JUDGMENT judgment of court was delivered by R. Sudhakar J.-These appeals are filed by Revenue challenging order of Income-tax Appellate Tribunal "C" Bench, Chennai, dated December 21, 2010, made in I. T. A. Nos. 641 to 647 and 515 to 521/Mds/ 2012 for assessment years 2003-04 to 2009-10, by raising following substantial questions of law: "(for all assessment years) 1. Whether, on facts and in circumstances of case, Tribunal was right in restricting disallowance, including offer made by assessee, shall not exceed 10 per cent. of land development expenses incurred in cash by assessee? 2. Whether, on facts and in circumstances of case, Tribunal was right in restricting disallowance, including offer made by assessee, shall not exceed 10 per cent. of land development expenses and if such direction is followed income determined after appeal effect will be less than income offered by assessee? 3. Whether, on facts and in circumstances of case, Tribunal was right in deleting interest disallowance without noting that assessee has not produced any evidence for advances given were out of interest-free funds? (except for assessment years 2003-2004 and 2008-2009) 4. Whether, on facts and in circumstances of case, Tribunal was right in allowing depreciation claimed by assessee as per old provisions, without noting that Assessing Officer has correctly allowed depreciation as per depreciation chart applicable to relevant assessment years? (for assessment year 2009-10) 5. Whether, on facts and in circumstances of case, Tribunal was right in deleting addition on account of drawings of directors without noting that assessee has debited amount under head'Sales promotion and travelling expenses'?" 2.1. brief facts of case are as under: search and seizure operation was conducted in VGP group on March 3, 2009. Consequent to such search operation, notice under section 153A of Income-tax Act 1961 (for brevity, "the Act"), dated March 17, 2010, was duly served upon assessee. Thereafter, notice under sections 142(1) and 143(2) of Act were duly served upon assessee. In response to notice under section 153A of Act, assessee filed revised return of income on July 29, 2010, for all assessment years except 2009-10. For assessment year 2009-10, assessee filed its returns on September 30, 2009. 2.2. In course of search, it was found by Department that assessee was suppressing its profits through claim of inflated land development expenditure. It is case of Revenue that assessee purchased land at nominal rate; developed same and sold them in plots at low rate and such sale price of each plot included land development charges, apart from basic value of plot and other expenses like stamp duty, registration expenses, etc. assessee debited expenditure incurred on development of plots project-wise to profit and loss account filed along with return of income. assessee produced vouchers in respect of expenditure incurred towards land development and that was perused by Department and found to be self- serving documents. Department was of view that expenditure incurred by assessee for land development is inflated. 2.3. During course of search proceedings on March 3, 2009, one of directors of VGP Housing P. Ltd. admitted that there was element of inflation of expenses towards land development and he stated that inflation in respect of land development expenses would be around Rs. 1.20 crores in respect of all concerns of group for years 2002-03 to 2008- 09. On such premise, Assessing Officer restricted claim of development expenses to 80 per cent. of actual claim, warranting disallowance of 20 per cent. 2.4. In addition to above, Assessing Officer disallowed claim of assessee for interest payment in respect of loans availed of from banks and financial institutions, stating that it has advanced certain amounts to group companies without any interest. Assessing Officer observed that assessee had not furnished any business exigency, necessity or compulsion to advance loans to its group companies without any interest. 2.5. next issue which was considered by Assessing Officer was claim of assessee for depreciation on roads and electrical fittings at rate of 20 per cent. Assessing Officer held that assessee had claimed excess depreciation at rate of 20 per cent. as against eligible rate of 10 per cent. and 15 per cent., respectively, for all assessment years except 2003-04 and 2008-09. Assessing Officer disallowed claim of assessee for depreciation at 20 per cent. 2.6. Apropos of drawings by directors debited under head "sales promotion and travelling expenses" during assessment year 2009-10, Assessing Officer held that expenses debited under said head are purely personal expenditure of individual directors and same cannot be debited in company's accounts. Thus, Assessing Officer disallowed claim of assessee under this head. 2.7. assessee appealed against said order to Commissioner of Income-tax (Appeals), who by order dated December 22, 2011, made in I. T. A. Nos. 200 to 206/10-11, restricted disallowance on land development expenses to 5 per cent., as against 20 per cent. disallowance ordered by Assessing Officer. 