2023 (2) TMI 205 - AT - Income Tax

Deduction of 80P on account depreciation (Protective) - HELD THAT - After a careful consideration, we are unable to verify certain facts relevant to the issue being agitated, viz. (i) whether and to what extent the buildings/godowns are being used for the activities eligible for 80P deduction or other activities as being claimed before us; and (ii) the treatment given by assessee and accepted by revenue-authorities in the preceding and subsequent assessment-years on this issue. Hence, we think it appropriate to remand this issue back to the file of Ld. AO who shall first verify these aspectsand thereafter take a call on the issue in the light of legal provisions of Income-tax Act, 1961 and the judicial rulings, if any, thereon. That would enable to resolve the assessee s grievance aptly. Needless to mention that the Ld. AO shall give adequate opportunities to the assessee to explain his case. This appeal of assessee is allowed for statistical purpose.

Summary

Issues involved:
1. Disallowance of deduction of 80P in respect of storage income
2. Disallowance of claim of deduction u/s 80P on account of depreciation

Analysis:
1. The appeal was filed challenging the order passed by the Commissioner of Income-Tax (Appeals) regarding the disallowance of deduction of 80P for storage income derived from CAP storage. The first ground of appeal was initially decided in favor of the assessee. However, the second ground regarding the disallowance of claim of deduction u/s 80P on account of depreciation was treated as infructuous in the first order. Subsequently, a Miscellaneous Application was filed by the assessee to adjudicate Ground No. 2 on merit, which was allowed. The case was brought before the tribunal again for adjudication of the second ground.

2. The issue at hand was whether the disallowance of the claim of deduction u/s 80P on account of depreciation was justified. The assessee, being an APEX body of marketing societies, claimed that the disallowance was related to depreciation on "Buildings and Godowns block" of assets. The assessee argued that the depreciation was not separable for activities eligible for 80P deduction and other non-eligible activities, such as keeping own goods and administrative buildings. The tribunal noted the lack of verification on the extent of usage of buildings/godowns for eligible activities and the treatment in previous and subsequent assessment years. Consequently, the tribunal remanded the issue back to the Assessing Officer for further verification and to decide on the issue in accordance with legal provisions and judicial rulings, providing the assessee with adequate opportunities to present their case.

3. The tribunal considered the arguments presented by both sides and decided to remand the issue back to the Assessing Officer for proper verification of facts. The tribunal found it necessary to ascertain the extent of usage of buildings/godowns for eligible activities and to review the treatment of similar issues in previous assessments. The tribunal directed the Assessing Officer to make a decision based on the legal provisions of the Income-tax Act, 1961, and relevant judicial rulings. The appeal of the assessee was allowed for statistical purposes, and the case was remanded for further proceedings.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the tribunal's decision on the disallowance of deduction u/s 80P on account of depreciation.