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2016 (1) TMI 310 - AT - Income TaxAllowability of depreciation at the rate of 100% on the temporary structure - CIT(A) disallowed claim - Held that - The assessee has not filed the lease deed document, though the assessee has filed copy of the tax invoice and other bills towards purchase of materials for the above partition/false ceiling works. On perusal of para 4.1 of the order of the ld. CIT(A) and para 2 of the assessment order, we find that there is no clarity on the nature of the asset, on which depreciation at the rate of 100% is claimed. The copy of the Invoice No. DA/63 dated 16.10.2006 relied upon by the ld. Counsel for the assessee only describes the list of items of raw materials purchased by the assessee. It does not describe the nature of fixed asset. Therefore, there is need for basic facts relating to the assets in question, if there are partitions, ceiling, etc. or otherwise. In view of the above facts and circumstances, we set aside the order passed by the ld. CIT(A) and remit the matter back to the Assessing Officer to verify the lease deed and other documents as may be filed by the assessee and decide the issue afresh in accordance with law after allowing sufficient opportunity of hearing to the assessee by keeping in view of the ratio laid down by the Hon ble Jurisdictional High Court in the case of Thiru Arooran Sugars Ltd. v. DCIT (2013 (2) TMI 450 - Madras High Court ). - Decided in favour of assessee for statistical purposes.
Issues:
Allowability of depreciation at the rate of 100% on temporary structure. Analysis: The appeal involved a dispute regarding the allowability of depreciation at the rate of 100% on a temporary structure in the lease premises for the assessment year 2007-08. The Assessing Officer initially issued a notice under section 154 to rectify the claim of 100% depreciation, which was objected to by the assessee. Subsequently, a notice under section 148 for reopening the assessment was issued, leading to scrutiny and completion of assessment under section 143(3) r.w.s. 147. The assessee then appealed to the CIT(A), who dismissed the claim based on the disallowance of depreciation. The Tribunal, in a previous order for a later assessment year, had confirmed the CIT(A)'s decision, which was cited in the current appeal. The assessee argued that the expenditure incurred was revenue in nature and eligible for 100% depreciation, citing various precedents including the decision of the Jurisdictional High Court. The Assessing Officer treated the expenditure as capital, allowing 10% depreciation and disallowing the rest. The Tribunal noted that the premises needed modifications for business operations, and the Assessing Officer's decision was based on precedents classifying the expenditure as capital. The assessee contended that the temporary structures were not reusable and should be considered revenue expenditure, referencing the Jurisdictional High Court's decision on depreciation for construction or renovation works. The Tribunal observed a lack of clarity regarding the nature of the asset for which 100% depreciation was claimed, as the documents provided did not specify whether the expenditure was on partitions, false ceilings, etc. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for further verification of lease documents and other relevant information to decide the issue in accordance with the law and the precedent cited by the Jurisdictional High Court. In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of the asset nature and documentation to determine the allowability of depreciation on the temporary structure in the lease premises. Order pronounced on 20.11.2015.
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