TMI Blog2022 (5) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ITA No.2734/Mum./2019 And ITA No.6330/Mum./2019 - - - Dated:- 2-5-2022 - Shri Amarjit Singh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri B.V. Jhaveri For the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of Rs. Nil. A search and seizure action under section 132 of the Act was carried out in the case of M/s Mohit Diamond Group on 13.09.2011 and the assessee company was covered under the provisions of section 153A of the Act. Accordingly, notice under section 153A was issued on 29.11.2012. By the Indenture of Sub-Lease dated 13.08.2010 between the Development Commissioner, SEEPZ, Special Economic Zone ( SEZ ), the lessee, and the assessee company, the sub-lessee, the units bearing Nos. 301 to 304 on 3rd floor of the building known as SEEPZ++, Tower-II were allotted to the assessee company by MIDC (the lessor) on the recommendation of the Development Commissioner, SEEPZ, for the consideration of Rs. 8,24,30,300. The premises were allotted to the assessee for a period of 95 years with a right to renew for a further period of 95 years subject to conditions. 6. During the course of assessment proceedings, it was noticed that assessee has claimed depreciation on the building taken on lease and similar depreciation was also disallowed by the Assessing Officer during assessment proceedings for assessment year 2006-07. Following, similar approach, the Assessing Officer vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of depreciation in respect of the said 4 units taken on extended period of lease from MIDC. Being aggrieved by the partial disallowance of depreciation, the assessee is in appeal before us. 9. During the course of hearing, Shri B.V. Jhaveri, learned Authorised Representative ( learned A.R. ) submitted that assessee paid consideration of Rs. 8,24,30,300 as cost for buildup space and same did not include the cost of land. The learned A.R. submitted that there are 72 occupants of the 7 Storey Tower and assessee s units are on third floor. By referring to various clauses of (i) lease deed dated 28/06/2005 entered into between MIDC, the lessor, and Development Commissioner, SEEPZ, SEZ, the lessee; and (ii) indenture of sub-lease dated 13/08/2010 entered into between Development Commissioner, SEEPZ Special Economic Zone, the lessee, and the assessee, the sub-lessee, the learned A.R. submitted that the entire consideration paid by the assessee was for the cost of 4 units. The learned A.R. also submitted that the assessee company was neither eligible for the proportionate plot of land nor was allotted any proportionate plot of land along with the four units and therefore the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omic Zone (the lessee) and the assessee (the sub-lessee). Copy of Indenture of sub-lease is from page 48 to 80 of the paper book. Upon perusal of sub-lease deed, it is evident that the two buildings were constructed by MIDC at its cost and expenses and having ground and seven floors and comprising a total 72 units with facilities of open / basement car and scooter parking. The assessee was allotted unit No. 301 to 304 on third floor of Tower II admeasuring 26168 sq.ft. As a consideration, the assessee paid a sum of Rs. 8,24,30,300 being the premium of the said units. The sub-lease deed further provides as under: AND WHEREAS the Lessor and Lessee have agreed to demise the said Unit Nos. 301 to 304 on the 3rd floor to sub-lessee together with the said proportionate land under the Tower No.II in Seepz++ in the Marol Industrial Area within the village limits of Vyarawali, Parajapur, admeasuring 26168.32 sq.ft. or thereabouts and more particularly described Thirdly in the schedule here under written subject to condition that the sub lessee/s of the Tower No. II shall immediately from the Association of the unit holders of the said building for the upkeep, management, safety etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II in Seepz++. Further, the 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 clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in not considering that the A.O. erred in computing the total income at Rs.7,85,58,198, because the A.O. started with the wrong figure of total income as per computation at Rs.7,39,14,164. 17. In this appeal for assessment year 2011-12, insofar as grounds pertaining to claim of depreciation on units leased to the assessee under sub lease deed, the basic facts are identical to the assessment year 2010-11. However, in this year, the learned CIT(A), inter-alia, confirmed the disallowance of depreciation made by the Assessing Officer on the ground that the assessee is not the owner of those units. Being aggrieved by the said impugned order dated 26/07/2019 passed by the learned CIT(A), the assessee is in appeal before us. 18. As, we have upheld the order passed by the learned CIT(A) for assessment year 2010-11 granting partial depreciation, we direct the Assessing Officer to similarly grant depreciation to the assessee in assessment year 2011-12 only on the cost of construction of the said units. As a result, grounds No. 1-7 raised in assessee s appeal are partially allowed. 19. As regards ground No. 8 raised in assessee s appeal, the assessing officer is directed to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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