Depreciation @ 100% on’ Advertisement hoardings treated as temporary structures allowable

D.C.I.T. Vs. M/s. One Ad Display Pvt. Ltd. (ITAT Kolkata)

 Issue-  Depreciation @ 100% on’ hoardings treated as temporary structures as against the treatment given by the AO as plant and machinery allowing depreciation @ 15%.

Held by ITAT

Tribunal has already taken a view in favour of the assessee in the past assessment referred to in the earlier part of this order. It cannot be argued by the DR at this stage that in none of these decisions the question whether the hoardings were temporary or permanent structure was considered by the Tribunal. Going by the principle of consistency we are of the view that it would be just and proper to take a view different from the view which has already been taken in assessee’s own case in the past. Even in the order of assessment the facts to substantiate a stand taken by the revenue have not been brought out.

Full Text of the ITAT Order is as follows:-

This is an appeal by the Revenue against the order dated 20.8.20 15 of CIT(A)- 4, Kolkata, relating to AY 2009-10.

The grounds of appeal raised by the revenue reads thus:

“1. That on the facts and in the circumstances of the case Ld. CIT(A) has erred in holding allowing depreciation @ 100% on’ hoardings treated as temporary structures as against the treatment given by the AO as plant and machinery allowing depreciation @ 15%.

2. That on the facts and circumstances of the case, Ld. CIT(A) has erred in allowing depreciation @100% on hoardings, which have been put to use for less than 180 days.

3. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or all the time of hearing.”

3. The Assessee is a company. It is engaged in the business of out-door advertisement. The assessee claimed depreciation at 100% on hoarding structures. Under part-A in Appendix-I to the Income Tax Rules, 1962 (Rules) under the head ‘Tangible assets’ entry (4) depreciation at 100% on “Purely temporary erections such as wooden structure” is allowed.

4. According to the AO development of hoardings consist of cement base on which an iron structure is fabricated. On this iron structure there is a wooden board on which the final advertisement sheet is displayed. According to the AO hoardings therefore have life time for a considerable period and therefore cannot be regarded as “purely temporary erection”.

5. The AO therefore disallowed the depreciation claimed at 100% hoardings. According to the AO hoardings have to be regarded as plant and machinery on which allowable depreciation as per Rules was only 15%. The AO accordingly disallowed the difference between the depreciation claimed by the assessee and that allowed by the AO.

6. On appeal by the assessee, the CIT(A) allowed depreciation at 100% on In doing so the CIT(A) followed the decisions rendered by the Tribunal in the case of another sister concern of the assessee M/s. Selvel Advertising Pvt. Ltd for A.Y. 2005-06 in ITA No. 820/Kol/2008 order dated 11.12.2007 wherein the ITAT had allowed similar claim of the assessee and the department did not file any appeal against the said order to the High Court. For all the above reasons the CIT(A) directed the AO to allow the claim of the assessee for depreciation at 100% on hoardings.

7. Aggrieved by the order of the CIT(A), the revenue is in appeal before the Tribunal.

8. We have heard the submissions of the learned DR who relied on the order of the AO and submitted that under part-A in Appendix-I of the Rules, under the head ‘ Tangible assets’ entry (4) depreciation at 100% on “Purely temporary erections such as wooden structure is allowed. According to him the hoardings in question cannot be regarded as purely temporary erection. In this regard the ld. DR filed before us policy guidelines on display of advertisements within the Kolkata Municipal Corporation Area wherein guidelines have laid down with regard to the size of the hoardings, structural design and erection of the hoardings structural stability certificate for erection of hoardings etc. These guidelines are meant to ensure that the hoardings do not fall injuring person or property. He laid emphasis on the fact that in the light of such stringent conditions for erection of advertisement of hoardings, it cannot be said that hoardings are purely temporary erection.

9. We have considered the submissions of the learned DR. The depreciation on hoardings claimed by the Assessee and disallowed by the AO depreciation on Hoarding Structures (Bus Shelters) amounting to Rs. 57,73,114/- on additions for more than 180 days. In the Computation of Income, as shown in the Assessment Order for the AY. 2009-10 the Ld. Assessing Officer has disallowed Net depreciation of Rs. 46,70,109/- which figure has been arrived at as per details given below:

Thus, in the Assessment Order for the AY. 2009-10, the Ld. Assessing Officer disallowed Rs. 57,73,114 out of total depreciation claimed of Rs. 1,94,65,63 1 @ 100% on the additions of more than 180 days to the Hoarding Structures ( Bus Shelters). He further disallowed 50% depreciation amounting to Rs. 7,74,495/- on additions of Rs. 15,48,990/- Hoarding structures (Bus Shelters) for less than 180 days in Paragraph 3 on page 2 of the order. He allowed the balance 50% of the claim for depreciation of Rs. 18,77,500/- on Hoarding Structures that was disallowed in A.Y. 2008-09 in paragraph 3 on page 3 of the order.

10. It is thus clear from the order of CIT(A) that the depreciation disallowed by the AO of Rs. 57,73,114 was depreciation on hoardings and structures which were used for more than 180 days. Therefore there is no merit in ground No. 2 raised by the revenue before us.

11. As far as Gr. No. 1 raised by the revenue is concerned, the issue is fully covered against the revenue by the order of the Tribunal in the case of M/s. Selvel Advertising Ltd for A.Y. 2005-06 in ITA No. 820/Kol/2008 order dated 11.12.2007

12. We have given a very careful consideration to the rival submissions. We are of the view that the Tribunal has already taken a view in favour of the assessee in the past assessment referred to in the earlier part of this order. It cannot be argued by the DR at this stage that in none of these decisions the question whether the hoardings were temporary or permanent structure was considered by the Tribunal. Going by the principle of consistency we are of the view that it would be just and proper to take a view different from the view which has already been taken in assessee’s own case in the past. Even in the order of assessment the facts to substantiate a stand taken by the revenue have not been brought out.

13. Keeping in mind the precedents on the issue we are of the view that the order of CIT(A) does not call for any interference. Accordingly ground no. 1 raised by the revenue is dismissed.

14. In the result the appeal by the revenue is dismissed.

Order pronounced in the Court on 01.12.2017