2015 (12) TMI 1230 - AT - Income Tax

Addition on account of excess depreciation - CIT(A) deleted the addition - Held that - We find that the assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee s case as decided by the ITAT. Respectfully following the order of the Tribunal in assessee s own case we are inclined not to interfere with the order of Ld. CIT(A). - Decided against revenue Addition made on account of payment of gratuity - CIT(A) deleted the addition - Held that - Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account it can be inferred that the expenditure has actually been incurred by assessee. Hence we confirm the order of Ld. CIT(A). - Decided against revenue

Summary

Issues:
1. Excess depreciation claimed by the assessee.
2. Addition made on account of gratuity payment.

Issue 1 - Excess Depreciation Claimed:
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) regarding the excess depreciation claimed by the assessee. The assessee, engaged in software technology park development, had transferred commercial spaces on lease and faced disallowance of excessive depreciation. The Assessing Officer (AO) disallowed the claimed depreciation due to the consideration from property transfers not being reduced from the block of depreciable assets. The AO recalculated depreciation based on the sale value of assets, resulting in disallowance and income addition. The assessee contended that the depreciation was correctly claimed, providing evidence of proper adjustment in balance sheets. The Commissioner agreed with the assessee, referencing a previous Tribunal order in favor of the assessee. The Tribunal upheld the Commissioner's decision, noting the proper deduction of sale proceeds from the building block and lack of evidence supporting the Revenue's claims.

Issue 2 - Gratuity Payment Addition:
The second issue involved the addition made by the AO on account of gratuity payment, which was later deleted by the Commissioner. The AO disallowed the expense due to the absence of an approved gratuity fund. However, the Commissioner deleted the addition as the payment was actually made during the year when the employee left the organization and was recorded in the books. The Tribunal affirmed the Commissioner's decision, stating that since the payment was made and recorded, the expense was deemed to have been incurred by the assessee. Consequently, the Tribunal dismissed the Revenue's appeal on this ground as well.

In conclusion, the Tribunal dismissed the Revenue's appeal concerning both the excess depreciation claimed by the assessee and the addition made on account of gratuity payment. The Tribunal upheld the Commissioner's decisions in both instances, emphasizing the proper treatment of transactions and expenses as per the evidence presented by the assessee.