2.8. claim of assessee for interest payment, which was disallowed by Assessing Officer, was deleted by Commissioner of Income-tax (Appeals) holding as follows: "14. I have considered facts and circumstances and arguments of learned authorised representative. As contended, there is no diversion of borrowed funds for non-business purposes. Moneys have not been advanced during this year. Moneys advanced in earlier year were out of interest-free funds. Even moneys advanced have been used by sister concerns only for purpose of business. decision of hon'ble Tribunal, in sister concern of this group, on identical facts, is seen to apply to case of appellant. Therefore, disallowances made for all years is hereby directed to be deleted." 2.9. Anent claim of depreciation on roads and electrical fittings for all assessment years except 2003-04 and 2008-09, Commissioner of Income- tax (Appeals), noticing that it is expenditure incurred towards maintenance of roads in amusement park, came to hold that 20 per cent. depreciation claimed by assessee is perfectly in order. relevant portion of order passed by Commissioner of Income-tax (Appeals) reads as under: "24. I have considered arguments of learned authorised representative and decisions relied upon. fact that these roads connect various amusement rides within park with one another has not been disputed. That roads are not pucca roads and are only kutcha roads have also not been disputed. Since these roads are not adjunct to any building and there is no other construction except these roads, decisions relied upon by appellant are applicable to facts of this case. electrical fittings are beside these roads. Therefore, it is directed that depreciation as claimed on roads, as well as electrical fittings is to be allowed. grounds on these issues are therefore fully allowed for all years in question." 2.10. With regard to next issue relating to drawings of directors and debiting amount under head "Sales promotion and travelling expenses", Commissioner of Income-tax (Appeals) accepted contention of assessee that said amount was debited to partnership firm, in which directors were partners, and these moneys are due to assessee from partnership firm and are shown as either recovered or recoverable during subsequent assessment years and held that claim made by assessee is justified. relevant portion of said order reads as under: "30. During course of appeal proceedings, it was shown that moneys drawn from appellant company were debited to partnership firm in which directors were partners. said entries in ledger account of directors were basically posted for keeping track of transactions. While finalising accounts, moneys drawn from company were debited to account of partnership firms and these money due to appellant company from partnership firms were either recovered or shown as recoverable for subsequent assessment years. 31. In short, moneys drawn from appellant are transferred to firms. appellant shows it as due from firms. firms take it to individual account of partners. This is accounting procedure followed. I have examined entries and I find that explanation offered by appellant is correct." 2.11. Assailing said order passed by Commissioner of Incometax (Appeals), assessee as well as Revenue preferred appeals before Tribunal, which partly allowed appeals filed by either side. Tribunal, in effect, held as under: (i) directed Assessing Officer to restrict disallowance of expenses towards land development to 10 per cent.; (ii) confirmed order of Commissioner of Income-tax (Appeals) in respect of deleting disallowance of interest payment; (iii) confirmed that 20 per cent. depreciation claimed by assessee is perfectly in order; and (iv) drawings of directors and debiting amount under head "Sales promotion and travelling expenses" is fully justified. 2.12. Aggrieved by said order passed by Tribunal, Revenue has filed these appeals raising substantial questions of law, referred supra. assessee has not chosen to file any appeal. We have heard learned counsel on either side and perused orders passed by Tribunal and authorities below. substantial questions of law raised are dealt with on trot as under. Substantial questions of law (1) and (2) (For all assessment years) 5.1. On issue relating to disallowance of land development expenses, assessee as well as Department preferred appeals before Tribunal stating that percentage of disallowance ordered is erroneous and Tribunal held as under: "11. We agree with view of Assessing Officer that nature of business of assessee is such that incurring such expenses in cash towards land development is necessary, especially for labour payments. We also agree that it is very difficult to obtain third party vouchers as labourers employed are uneducated and, therefore, assessee is forced to support such expenses only by self-generated vouchers. At same time, it cannot be held that entire expenses recorded by assessee should be allowed, especially when it was found that assessee has inflated expenses substantially. Assessing Officer established with reference to seized material in number instances that land development charges claimed are at 70 per cent. to 80 per cent. of land cost and in some instances it went up to 90 per cent. of total sale consideration. Taking into consideration nature of business, totality of facts and circumstances of case, we direct Assessing Officer to restrict disallowance of expenses towards land development incurred in cash to 10 per cent. after taking into consideration offer made by assessee. In other words, total disallowance, including offer made by assessee should not exceed 10 per cent. of land development expenses incurred in cash by assessee." 