9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 29 - AT - Income TaxDisallowance of interest expenses u/s 36(1)(iii) - HELD THAT - Admittedly, the amount was borrowed dated 29th December 2010 in the immediate preceding year and the assessee claimed the interest expenses up to 31st March 2011 on such loan as revenue expenses in the FY 2010-11. But the same was disallowed by the AO on the reasoning that the asset was not put to use. On perusal of the order of the ITAT 2020 (1) TMI 953 - ITAT AHMEDABAD we note that the acquisition of the assets was not for extension of existing business and therefore the interest paid thereon was allowed as deduction. Respectfully following the same, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Depreciation of depreciation - asset put to use for less than 180 days - HELD THAT - The provisions of section 32 of the Act provides that the asset put to use for less than 180 days, meaning thereby 179 days or less, then such asset will be eligible for depreciation at the rate 50% of the actual rate of depreciation. The above working for the number of days, the asset was put to use comes out 180 days which is outside the purview of the proviso to section 32 of the Act. The above working as shown by the assessee was not disputed by the learned DR appeared for the revenue. In view of the above, we hold that the assessee is entitled for depreciation at the rate prescribed under the provisions of law. Accordingly we set aside the finding of the CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance of depreciation on vehicles - vehicles ready to use - HELD THAT - Cars purchased by the assessee were ready to use as on the date of purchase i.e. prior to 28th September 2011. Accordingly, even if it is assumed that the vehicles were registered on 12th October 2011 then also the assessee is eligible for depreciation at the rate of 15% for the simple reason that the vehicles were ready to use. We hold that the assessee was eligible for depreciation at the rate of 15% on the value of the vehicles purchased during the year. Accordingly we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Disallowance of interest expenses under section 36(1)(iii). 3. Disallowance of depreciation on machinery. 4. Disallowance of depreciation on vehicles. Detailed Analysis: 1. Delay in Filing the Appeal: The assessee's appeal was delayed by 104 days due to an inadvertent mistake by the accountant. The assessee filed an affidavit explaining the delay, and the Revenue did not counter this affidavit. The tribunal emphasized that the principle of advancing substantial justice is paramount when considering the condonation of delay. Referring to the Supreme Court's judgment in Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471), the tribunal highlighted that substantial justice should prevail over technicalities. Consequently, the tribunal condoned the delay and proceeded to address the merits of the case. 2. Disallowance of Interest Expenses under Section 36(1)(iii): The assessee had borrowed funds to acquire machinery, and the AO disallowed the interest expenses up to the date the asset was put to use, arguing it should be capitalized. The CIT(A) upheld this disallowance. The tribunal noted that a similar issue had been decided in the assessee's favor for the previous year, where it was held that the acquisition of the asset did not amount to the extension of the existing business. Therefore, the interest expenses were deductible. Following the precedent, the tribunal directed the AO to delete the addition, allowing the assessee's appeal on this ground. 3. Disallowance of Depreciation on Machinery: The AO disallowed 50% of the depreciation on machinery, arguing it was used for less than 180 days as it was registered on 4th October 2011. The CIT(A) confirmed this disallowance. The tribunal calculated the number of days from 4th October 2011 to 31st March 2012, which totaled 180 days. Since the asset was used for 180 days, it fell outside the purview of the proviso to section 32, which restricts depreciation to 50% if used for less than 180 days. The tribunal directed the AO to allow full depreciation, thus allowing the assessee's appeal on this ground. 4. Disallowance of Depreciation on Vehicles: The AO disallowed 50% of the depreciation on vehicles, arguing they were used for less than 180 days as they were registered on 12th October 2011. The CIT(A) upheld this disallowance. The tribunal noted that the vehicles were purchased on 27th September 2011, insured from that date, and ready for use. Citing the Gujarat High Court's judgment, the tribunal held that the vehicles were eligible for full depreciation as they were ready for use before the registration date. The tribunal directed the AO to allow full depreciation, thus allowing the assessee's appeal on this ground. Conclusion: The tribunal condoned the delay in filing the appeal and allowed the assessee's appeals on the grounds of disallowance of interest expenses and depreciation on machinery and vehicles. The appeal was partly allowed.
|
