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DATE: July 24, 2015 (Date of pronouncement)
DATE: July 27, 2015 (Date of publication)
AY: 1989-90, 1991-92
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S. 32: A licensee who is in full control of the building and can exercise the rights of the owner in his own right is entitled to depreciation

The very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time

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DATE: May 15, 2015 (Date of pronouncement)
DATE: May 19, 2015 (Date of publication)
AY: 1991-92
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S. 32: The assessee has the right to disclaim depreciation in its entirety. However, it cannot claim depreciation for the current year and disclaim unabsorbed depreciation

Once the unabsorbed carried forward depreciation has become a part of the depreciation of the current year, it is not open to the assessee to bifurcate the two again and exercising its choice to claim the depreciation of the current year under Section 32(1) of the Act and take a position that since unabsorbed depreciation of the previous years is not claimed, it cannot be thrusted upon the assessee. The position would have been different if the assessee had not claimed any depreciation at all. However, once the depreciation is claimed and while giving deductions the depreciation is to be set off against the profits of the current year prior to the unabsorbed carried forward investment allowance, it is the entire depreciation, namely, the depreciation of the current year as well as the unabsorbed carried forward depreciation, which is to be taken into account as by virtue of the fiction created under Section 32(2) of the Act

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DATE: March 12, 2015 (Date of pronouncement)
DATE: March 14, 2015 (Date of publication)
AY: 1980-81, 1981-82
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CITATION:
S. 32: Expenditure allowable u/s 35D cannot be capitalized to asset for claim of depreciation

A plain reading of section 35D indicates that the Legislature has thought it appropriate to give a special benefit to the assessee in respect of expenditure specified in sub-section (2) incurred before commencement of business or after the commencement of business, in connection with the extension of industrial undertaking or in connection with setting up a new industrial unit. This provision allows amortisation of the specific category of expenditures incurred by the assessee, by way of deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years as provided therein. The legislature, therefore, having specifically provided for amortisation of the preliminary expenditure which includes expenditure incurred for issuance of shares by the assessee in connection with the issue of shares, the said expenditure on issue of shares is not eligible for depreciation.

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DATE: January 9, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
(i) Unabsorbed depreciation of AYs 1997-98 to 2001-02 is eligible for relief granted by amended s. 32(2) in AY 2002-03 (ii) Judgement of a non-jurisdictional High Court has to be preferred over the judgement of a Special Bench of the ITAT (iii) In the absence of exempt income, s. 14A disallowance cannot be added to s. 115JB book profits even if assessee has accepted s. 14A disallowance in the normal computation

The assessee may have accepted the disallowance under section 14A but once it is a settled legal position, in the light of the law laid down in CIT Vs Holcim India Pvt Ltd (Del) that there cannot be any disallowance under section 14A unless there is corresponding exempt income and the assessee has no such exempt income, adjustment under clause (f) of Explanation to Section 115JB (2) cannot indeed be made. The adjustment has to meet the tests of law and what cannot be considered to be ‘expenditure relatable to exempt income’ under the law, cannot be subjected to the adjustment either. There is no estoppel against the law. The mere fact that the assessee has accepted this disallowance affects that disallowance only and nothing more than that; it does not clothe such an adjustment, in computation of book profit under section 115JB, with legality

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DATE: December 17, 2014 (Date of pronouncement)
DATE: January 10, 2015 (Date of publication)
AY: 1996-97
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S. 80-IA/ 80HHC: Despite the introduction of 'block of assets' depreciation cannot be thrust on the assessee while computing quantum of eligible deduction

Depreciation is optional to the assessee and once he chooses not to claim it, the Assessing Officer cannot allow it while computing the income. Further, once depreciation is optional, it will be optional for block of assets also. It is not necessary that the depreciation is allowable or not allowable as a whole. The assessee can claim it partly also in respect of certain block of assets and not claim in respect of other block of assets. Accordingly, for purposes of sections 80HHC and 80-IA, depreciation not claimed for by the assessee cannot be allowed as a deduction despite the introduction of the concept of block of assets

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DATE: December 5, 2014 (Date of pronouncement)
DATE: December 8, 2014 (Date of publication)
AY: 2008-09 to 2010-11
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(i) S. 153A: Even in non-pending assessments where no incriminating material is found, AO is not limited to assessing “undisclosed” income, (ii) revenue expenditure on leased premises is not hit by sub-section (1A) to s. 32 or Explanation 1 to s. 32, (iii) Even income voluntarily disclosed in search is liable for 2. 234B/C interest

(i) The circumstance where proceedings are not pending and no incriminating material is found in the course of search has been left unanswered by the Delhi High Court in Anil Kumar Bhatia 352 ITR 493 (Del). In this case, the …

M/s. Nandini Delux vs. ACIT (ITAT Bangalore) Read More »

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DATE: October 14, 2014 (Date of pronouncement)
DATE: November 12, 2014 (Date of publication)
AY: 2005-06
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CITATION:
The person who constructs a road on Build, Operate and Transfer (BOT) basis on land owned by the Government is not the "owner" of the road and cannot claim depreciation thereon

The High Court had to consider whether a person who is in the business of infrastructure development constructs a road on Build, Operate and Transfer (BOT) basis on land owned by the Government, can it claim depreciation on the toll …

North Karnataka Expressway Ltd vs. CIT (Bombay High Court) Read More »

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DATE: October 10, 2014 (Date of pronouncement)
DATE: October 16, 2014 (Date of publication)
AY: 1993-94
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CITATION:
S. 271(1)(c): Wrong claim for depreciation by showing a finance or loan transaction as a lease transaction attracts penalty

(i) The detailed findings of the AO, the assessee not agitating the findings of the AO in quantum proceedings, no plea of factual discrepancies during quantum proceedings and appeals, even no such plea before AO during penalty proceedings and no …

Times Guaranty Ltd vs. ACIT (ITAT Mumbai) Read More »