5.2. plea of Revenue before us is that Tribunal, while directing Assessing Officer to restrict disallowance to 10 per cent., ought not to have stated that including offer made by assessee, disallowance should not exceed 10 per cent. of land development charges incurred by assessee. 5.3. However, this issue appears to have been clarified by Tribunal by order dated June 7, 2013, made in M. P. Nos. 61 to 68/Mds/2013. In paragraph (5) of said order, Tribunal held as under: "5. Considering submissions of both parties and on going through order of this Tribunal, we notice that there is mistake apparent on record in abovesaid portion of order which should be modified and shall be read as under: '11... Taking into consideration nature of business, totality of facts and circumstances of case, we direct Assessing Officer to restrict disallowance of expenses towards land development incurred in cash to 10 per cent. after taking into consideration offer made by assessee. In other words, total disallowance including offer made by assessee should not exceed 10 per cent. of land development expenses incurred in cash by assessee. We make it clear that in any of these assessment years in case offer made by assessee is more than 10 per cent. of land development expenses incurred in cash, in such circumstances, Assessing Officer should restrict disallowance to offer made by assessee and not 10 per cent. of land development expenses incurred in cash.'" 5.4. In view of subsequent order passed by Tribunal on June 7, 2013, in M. P. Nos. 61 to 68/Mds/2013, Revenue is not aggrieved by order impugned in these appeals on this issue. assessee is also not aggrieved by subsequent order passed by Tribunal. 5.5. In view of above, substantial questions of law (1) and (2) does not require to be considered any further and, accordingly, they are not answered. Substantial question of law (3) (For all assessment years) 6.1. This issue pertains to interest payment. Assessing Officer disallowed interest on ground that assessee extended loans to its group companies without any interest. On appeal, Commissioner of Income-tax (Appeals) held that monies have not been advanced during year and they were advanced in earlier years out of interest-free funds and, therefore, there is no diversion of borrowed funds by assessee for nonbusiness purposes. In such view of matter, Commissioner of Income-tax (Appeals) deleted disallowance of interest. 6.2. Tribunal, while considering said issue, noticed that similar transaction came for scrutiny in case of VGP Investments in I. T. A. Nos. 975, 976/Mds/02 and 677/Mds/03, dated October 12, 2007, and earlier co- ordinate Bench of Tribunal has held in favour of assessee and that order has been accepted by Revenue and was not appealed against. Tribunal held that facts in present case are identical to earlier case and Department having not produced any material to controvert findings of Commissioner of Income-tax (Appeals), order of Commissioner of Income-tax (Appeals) was confirmed on said issue. 6.3. It is not in dispute that Department has not appealed against order of Tribunal in I. T. A. Nos. 975, 976/Mds/02 and 677/Mds/03, dated October 12, 2007, passed under identical circumstances. That apart, Department has not produced before this court any iota of material rebutting finding arrived at by Tribunal in this case. Department has also not pointed out any specific error of law committed by Tribunal on this issue. 6.4. In such view of matter, this substantial question of law is answered against Revenue. Substantial question of law (4) (For all assessment years, except 2003-04 and 2008-09) 7.1. This issue relates to depreciation on roads and electrical fittings. Assessing Officer rejected claim of assessee for depreciation at rate of 20 per cent. and held that assessee is eligible for depreciation only at rate of 10 per cent. and 15 per cent. On appeal, Commissioner of Income- tax (Appeals) modified same and allowed depreciation at 20 per cent. by placing reliance on decision of Supreme Court in Indore Municipal Corporation v. CIT [2001] 247 ITR 803 (SC) and decision of Bombay High Court in CIT v. Chemaux Ltd. [1994] 74 Taxman 201 (Bom). Tribunal, on appeal, confirmed order passed by Commissioner of Income-tax (Appeals). 7.2. In case of Indore Municipal Corporation v. CIT [2001] 247 ITR 803 (SC), reason for granting higher depreciation was justified by stating that road in question was not adjunct to any buildings and, therefore, cannot be classified under buildings for depreciation purposes. In CIT v. Chemaux Ltd. [1994] 74 Taxman 201 (Bom), Bombay High Court held that any expenditure incurred for repair or resurfacing of kutcha roads inside factory is revenue expenditure. 7.3. Tribunal, while confirming order of Commissioner of Income-tax (Appeals), held that since in case on hand roads are not adjunct to any building and there is no other construction except these roads, decisions, referred supra, would squarely apply and granted depreciation as claimed by assessee. 