2013 (5) TMI 798 - AT - Income Tax

Disallowance of loss of gold and silver due to wastage - CIT(A) deleted the addition - Held that - It appears from records that the wastage for the assessment year 2004-05 works out to 2.82 per cent. and that for the assessment year 2009-10 is 4.01 per cent. Thus, the wastage claimed by the assessee is within the permissible limit. The learned Departmental representative was also not able to bring any material to controvert the aforesaid factual position. In these facts and circumstances, we find no infirmity in the order of the Commissioner of Income-tax (Appeals) in deleting the addition made by the Assessing Officer by following the order of the Income-tax Appellate Tribunal for the assessment year 2008-09 wherein allowed wastage of 5 per cent. - Decided against revenue. Depreciation at the rate of 50 per cent. on motor car disallowed - Held that - On perusal of the assessment order, it appears that the Assessing Officer has given no reason as to why the assessee s claim of depreciation at the rate of 50 per cent. is not allowable. Since the disallowance of depreciation claimed is not supported by any reason, the disallowance so made, cannot be sustained. However, it is seen from the order of the Commissioner of Income-tax (Appeals) that the assessee has purchased the motor car on February 26, 2009 which in other words mean that the asset has been used for less than 180 days and as such the assessee is not entitled for full depreciation but for 50 per cent. of the amount computed. We therefore direct the Assessing Officer to compute depreciation on motor car accordingly.The order of the Commissioner of Income-tax (Appeals) is modified to the extent indicated above. - Decided partly in favour of revenue.

Summary

Issues:
1. Disallowance of claim on wastage in the assessment years 2004-05 and 2009-10.
2. Disallowance of depreciation on motor car at the rate of 50%.

Analysis:
1. The appeals filed by the Department were against separate orders of the Commissioner of Income-tax (Appeals) concerning the disallowance of the claim of wastage by the Assessing Officer for the assessment years 2004-05 and 2009-10. The Assessing Officer disallowed the claim of loss on wastage despite the assessee's submissions and supporting evidence. The Commissioner of Income-tax (Appeals) allowed the claim based on a previous order by the Income-tax Appellate Tribunal for the assessment year 2008-09. The Tribunal upheld the Commissioner's decision, stating that the wastage claimed by the assessee was within permissible limits, and dismissed the Department's ground of appeal.

2. The second issue in one of the appeals was regarding the disallowance of depreciation on a motor car at the rate of 50%. The Assessing Officer disallowed a portion of the depreciation claimed by the assessee, contending that the depreciation rate should be 15% instead of 50%. The Commissioner of Income-tax (Appeals) allowed depreciation at the rate of 50% based on the vehicle being a commercial vehicle. The Tribunal found that the Assessing Officer did not provide a valid reason for disallowing the higher depreciation rate and modified the Commissioner's order to allow 50% depreciation as the asset was used for less than 180 days.

In conclusion, the Tribunal dismissed one appeal and allowed the other in part, based on the merits of each issue presented.