounts, is to be deemed to have been applied to purposes other than charitable or religious and hence, would be charged to tax under sub-section (3). As only income disclosed would be eligible for exemption under section 11(1) of the Act, the permitted accumulation of 25% would be calculated with respect to this income. Clause (4) refers to income derived by the trust from house property, interest on securities, capital gains or other sources and it is provided that the word income should be understood in its commercial sense. 31. The Hon'ble Supreme Court in Calcutta Co. Ltd. Vs. CIT (supra) while deciding the case of assessee which dealt in land and property and carried land developing business, held that wherein certain plots were sold and wholesale price of plots was declared though not received, then where the assessee undertook devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make de-novo assessment. At the time of de-novo assessment, form No.10, audit report and documents were already on record of the Assessing Officer. The Hon ble High court held that if the assessee was required to file form No.10 and another document before completion of assessment and in the case where there was only technical plea raised by Revenue, then that should not take away the benefit accruing to the assessee, in law. In view of chequered history of case pertaining to registration under section 12A of the Act, it was observed that rigors of section have been somewhat diluted by Revenue s understanding and the issuance of circular. The said circular contemplated condonation of delay in filing documents, which would enable the assessee to avail of the benefits. The circular No.273, dated 03.06.1980 does not dispense with the filing of form No.10. The Commissioner is only vested with the powers to accept the same after the specified period. In such circumstances and where the objects of trust were found to be genuine, the Assessing Officer was directed to carry out de-novo assessment and assessee s claim for benefit of exemption under section 11 of the Act deserved acceptanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed areas. The assessee on one hand developed overall area and created various infra facilities; and on the other hand, the assessee allotted developed plots and constructed areas to various persons by way of long term lease. The assessee, being a development authority was not liable to income tax till assessment year 2002-03 as per exemption under section 10(20A) of the Act. However, as the said exemption was withdrawn from assessment year 2003-04. The assessee for the first time on 01.04.2002 drew up Balance Sheet of state of affairs as on that date and stated various assets and liabilities at their historic cost. Till 31.03.2002, the assessee was not preparing any Balance Sheet and / or Profit and Loss Account. The Balance Sheet as on 01.04.2002 was the opening balance of various assets and liabilities of assessee, which has not been disturbed by the Assessing Officer and CIT(A). The assessee adopted rent model for offering its revenue from the lease premium. As such, 99 years lease premium was spread over entire 99 years life of the lease agreement period. The assessee thus, did not claim deduction of land cost, constructed area cost, infra cost and depreciation on infra cost in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has also decided appeal filed against order of Commissioner passed under section 263 of the Act. 35. The first issue raised before us is the application of matching principle in case the lease premium is to be treated as income of assessee in the year in which the assessee enters into agreement with the lessee. In this regard, the learned Authorized Representative for the assessee has submitted written submissions in which it has explained step-wise working of cost of land and the cost of constructed area which the assessee seeks as deduction against revenue earned for the year. The assessee had offered 99 years premium spread over the entire life of lease agreement period of 99 years i.e. 1/99th of amount was offered in its hands. Since it was only offering 1/99th of lease premium in each of the year, the assessee had not claimed any land cost, constructed area cost or infra cost and also depreciation on various items. Once the manner of recognizing income in the hands of assessee undergoes change, then corresponding expenditure which has been incurred by assessee either in earlier years or during the year under consideration need to be appropriated. Undo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Area Total constructed area of PCNTDA as of 31/3/2002 is taken from the certificate of PCNTDA dated 27/11/2018 Cost Total cost of constructed area of ₹ 12399.72 lacs is taken from the Opening Balancesheet as of 31/3/2002 3. On an overall basis, PCNTDA has confirmed that, land area of about 50% is used for creating various INFRA facilities and balance 50% land area is used for various developments to be used for own purpose or to be used for leasing purpose. ( Not applicable) 