| The Tax Publishers2019 TaxPub(DT) 5150 (Bang-Trib) INCOME TAX ACT, 1961
Section 32(1)
Depreciation claim could not be allowed where mere existence of plant and machinery was not substantiated by any lease agreement, etc., as it was allegedly given on lease, further, in earlier year also the existence of said assets was in doubt.
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Depreciation - Allowability - Existence of plant and machinery given on lease not proved by assessee in any way -
Books of account and other details furnished by assessee were examined by AO and observed that assessee had claimed depreciation on general plant and machinery. Alleged addition by assessee was in respect of disallowance of depreciation on plant and machinery. CIT(A) upheld additions so made. It had been submitted by AR that assessee gave its plant and machinery on lease to its cliehts in earlier years, and acordingly formed part of its block of assets depreciable at 15%. He argued that test of ownership and existence of such general plant and machinery had not been disputed since assessment year 2000-01.Held: Twin conditions required for claiming depreciation under section 32 stands unsatisfied, as assessee do not have income from lease of alleged plant and machinery, against which depreciation could be claimed. In facts of present case, authorities below rejected claim of depreciation for the reason that, there is no asset, as had been claimed by assessee, and that, no such assets had been used for purposes of business which generated any income, on which claim of depreciation could be computed. Mere existence of plant and machinery on which depreciation was claimed had been doubted, and assessee had not been able to substantiate the same by way of any agreements entered into by it, with parties to which plant and machinery had been released on hire purchase. Even in the preceding years assessee had not been able to establish existence of plant and machinery by way of corroborative evidences. No evidence to establish prima facie existence of machinery had been brought on record. Under such circumstances ratio of decisions relied upon by AR was not applicable to the facts of present case.
Distinguished:ICDS Ltd. v. CIT reported in (2013) 29 taxmann.com 129 (SC) : 2013 TaxPub(DT) 414 (SC) and Manipal Finance Corporation Ltd. v. Asstt. CIT (2014) 49 taxmann.com 353.
REFERRED : ACIT v. Vireet Investments (P) Ltd. (2017) 58 ITR (Trib) 313 (Del)(SB) : 2017 TaxPub(DT) 1760 (Del-Trib)(SB)
FAVOUR : Against the assessee.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 115JB(2) Section 14A
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