2009 (3) TMI 628 - HC - Income Tax

Depreciation - Held that - cost incurred towards the construction activity for a holiday resort by depicting the estimated cost thereof. on the basis of the estimated cost, it was not possible for the Revenue to deter-mine the quantum of depreciation that had to be allowed to the respondent-assessee under section 32 of the Income-tax Act, 1961. The Assessing Officer required the actual cost to be determined by the District Valuation Officer and on the basis thereof, allowed a deduction in the nature of depreciation to the respondent-assessee, depreciation on the expenses incurred by the respondent-assessee on the construction of its holiday resort could not have been determined on the basis of any rough estimate. remanded the matter back to the Assessing Officer.

Summary

The High Court of Punjab and Haryana, in a 2009 judgment, upheld an order made by the Income-tax Appellate Tribunal regarding the determination of depreciation on expenses incurred by the respondent for constructing a holiday resort. The respondent initially submitted estimated costs in their income tax return, leading to the Assessing Officer requiring the actual cost to be determined by the District Valuation Officer. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both ruled in favor of the respondent, allowing the deduction of depreciation. The Tribunal remanded the matter back to the Assessing Officer to enable the respondent to provide evidence of the actual costs incurred. The High Court found no issue with this determination and upheld the Tribunal's decision. Therefore, the appeal by the Revenue was dismissed.