4. Area Balance 50% area of land is considered available for various usages by PCNTDA as per letter dated 27/11/2018 Cost Though only 50% of acquired area is considered as available for development and further usage, 100% of land cost is considered for the further proration Same as step 2 above 5. Area On an overall basis, PCNTDA ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/2002 till 31/03/2014 is as per certificate of PCNTDA dated 27/11/2018. The year wise constructed area leased out is also mentioned in the said certificate dated 27/11/2018. Cost Proportionate cost has been worked out the basis of total land cost total land area as to the proportion of area sold from 1/04/2002 till 31/03/2014 The appellant is eligible to claim the said proportionate cost in a year in which area is leased out. 9. Area Balance Area is available to leased out is derived from above steps Cost Balance cost available to claim as on 31/03/2014 is derived from above steps Area Balance area is available to lease out on 31/03/2014 is as per certificate of PCNTDA dated 27/11/2018. Cost Balance cost available to claim is derived from above steps 37. The assessee has enclosed tabulated details in this regard, which reads as under:- Step No. Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 593.36 579.52 3,96,240.80 12,595.06 7. Less: Area leased prior to 31/03/2002 358.97 - 350.60 -3,53,394.97 -11,233.14 8. Less: Area leased after 1/04/2002 till 31/03/2014 -179.02 -174.85 40,674.83 1,292.91 9. Balance area available as on 31/03/2014 55.37 54.08 2,171.00 22,535.29 38. In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was ₹ 12.92 crores (approx.), which is to be bifurcated over the number of years. The assessee has furnished certificate of architect in this regard and the Assessing Officer is directed to carry out necessary verification and allow deduction on account of cost of constructed premises to the assessee in the respective years. 40. Now, coming to next stand of assessee that besides carving out the plots of land and constructing premises for leasing out, the assessee had also developed the area i.e. built roads, infra ways, constructed projects and the cost of said items were booked under the head Infra cost at ₹ 39,19,00,091/-. The learned Authorized Representative for the assessee in this regard has pointed out that depreciation on this cost as on 01.04.2002 should be allowed as deduction in the hands of assessee, from year to year, as the assessee gets appropriate benefit of infra cost by way of charging the lease premia from the respective lessees. The assessee has also raised an additional ground of appeal for allowing depreciation on opening infra cost and also on infra cost incurred from year to year. Our attention was drawn to Paper Book-4 i.e. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the learned I-T authorities ought to have granted depreciation on these INFRA facilities costs which includes opening balance as on 31/3/2002 as well as yearly costs incurred thereafter. PCNTDA keeps reliance on the apex court ruling in the case. CIT vs Rajasthan Gujarati Charitable Foundation Poona 89 taxmann.com 127 (SC). 41. The infra cost which has been incurred by assessee and which was the opening balance as on 31.03.2002 in the hands of assessee on account of creation of roads, creation of parks, water tanks, bridges, etc. and also the items booked under the head relating to water and drainage system was the basic framework provided by the assessee which was necessary for establishing a township. On such infra cost which has already booked in the hands of assessee, depreciation is to be allowed and we find merit in the plea of assessee and accordingly, direct the Assessing Officer to allow depreciation on such infra cost. The Statute had introduced Explanation 6 under section 43(6) of the Act, which clearly provides the method to be adopted in the hands of assessee for working out written down value of an asset where the asset w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, the premium relating to past years transactions were also offered to tax by assessee. The CIT(A) has directed the Assessing Officer to work out the figures of earlier years premium on plots of land sold and plots of tenements sold. The same needs to be excluded in the hands of assessee. Further, the assessee on transfer of plots / properties after lock in period of 5 years, was receiving premium for the aforesaid transfer. The assessee was offering said premium also in staggered manner. So, the figures of plot premium and property premium were not only included the amount attributable to properties which were transferred in earlier years and only part of premium for the year under consideration was offered to tax. The Assessing Officer is directed to adopt correct figures of current year and exclude the figures relating to earlier years. 