TMI Blog2023 (1) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from income from house property to income from business profession ), the AO is directed to re-compute the depreciation claimed by the assessee treating AY. 2016-17 as the first year in which the claim has been made and for that adopt the original cost of asset for computing the profit arising out of this business. And the AO is directed to compute the depreciation claimed by the assessee in accordance to the law. Disallowance of interest expenses which was attributable to borrowed fund for making payment - It is noted that the Ld. CIT(A) has allowed the interest expenditure by following the decision of Tribunal orders in Assessee s own case on this issue from AY. 2006-07 to AY. 2008-09 [ 2017 (11) TMI 719 - ITAT MUMBAI] and he further noted the Tribunal orders Assessee s own case from AY. 2009- 10 to AY. 2011-12; and moreover, the Ld. AR brought to our notice that this Tribunal has allowed this issue up to AY. 2015-16 [ 2022 (11) TMI 1406 - ITAT MUMBAI] - Therefore, we confirm the action of the Ld. CIT(A) and dismiss the appeal of the revenue. Since there is no change of facts or law, revenue appeal dismissed. - SHRI ABY T. VARKEY, JM AND SHRI OM PRAKASH KANT, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 132 of the Act also cannot be utilized by the assessee to seek relief not claimed earlier . 4. Ground no. 1, 2 and 5 are inter-connected and therefore are taken up together. By raising the aforesaid grounds, the revenue has challenged the action of the Ld. CIT(A) considering the lease rental income earned by the assessee as income from business as against the action of the AO who included the same under the head income from house property . And the revenue is also challenging the action of the Ld. CIT(A) allowing depreciation on the assets to the assessee, consequent to his aforesaid action. 5. Brief facts of the case are that the assessee is a company engaged in the business of real estate development; and in the year under consideration it was involved in development and maintenance of Industrial Parks situated in the Special Economic Zones (in short SEZs ); and the assessee had filed return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter the Act ) dated 30.11.2016 declaring loss of Rs.26,30,15,329/-. It also reflected book profit at loss of Rs. (-) 15,24,08,629/-. Later, the case of the assessee was selected for scrutiny proceedings. While assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not depreciated price no depreciation is allowed on these items. It is the submission of the assessee that in the first year of the income being taxed under the head PGBP , this cost price should be adopted as the opening value of assets on which depreciation is required to be availed by the assessee. 7.3 It is the claim of the assessee that the assessee has filed a return u/s 153A of the Act for AY 2014-15 and AY 15-16 wherein the income, which had been shown under the head Income from House property in the original return, has been offered under the head PGBP and accordingly, depreciation at specified rates has been claimed in these years. Accordingly, the depreciation for the AY 2016-17 has been claimed on the written down value of the assets. The assessee claims that if the revised claim of the assessee in AY 2014-15 and AY 2015-16 is allowed, then this additional ground becomes infructuous. However, if the revised claim of the assessee in the two preceding years are not allowed, the opening value of the assets for the purpose of claiming depreciation should be adopted at the original cost of assets and not the written down value of such assets as computed in the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived by the assessee in its return of income, shall be adopted by the AO for computation purpose. 6. Aggrieved by the aforesaid action of the Ld. CIT(A), the revenue is before us. 7. We have heard both the parties and perused the records. At the outset, the Ld. AR of the assessee brought to our notice that this issue is no longer res-integra. According to the Ld. AR, during the search operation on 30.11.2017, the assessee s sister concern namely viz M/s. Mind space Business Park Pvt. Ltd. was also searched and pursuant to which the assessment proceedings u/s 153A of the Act, was also initiated against that assessee (M/s. Mindspace Business Park Pvt. Ltd. for AY. 2015-16 AY. 2016-17) and like in the present assessee s case on the date of search these assessment years were abated assessments; and that assessee (M/s. Mindspace) was also letting out premises situated at SEZs and offering the rental income under the head house property and pursuant to the notice u/s 153A of the Act while filing the return of income had claimed the rental income under the head Income from Business and Profession . The AO did not accept the claim made by the assessee by changing the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the head House Properties as declared in the original return of income filed u/s 139 of the Act. He submitted that the Ld CIT(A) while adjudicating failed to consider the decision of Hon ble Supreme Court in the case of Sun Engineering Works (P) Ltd (supra) and Hon ble Bombay High Court decision in the case of K Sudhakar S Shanbhag (supra). Similarly, he submitted that the assessee cannot claim or allowed to claim the depreciation of assets that was not claimed originally in the return of income in the subsequent proceedings u/s.153A of the Act. Therefore, he vehemently supported the findings of assessing officer. 