COMMISSIONER OF INCOME TAX Vs. HINDUSTAN TIMES LIMITED

JUDGEMENT

(1.) THESE six applications under S. 256(2) of the INCOME TAX ACT, 1961, by the CIT against the same assessee ( M/s.Hindustan Times Ltd.) can be disposed of by a common order since they involve some common questions. The applications relate to the asst. yrs. 1973 -74, 1974 -75, 1977 -78, 1978 -79, 1979 -80 and 1980 -81 respectively.

(2.) ONE common question the reference of which is sought in all the applications is whether the assessee is entitled to depreciation in respect of a sum of Rs. 36,96,516 which it claimed as part of the actual cost of a construction put up by it for business purposes.This question arises briefly in the following circumstances : The assessee purchased an existing residential building bearing No. 18 -20 at Kasturba Gandhi Marg, New Delhi, in the year 1961. Since the assessee wanted to use the building for commercial purposes, it paid certain additional charges to the Development Officer of the Government of India and also an extra ground rent in respect of the land. This was in 1962. Later, the assessee demolished the original construction and put up a multi -storeyed structure thereon. But the floor area of the multistoreyed structure was several times the original area of 51,198 sq.ft. The assessee applied to the Land and Development Officer for permission to put up this building. This permission was also granted on the assessee's paying a sum of Rs. 36,96.5116 as additional premium or commercialisation charges. The assessee claimed that this sum of Rs. 36,96,516 which it had to incur for putting up a building for its offices or) the said plot of land forms part of the actual cost of the building and that it was entitled to claim depreciation in respect thereof. This claim of the assessee has been accepted by the Tribunal for the assessment years in question and the CIT seeks a reference to this Court on the question as to whether the capitalisation of the above expenditure and allowance of depreciation thereon is justified.

(3.) WE have heard the counsel at some length but we are of opinion that the conclusion of the Tribunal is patently correct. As the Tribunal has pointed out, the Union of India was the lessor of the land which had initially been leased out for residential purposes, and when the assessee wanted to convert the use from residential to commercial purposes, it had to pay a premium or commercialisation charges. Commercial use of the land had already been permitted in 1962 and the question of commercialisation for the second time did not arise. The charges, therefore, had been paid by the assessee in order to obtain the permission of the lessor of the land to put up a multi -storeyed building in place of the original small structure which was there on the land. It is true that, so far as the Union of India is concerned, it was only the lessor of the land and that any payment or charges it demanded from the assessee was only in its capacity as the lessor, but so far as the assessee is concerned, we are concerned with the direct object and purpose with which the expenditure in question had been laid out by the assessee. The Tribunal is clearly correct in coming to the conclusion that the sum of Rs. 36,96,516 has been laid out by the assessee in order to acquire permission for constructing an additional space of 3,45,144 square feet for office purposes. In fact this is also made clear by the letter from the Government of India to which counsel for the Department made a reference. In our opinion, therefore, the question raised by the Revenue requires no interpretation of any document which is ambiguous. The payment has clearly been made only to enable the assessee to put up the construction of the business asset and it follows that the payment made by the assessee has to form part of the cost incurred by the assessee in putting up that building. In our view, the conclusion of the Tribunal is patently the only one which can be arrived at in the circumstances and no question of law is involved. We, therefore, do not see any justification for calling upon the Tribunal to refer this question for our decision on this aspect.