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2016 (11) TMI 949 - AT - Income TaxDisallowance of depreciation - installation and the commencement of production - Held that - As noticed that first balance-sheet was drawn by the assessee in the assessment year 2004-05 when it came in production and, thereafter, the balance-sheet for the assessment years 2005-06 and 2006-07 were also prepared which included the cost of the building and plant and machinery and the claim of depreciation in those years. Considering the materials and the documents available on record, it appears that nobody visited the site where the factory of the assessee was situated which indicates that the Assessing Officer merely proceeded on suspicion. He failed to bring contrary evidence on record. It is also noted that after a lapse of a considerable period and after the installation and the commencement of production, the Assessing Officer made enquiry in the subjected year and merely proceeding on suspicion, disallowed the claim of depreciation made by the assessee and, therefore, of a considered view that the claim of the depreciation disallowed by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is without any basis and deserves to be deleted. In view of the facts and circumstances of the case, the order of the learned Commissioner of Income-tax (Appeals) is reversed on this issue. - Decided in favour of assessee Disallowance of household expenses and marriage expenses of the daughter - Held that - We find from the record that the assessee has not been able to substantiate the household expenses and marriage expenses of the daughter to the satisfaction of the lower authorities. In this view of the matter, we find no reason to interfere with the order of the learned Commissioner of Income-tax (Appeals) which is sustained - Decided against revenue
Issues Involved:
1. Disallowance of depreciation claimed on building and plant and machinery. 2. Addition on account of household expenses. 3. General ground (not requiring adjudication). Detailed Analysis: 1. Disallowance of Depreciation: The primary issue revolves around the disallowance of depreciation amounting to ?4,31,432 claimed by the assessee on building and plant and machinery. The Assessing Officer (AO) conducted an enquiry and found discrepancies in the purchases of machinery and materials from certain parties, concluding that the assessee arranged bogus bills to claim depreciation. The AO disallowed the depreciation and added the amount to the income of the assessee. The Commissioner of Income-tax (Appeals) upheld this disallowance, stating that the ownership and use of the assets were not established. The Tribunal, however, observed that the assessee had disclosed job receipts from manufacturing activities and that the AO had accepted the books of account for other purposes but disbelieved the same books when it came to the depreciation claim. The Tribunal noted that the assessee had made payments for electricity and wages, supporting the existence and use of the assets. It was also highlighted that the AO did not conduct a site visit and relied on suspicion. Consequently, the Tribunal reversed the order of the Commissioner of Income-tax (Appeals) on this issue, allowing the depreciation claim of ?4,31,432. 2. Addition on Account of Household Expenses: The second issue pertains to the addition of ?1,50,000 made by the AO for household expenses, which was sustained by the Commissioner of Income-tax (Appeals). The AO required the assessee to submit details of household expenses and found the declared expenses inadequate given the family size and lifestyle. The AO added an estimated amount of ?1,50,000 to the income of the assessee, which was upheld by the Commissioner of Income-tax (Appeals), citing the inadequacy of the declared expenses. The Tribunal found that the assessee failed to substantiate the household and marriage expenses to the satisfaction of the lower authorities. Therefore, the Tribunal saw no reason to interfere with the order of the Commissioner of Income-tax (Appeals) and sustained the addition of ?1,50,000. 3. General Ground: The third ground raised by the assessee was general in nature and did not require adjudication. Conclusion: The appeal of the assessee was partly allowed. The Tribunal allowed the claim of depreciation amounting to ?4,31,432, reversing the order of the Commissioner of Income-tax (Appeals) on this issue. However, the addition of ?1,50,000 on account of household expenses was sustained. The general ground raised by the assessee was not adjudicated.
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