INCOME TAX ACT, 1961

Section 32(1)

Depreciation - Allowability - No approval plan of factory premises furnished by assessee nor any other evidence to justify date of put to use of plant and machineries -

Assessee, a private limited company, engaged in manufacturing and trading of pharmaceuticals items claimed to have purchased a piece of land and submitted that manufacturing unit was set up which started functioning from the month of October 2007 and commercial sales begun in the month of Novermber 2007. Accordingly, assessee claimed depreciation on such manufacturing unit. AO concluded that manufacturing activities of assessee had not commenced in the year under consideration because there was no approval plan of the factory premises furnished by assessee nor any other evidence to justify date of put to use of plant and machineries and therefore, depreciation was not allowable for deduction under section 32. Held: There was addition of different fixed assets approximately of Rs. 5 crores including plant and machinery and factory premises which were major items of addition in the fixed assets schedule but assessee failed to produce documents such as approval plan of factory premises, etc. Likewise, assessee failed to file any documentary evidence reflecting sales made by it through manufacturing activity viz., trading activity separately which was essential to establish the fact that assessee had carried out manufacturing activity in the year under consideration. Accordingly, no depreciation could be allowed. However, depreciation claimed by assessee on the opening written down value could not be denied in the year under consideration as it pertained to fixed assets which were acquired in earlier years.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 37(1)

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