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2017 (5) TMI 211 - AT - Income TaxClaim of depreciation on building u/s 32 - period of use of premises by assessee - Held that - We find that the bill was issued in the name of BNS, though he was not in possession of the property after August, 2010 and that the bill was raised for the period for July,2010 to December,2010. As the sale of the flats was also in possession of the property during the said period, so, the bill was issued in his name.But, during the intervening period, he had handed over the possession to the assessee. It is also a fact that society maintenance charges,amounting ₹ 2.37 lakhs were paid by the assessee. In these circumstances, we are of the opinion that the FAA was not justified in holding that BNS was the owner of the property till October,2010. The possession letter clearly establishes the fact of ownership of the flats by the assessee in the month of August, 2010. Therefore, reversing the order of the FAA we hold that the assessee was entitled to depreciation of ₹ 23.68 lakhs.First ground of appeal is decided in favour of the assessee. Disallowance of professional fees paid for compilation of Share Purchase Agreement - Held that - We find that the FAA has mentioned that the AR of the assessee had stated that there was no objection if the disputed amount was treated as capital expenditure, that accordingly he held that expenditure was capital in nature. Before us, the assessee has not produced any evidence to show that its AR has made no concession before the FAA.There was no reason for the FAA to treat the expenditure in question as capital expenditure,if the AR had not made the concession. Therefore, in our opinion, second ground raised by the assessee deserves to be dismissed. Disallowing a sum being the difference between interest and amount credited in the P&L account based on the information from the AIR database - Held that - After considering the available material, we are of the opinion that matter needs further verification by the AO. Therefore, in the interest of Justice, we are restoring that the issue to the file of the AO for fresh adjudication. He is directed to afford a reasonable of urgency of into the assessee.Third ground is decided in favour of the assessee, in part
Issues:
1. Restriction on claim of depreciation on building. 2. Disallowance of professional fees for compilation of Share Purchase Agreement. 3. Disallowance based on difference in interest amounts. Issue 1: Restriction on claim of depreciation on building The appellant, engaged in the manufacturing and export of jewellery, challenged the restriction on claiming depreciation on a building. The Assessing Officer (AO) restricted the depreciation to &8377; 11.84 lakhs instead of &8377; 23.68 lakhs claimed by the appellant. The First Appellate Authority (FAA) upheld the AO's decision based on possession details and society charges payment. However, during the ITAT hearing, it was established that the appellant had possession of the property and was entitled to the full depreciation amount. The possession letter and society maintenance charges payment supported the appellant's claim, leading to a reversal of the FAA's decision in favor of the appellant. Issue 2: Disallowance of professional fees for compilation of Share Purchase Agreement The AO disallowed &8377; 70,000 paid for compilation of a Share Purchase Agreement, considering it as capital expenditure. The FAA also upheld this decision, stating that the expenditure was related to a change in shareholding pattern and was of a capital nature. The ITAT noted that the appellant did not provide evidence contradicting the FAA's decision. As the appellant's representative did not object to treating the expenditure as capital before the FAA, the ITAT dismissed the appellant's appeal on this ground. Issue 3: Disallowance based on difference in interest amounts The AO disallowed a sum based on a difference in interest amounts credited in the Profit & Loss account. The appellant argued that the interest was adjusted against bills and that the matter required further verification. The ITAT agreed with the appellant and directed the AO to re-examine the issue for a fair adjudication. Consequently, this ground of appeal was partly decided in favor of the appellant. In conclusion, the ITAT partially allowed the appeal filed by the appellant, overturning the restriction on depreciation claim while upholding the disallowance of professional fees as capital expenditure. The matter of disallowance based on interest amounts was remanded for further verification by the AO.
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