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2017 (12) TMI 1746 - AT - Income TaxAddition on account of excess claim of depreciation and additional depreciation on the spare parts in respect of pre-existing machinery - HELD THAT - There is no dispute that the assessee has purchased certain spare parts in respect of the machinery which is used for the purpose of power generation units. We further find that the purchase of spare parts for the machinery was treated as capital expenditure and, therefore, makes the assessee eligible for claim of depreciation and also the claim of additional depreciation on the same. We, therefore, do not find any error or infirmity in the findings of the CIT(A).
Issues:
Challenge to deletion of addition of depreciation and additional depreciation on spare parts by Revenue. Analysis: The Revenue challenged the CIT(A)'s order deleting the addition of depreciation and additional depreciation on spare parts concerning pre-existing machinery. The assessee, involved in mining and power generation, filed a return for the assessment year 2008-09. The Assessing Officer, following directions from the Commissioner, examined the claim of depreciation and disallowed the excess depreciation of ?2,77,92,657 on spare parts not classified as machinery. The CIT(A), after the assessee's appeal, allowed the claim of depreciation and additional depreciation on spare parts and machinery used in the mining project and power generation units. The Revenue contended that the spare parts could not be considered machinery, thus disallowing the additional depreciation. However, the CIT(A) found the assessee eligible for both depreciation and additional depreciation on the spare parts treated as capital expenditure. The Tribunal, after considering the arguments, upheld the CIT(A)'s decision. It noted that the spare parts purchased for machinery used in power generation were treated as capital expenditure, making the assessee eligible for depreciation and additional depreciation. The Tribunal found no error in the CIT(A)'s findings and dismissed the Revenue's appeal.
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