Re: Consequential depreciation

With regard to the replacement of machinery claimed as revenue expenditure by the assessee but treated as capital expenditure in the assessment by the assessing officer. The issue is pending before appeal. If the dispute is settled Under VsVs scheme can the assessee claim consequential depreciation in respect of that asset in subsequent years taking into account sec 8 of the VsVs act 2020

When the  Assessing Officer treated the revenue expenditure as capital expenditure , he ought to have allowed the consequential depreciation . In. CIBA India Ltd v. CIT  1993)202 ITR 1/114 CTR 105/ 70 Taxman 505 (Bom.) (HC)  the court held that when the expenditure is held to be capital expenditure   the Tribunal ought to have allowed consequential  depreciation on capital expenditure .

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