×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal, filed by assessee, being ITA No. 703/Mum/2018, is directed against appellate order dated 16.10.2017, passed by learned Commissioner of Income Tax (Appeals)-20, Mumbai (hereinafter called “the CIT(A)”) in appeal number CIT(A)-20/DCIT-12(2)(1)/IT-10040/16- 17 for assessment year 2013-14, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 11.03.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2013-14.
2. The grounds of appeal raised by assessee in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“1. The learned CIT(A) Confirmed AO's contention, & Calculated Depreciation on property given on rent separately by removing from the block of asset property given on rent and confirmed addition of Rs. 9,79,042/-
2. The learned CIT(A) and AO grossly erred in ignoring the submissions made by the Appellant in this regard.
3. Without prejudice considering above logic The learned CIT(A) did not allowed depreciation on Office premises added during the Assessment year at its cost of acquisition.
4. The Appellant craves leave to add, alter, amend all or any of the grounds in appeal.”
3. The assessee is engaged in the business of trading in chemicals & dyes , intermediate & commission agents. The assessee has shown income from house property in respect of office premises which were let out during the year. The assessee had also claimed depreciation on these premises which had been let out during the year. The AO asked assessee to explain as to how depreciation can be allowed on let out properties. The assessee submitted details of properties held by it on 31.03.2013 and the purpose of acquisition of all these properties were shown to be for self use for the purposes of business of the assessee.
The assessee explained before AO that said properties were acquired for business of the assessee and form part of the business assets and rightly taken into „Block of Assets‟-Building to claim depreciation under the 1961 Act. It was submitted that moment the assets enters into „Block of Assets‟ , it loses individual identification and deprecation is claimed on closing balance in the „Block of Assets‟ which should be allowed.
3.2 The AO rejected contentions of the assessee on the ground that once assets are let out more so where the income is shown as „Income from House Property‟, the depreciation cannot be allowed. The AO observed that standard deduction of 30% is allowed towards maintenance as statutory deduction and hence depreciation cannot be allowed on these let out properties . The AO observed that assessee was required to reduce value of such let out properties from „Block of Assets‟ before claiming depreciation because as per AO , depreciation can be allowed only on assets which are used for business purposes. The AO observed that the value of such let out property works out to be Rs.1,14,86,576/- and hence total value of the property considered in the „Block of Assets‟ was required to be reduced by this amount before calculating depreciation. The AO disallowed depreciation to the tune of Rs. 11,48,658/- being 10% of the value of let out property and added the same to income of the assessee , vide assessment order dated 11.03.2016 passed by the AO u/s 143(3) of the 1961 Act.
4 Being aggrieved by an assessment framed by AO u/s 143(3) of the 1961 Act, the assessee carried the matter in appeal before learned CIT(A) and submitted that these let out properties had been used by assessee for its business purposes in earlier years. It was submitted that these properties formed part of „Block of Assets‟ on which depreciation was claimed and allowed by Revenue in earlier years . The assessee submitted that as per provisions of the 1961 Act, it is not allowed to segregate assets on which depreciation has been claimed and allowed on „Block of Assets‟.
4.2 The learned CIT(A) rejected contentions of the assessee and observed that these let out properties were not used for purposes of business of the assessee at all during year under consideration . The learned CIT(A) referred to provisions of clause (ii) to Section 32(1) r.w.s. 38(2) of the 1961 Act and observed that the assessee is not entitled to depreciation on premises let out although part relief was granted by learned CIT(A) on computational aspects , vide appellate order dated 16.10.2017, by holding as under:-