14. Ld. Counsel for the assessee reiterated the submissions made before the Ld.CIT(A). Ld. AR submitted that the years under consideration i.e A.Y. 2015-16 and A.Y. 2016-17 represent abated years. He submitted the below chart with the relevant dates : Particulars AY. 2015-16 AY. 2016-17 Original return under section 139(1) 28.11.2015 30.11.2016 Revised return under section 139(5) 22.03.2016 28.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to raise in the return filed under section 153A (1) of the Act. 18. Further, in respect of the judgment of Hon'ble Apex Court in the case of CIT v. Sun Engineering Works Pvt Ltd relied by the department as mentioned in Ground No. 2 of grounds of appeal, Ld AR submitted that the said decision was relied by the department before the Hon'ble Bombay High Court in the case of CIT v. B.G. Shirke Construction Technology P. Ltd [(2017) 395 ITR 371 (Bom)]. While adjudicating the matter, the Hon'ble Bombay High Court has held that the department has misplaced its reliance, as the judgement of Hon'ble Apex Court in Sun Engineering was restricted to the order passed under section 147/148 of the Act only. 19. Ld. AR further submitted that although, the department has not challenged the merits of the case but for the sake of completeness it is submitted that the merits are covered by the CBDT Circular No.16/2017 dated 25.04.2017. In the instant circular, it has been clarified that the income arising from letting out of premises/ developed space along with amenities in an Industrial Park/SEZ will be charged to tax under head Profit and Gains from Business 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the pending assessment before the Assessing Officer consequent to return filed under Section 139(1) of the Act for the subject Assessment years had abated. This was on account of the search and as provided in second proviso to Section 153A(1) of the Act. The consequence of notice under Section 153A(1) of the Act is that assessee is required to furnish fresh return of income for each of the six assessment years in regard to which a notice has beenissued. It is this return which is filed consequent to the notice which would be subject of assessment by the Revenue for the first time in the case of abated assessment proceedings. Consequent to notice under Section 153A of the Act the earlier return filed for the purpose of assessment which is pending, would be treated as non est in law. Further, Section 153A(1) of the Act itself provides on filing of the return consequent to notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the assessee-assessee is being assessed in respect of abated assessment for the first time under the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd decision, we observe that the Hon ble Bombay High Court already considered the above decision in the case of B.G Shirke Construction (supra) in the Para No.10 of the decision (refer para no 22 above). It held that the stand of the revenue is misplaced as the issue is relating to the assessment u/s.147/148 of the Act, the same cannot be applied for the issue under consideration. Therefore, the submissions made by the Ld.DR are substantially answered. 24. Considering the above discussion, we are inclined to dismiss the grounds raised by the revenue in the appeal filed for the AY 2015-16. The issues raised in the appeal for the AY 2016-17 are mutandis mutatis, we are inclined to dismiss the grounds raised in that appeal as well. 25. In the result, appeals filed by the Revenue are dismissed. 8. Moreover it has been brought to our notice that the revenue had challenged similar issue before the Hon ble Bombay High Court in the case of CIT-II, Pune Vs. Magarpatta Township Development and Construction Co. Ltd., (ITA. No. 318 of 2015) wherein the Hon ble High Court by order dated 19.11.2017 framed the relevant question of law as under: - (b) Whether on the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO is directed to compute the depreciation claimed by the assessee in accordance to the law. And since there is no change in law or facts, the reasoning given (supra) for AY. 2016-17 will apply mutatis mutandis for AY. 2017-18. 11. Coming to the ground nos. 3 4 of the revenue, they are against the action of the Ld. CIT(A) deleting the disallowance of interest expenses which was attributable to borrowed fund for making payment of Rs.100.80 crores to M/s. Om Metals Ltd. and M/s. Well wisher Construction Finance Pvt. Ltd. At the outset, the Ld. AR of the assessee brought to our notice that this issue also is no longer resintegra. And pointed out that assessee has received the funds in AY. 2006-07 and has been paying interest regularly to these entities from whom assessee has borrowed the loan. The Ld. CIT(A) has decided the issue in favour of the assessee by taking note of the decision of this Tribunal in assessee s own case M/s Gigaplex Estate Pvt. Ltd. Vs. DCIT (ITA. No.1132, 1133 1137/Mum/2016 dated 10.11.2017 for AY. 2007-08, 2008-09 2006-07) wherein the Tribunal has held in favour of the assessee and allowed the claim of interest as revenue expenditure. The Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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