INCOME TAX ACT, 1961

Section 32(1)(ii) Section 263

Revision under section 263 - Erroneous and prejudicial order - AO allowed depreciation under section 32(1)(ii) on stamp duty expenses incurred on a lease agreement (pending registration) -

Pr.CIT held assessment order as erroneos and prejudicial to the interest of revenue on the gorund of AO having allowed depreciation under section 32(1)(ii) on stamp duty expenses incurred on a lease agreement (pending registration) treating the same as 'business or commercial rights of similar nature'.Held: In order to fall within the realm of any other business or commercial rights of similar nature as contemplated in section 32(1)(ii) and therein to be construed as an 'intangible asset' eligible for depreciation under, the 'right' under consideration would require to cumulatively satisfy a two fold test, viz., (i), the right should be a business or commercial right; and (ii) the right though need not answere the description of the six specified intangible assets, viz., know how, patents, copyrights, trademarks, licences or franchies, but must be of a similar nature. It was beyond understanding as to how a simpliciter payment of stamp duty expenses on lease agreement (pending registration), would bring into existence an intangible asset of the same genus, as that of six specified categories of assets and as to on what basis the AO while framing assessment allowed assessee's claim for depreciation on the capitalised amount of stamp duty expenses (pending registration). Accordingly, order passed by AO was erroneous insofar prejudicial to the interest of revenue.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2012-13

INCOME TAX APPELLATE TRIBUNAL RULES, 1963

Rule, 34(5)(c)

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