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2022 (3) TMI 529 - AT - Income TaxDisallowance of claim of depreciation interest expenditure and administrative expenditure in respect of Block-C - claim disallowed by the AO on the ground that the asset was not put to use - HELD THAT - We find that in assessment year 2013-14 the Assessing Officer had accepted the contention of assessee that Block-C is complete and allowed assessee s claim of depreciation administrative and interest expenditure qua Block-C. In respect of the remaining project the administrative and interest expenditure was allowed to be capitalized. The CIT(A) in the impugned assessment year allowed assessee s claim in respect of depreciation interest and administrative expenditure pertaining to Block-C on the ground that Department has accepted in assessment year 2013-14 that Block-C has been put to use . Once having accepted this position the AO cannot change his opinion in immediate next assessment year without there being any change in facts and circumstances. We find no infirmity in the impugned order hence the same is upheld. - Decided against revenue.
Issues:
Disallowance of depreciation for building Block C Disallowance of interest expenses for building Block C Disallowance of administrative expenses Consistency in allowing depreciation and expenses Assessment of asset "put to use" for depreciation Analysis: 1. Disallowance of Depreciation for Building Block C: The appeal by the Revenue challenged the deletion of depreciation disallowance amounting to Rs. 9,97,11,787 for building Block C by the CIT(A). The Revenue contended that the building was not completed for lease out as certain amenities were not finished, thus claiming it was not put to use. However, the assessee argued that since Block C was deemed complete and added to the block of assets in the preceding assessment year, the Assessing Officer cannot retract to disallow depreciation. The principle of consistency was emphasized, supported by legal precedents, asserting the eligibility to claim depreciation for an asset ready to use but not actually used. The Tribunal upheld the CIT(A)'s decision, emphasizing that the Assessing Officer cannot change their opinion without any change in facts and circumstances. 2. Disallowance of Interest Expenses for Building Block C: The Revenue also contested the deletion of interest expenses disallowance amounting to Rs. 20,05,29,277 for building Block C. The Revenue argued that since the asset was not put to use, depreciation and interest expenses should not be allowed. However, the assessee maintained that interest expenditure was claimed only for Block C, which was allowed in the previous assessment year. The Tribunal upheld the CIT(A)'s decision, emphasizing the principle of consistency and the acceptance of Block C being put to use in the preceding year. 3. Disallowance of Administrative Expenses: The Revenue challenged the deletion of administrative expenses disallowance of Rs. 92,98,042 by the CIT(A), claiming that no business was conducted during the year. The assessee argued that administrative expenses were attributable to Block C only, which were allowed in the previous assessment year. The Tribunal upheld the CIT(A)'s decision, citing the principle of consistency and relying on legal precedents to support the allowance of administrative expenses. 4. Consistency in Allowing Depreciation and Expenses: The Tribunal emphasized the importance of consistency in allowing depreciation and expenses, especially when the Assessing Officer had accepted the asset as ready to use in the preceding assessment year. It was held that the Assessing Officer cannot change their stance without any change in facts or circumstances. 5. Assessment of Asset "Put to Use" for Depreciation: The Tribunal reiterated that once an asset is deemed ready to use and depreciation is allowed in a previous assessment year, the Assessing Officer cannot disallow it in the subsequent year without valid reasons or changes in the situation. The Tribunal upheld the CIT(A)'s decision to allow depreciation, interest expenses, and administrative expenses for Block C, as the Department had accepted its status as "put to use" in the previous assessment year. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order as it found no merit in the Revenue's contentions, emphasizing the principle of consistency and the acceptance of Block C being "put to use" in the preceding assessment year.
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