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2016 (5) TMI 410 - AT - Income TaxDepreciation on a new tank lorry purchased - Held that - We concur with the contention of the assessee that when an asset is mingled in a block it completely loses its individual identity. In its audit report, the assessee had included the lorry in question in block of assets, thus, it should not have been isolated for making the disallowance of the depreciation claimed on it. Besides, it is an undisputed fact that the tank lorry in question was ready to use. Considering these material facts, we are of the view that the authorities below were not justified in making and upholding the depreciation in question disallowed. The Assessing Officer is thus directed to allow the claimed deprecation on the oil lorry - Decided in favour of assessee Disallowance of interest - Held that - Making the disallowance the Assessing Officer has ignored some important aspects of the matter. Firstly, the interest free advance in question was not made during the year under consideration and secondly assessee was having sufficient interest free funds to make the advance. The disallowance made by the Assessing Officer was not justified. We thus while setting aside orders of the authorities below in this regard direct the Assessing Officer to delete the disallowance in question made on account of advance given to Dr. Rajbir Singh. - Decided in favour of assessee Disallowance on account of shortage in diesel - Held that - Since it is not the case of the Revenue that this year, facts on the issue of shortage of diesel on account of handling were different, the Revenue was supposed to maintain consistency on the issue as held in other assessment years. We thus while setting aside orders of the authorities below in this regard direct the Assessing Officer to delete the disallowance made on account of shortage in diesel.- Decided in favour of assessee
Issues:
1. Disallowance of depreciation on a new tank lorry 2. Disallowance of interest on an old advance made to Dr. Rajbir Singh 3. Additional ground for disallowance on account of shortage in diesel Issue 1 - Disallowance of Depreciation on Tank Lorry: The assessee contested the disallowance of depreciation on a new tank lorry purchased for a specific amount. The Assessing Officer disallowed the claimed depreciation on the grounds that no expenses related to the lorry were incurred, and the claim of transporting mobile oil was not accepted. The CIT(Appeals) upheld this decision. The AR argued that depreciation should be allowed on the entire block of assets, citing relevant sections of the Income-tax Act. The AR provided evidence that the lorry was used and part of the block of assets. Relying on case law, the Tribunal held that the depreciation disallowance was unjustified as the lorry was part of the block of assets and ready to use. The Assessing Officer was directed to allow the claimed depreciation. Issue 2 - Disallowance of Interest on Old Advance: The Assessing Officer disallowed interest on an advance made to Dr. Rajbir Singh, alleging inconsistency with interest charged on loans. The CIT(Appeals) upheld this disallowance. The AR argued that the advance was made in earlier years and the Assessing Officer overlooked the availability of the assessee's own funds. The Tribunal found that the disallowance was unjustified as the advance was not made during the year under consideration, and the assessee had sufficient interest-free funds. The Assessing Officer was directed to delete the disallowance of interest on the advance. Issue 3 - Additional Ground for Disallowance on Shortage in Diesel: The assessee raised an additional ground challenging the disallowance on account of shortage in diesel. The disallowance was based on alleged overestimation of shortage to reduce profit. The AR argued that the disallowance lacked consistency with previous years and was based on petroleum companies' parameters. The Tribunal held that the Revenue should maintain consistency in its approach and directed the Assessing Officer to delete the disallowance on shortage in diesel. The appeal was allowed, and the orders of the authorities below were set aside. In conclusion, the Tribunal allowed the appeal, directing the Assessing Officer to allow the claimed depreciation on the tank lorry, delete the disallowance of interest on the advance, and delete the disallowance on shortage in diesel. The Tribunal emphasized the importance of consistency in the Revenue's approach and upheld the principles of law in each issue addressed.
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