7.4. To shed light on this issue, it would be relevant to refer to Table of rates at which depreciation is admissible, which finds place in old Appendix I (applicable for assessment years 2003-04 to 2005-06). relevant portion of table reads as under: Depreciation allowance as Block of assets percentage of written down value 1 2 I BUILDING. (1)... 10 (2) Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below. note to said old Appendix I states as under: "1. "Buildings" include roads, bridges, culverts, wells and tubewells." 7.5. In case on hand, admittedly, roads connect various amusement rides within park with one another. Commissioner of Income-tax (Appeals) as well as Tribunal proceeded on basis that roads are not adjunct to any buildings and, therefore, cannot be classified under buildings for depreciation purposes. reading of above said provision makes it clear that building includes roads, bridges, culverts, wells and tubewells. said provision is not restricted to only roads adjacent to buildings. Commissioner of Income-tax (Appeals) as well as Tribunal having not considered this aspect fell into error in accepting assessee's plea that 20 per cent. depreciation on roads and electrical fittings should be allowed. In our considered opinion, Assessing Officer was justified in restricting depreciation to 10 per cent. and 15 per cent., as applicable in respect assessment years, in terms of old Appendix I (applicable for assessment years 2003-04 to 2005-06). 7.6. In such view of matter, this substantial question of law is answered in favour of Revenue and against assessee. Substantial question of law (5) (For assessment year 2009-10) 8.1. This issue pertains to drawings by directors debited under head "Sales promotion and travelling expenses" during assessment year 2009-10. 8.2. We find that Commissioner of Income-tax (Appeals) as well as Tribunal has accepted contention of assessee that said amount was debited to partnership firm, in which directors were partners, and these moneys are due to assessee from partnership firm and are shown as either recovered or recoverable during subsequent assessment years and held that claim made by assessee is justified. 8.3. To controvert abovesaid view taken by Commissioner of Income-tax (Appeals) and Tribunal, learned standing counsel for Department relied upon statement made by one of directors and we extract same hereunder for better clarity on this issue: "Whenever any personal expenses (not incidental to business) is incurred by any director, expenses are recorded by debiting personal account of director and amounts are transferred as loan to partnership firms (VGP and Co., VGP Investments) and, subsequently, booked as drawings in partner's capital/current account. However, no actual transfer of funds to partnership firms and drawings from firms takes place. Personal expenses are met out of bank accounts of VGP Housing Pvt. Ltd. only. Apart from this, personal expenses such as credit card expenses, foreign travel expenses of directors, household expenses, etc., are debited under head'Sales promotion and travelling expenses' in VGP Housing (P.) Ltd./VGP and Co Pvt. Ltd. books of account. I admit that extent of such personal expenses (consolidated for all group concerns) debited under these heads of account would be around Rs. 1 crore for period 2003- 04 to 2008-09." 8.4. reading of above said statement makes it clear that there is clear admission by director that personal expenses are met out of bank accounts of assessee only. It is also stated that credit card expenses, foreign travel expenses of directors, household expenses, etc., are debited under head "Sales promotion and travelling expenses" in VGP Housing (P.) Ltd./VGP and Co. Pvt. Ltd. books of account. 8.5. Assessing Officer, on basis of said statement, held that expenses under head "Sales promotion and travelling expenses" are purely personal expenditure of individual directors and same cannot be debited in company's accounts. We find that there is clear contradiction between statement made by director, referred to above and findings of Commissioner of Income-tax (Appeals) and Tribunal. facts do not support finding rendered by appellate authorities. 8.6. learned counsel for assessee states that there are materials to substantiate plea that there was reversal of entries relating to monies transferred from assessee-company to firm. No material has been placed before us, except said statement made by learned counsel for assessee. In any event, that is issue which has to be decided on facts by competent authority, by considering materials that may be produced by assessee in contradiction to stand taken by Department on basis of statement made by one of directors of assessee. 8.7. In such view of matter, we hold that issue relating to deleting addition on account of drawings of directors should be considered by Assessing Officer on merits based on materials to be produced by assessee. Only to determine this issue, matter is remanded to Assessing Officer. Resultantly, these appeals are disposed of in above terms. No costs. Consequently, M. P. No. 1 of 2013 (13 petitions) are closed. *** Commissioner of Income-tax v. V. G. P. Housing (P.) Ltd