44. It may also be pointed out herein itself that income in the hands of assessee is to be computed in line with provisions of sections 11 and 12 of the Act since the assessee enjoys registration under section 12AA of the Act; hence income and expenditure has to be computed in line with the said sections. It may also be rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 12A of the Act, even though expenditure incurred for acquisition of capital asset was treated as application of income for charitable purposes under section 11(1)(a) of the Act, yet depreciation is to be allowed on such assets. 48. We also find that the Hon ble Bombay High Court in CIT Vs. Institute of Banking Personnel Selection (supra) had also laid down similar proposition. Applying the same, we hold that ground of appeal No.2 raised by Revenue does not stand and the same is dismissed. 49. We have also decided the issue of application / adjudication of income in the hands of assessee after allowing deduction on account of land cost, constructed cost and depreciation on infra cost and also deduction on account of infra cost and also application of income. But we would be failing if we do not address the last plea raised by the learned Authorized Representative for the assessee that though the Tribunal vide its order dated 20.06.2018 has decided the issue against assessee but the issue stands squarely covered by order of Hon ble High Court of Madhya Pradesh in M.P. Audyogik Kendra Vikas Nigam (Indore) Ltd. Vs. ACIT (supra), wherein the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered 1/99th portion of such land premium as revenue receipt to be taxed in the year under consideration and the Hon ble High Court has held that where the leasing of plot was for 99 years and there was no provision and condition in the agreement to suggest, the modality of transfer and renewal after 99 years, then there was no reason why the advance rent should be taxed accordingly. The learned Authorized Representative for the assessee stressed that it was the obligation of assessee that in case any lessee surrenders the lease after 5 years, then 93/99 years premium had to be returned and such a liability was contractual liability. He further pointed out that the Tribunal while deciding the issue has no doubt decided the same against assessee but since the issue stands covered by the decision of Hon ble High Court of Madhya Pradesh and where there is no contrary decision on the point, then the said decision of the Hon ble High Court becomes solitary decision on the point. In this regard, he placed reliance on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Godavaridevi Saraf (supra) and stressed that solitary non-jurisdictional decision was binding on the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d leasing the said land as an independent owner of land, the sums equated as land premium was used for incurring expenditure to develop the land and maintaining industrial infrastructure. The Hon ble High Court held that there was no denial that the transaction had to be taxed under the Income-tax Act, unless the same is exempted by a particular provision of the Act. The assessee was offering 1/99 of land premium (out of total land premium received by it during the year) as taxable. The assessee claimed that lease premium was not its income before the Hon ble High Court, so it was decided that the said land premium was the income of assessee to be taxed under the Income-tax Act. Vide para 31 it was held that from the perusal of clauses of memorandum, it was revealed that the assessee was in the business of leasing out of land and getting rental income as well as premium, therefore, the land premium is nothing but a revenue receipt in the form of advance rent, which has loosely been named as land premium. The Hon ble High Court noted that the assessee itself had offered 1/99th portion of such land premium as revenue receipt to be taxed in the year under consideration, which goes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided on the basis of income offered by assessee i.e. @ 1/99 of lease premium as advance rent and the appeal has been dismissed. 58. However, in the facts of present case, we find that Tribunal has decided the issue of recognition of revenue receipts while deciding appeal against order passed by Commissioner under section 263 of the Act, which is for the instant assessment year itself. The issue of assessability of lease premium has been decided against the assessee. We have in the paras hereinabove decided the alternate issue of allowing deduction of cost / depreciation by following matching principle of accounting. In such circumstances, we find no merit in the pleadings of learned Authorized Representative for the assessee in applying dictate of Hon ble High Court of Madhya Pradesh. Accordingly, this plea is dismissed. The grounds of appeal on merits are thus, allowed in favour of assessee. 59. The facts and issues in ITA Nos.930/PUN/2014 to 932/PUN/2014 are identical to the facts and issues in ITA No.929/PUN/2014 and our decision in ITA No.929/PUN/2014 shall apply mutatis mutandis to ITA Nos.930/PUN/2014 to 932/PUN/2014. 60. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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