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TMI Blog2013 (1) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... r purpose of business, disallowing depreciation amounting to Rs.1,80,58,339/- (calculated @ 25% on Rs.7,22,33,356) granted by the A.O. in the original order consequent to R&D expenses being assessed as being capital in nature (having enduring benefit) on the ground that no asset is generated on which depreciation can be allowed as per rules." 2. In this case, the order u/s.143(3) was passed by DCIT, Panchmahal Circle, Godhra on 27.12.2006, wherein ld. A.O. made addition under the head 'Research & Development' expenses at Rs.7,22,33,356/- after allowing the depreciation @ 25%. The A.O. observed that the assessee had debited Rs.9,58,00,000/- under the head 'Research & Development expenses" which were found to him as capital in nature. Out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the same be allowed and the assessment order passed by the ld. A.O. be amended accordingly. (ii) Depreciation on Non-factory building Rs.74,35,885/- Non factory building consists of administrative office building situated in Halol. They are no residential building/premises owned by the company. This is further substantiated by the tax audit report as well as facts examined by the Ld. A.O. prior to passing of the assessment order." After considering the assessee's reply, ld. CIT-III, Baroda has held as under: "However such expenditure does not give rise to any asset on which depreciation can be allowed as per rules and hence the Assessing Officer is directed to withdraw the depreciation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that when there is no asset in existence, the appellant cannot claim depreciation on it. The ld. A.O. had allowed the depreciation without making any inquiry. Thus, he requested to confirm the order of 263, passed by the CIT-III, Baroda. 4. We have perused the orders of the authorities below and gone through the facts. The ld. A.O. has inquired and gone through the details of expenses which has been found by him as enduring nature on which even depreciation @ 25% has been allowed by him. Therefore, it is tantamount to change of opinion. The addition made in original order by A.O. had been disputed by the assessee before the CIT(A). The order of A.O. had been merged with CIT(A) on these issues. Thus, we set aside the order of CIT-II ..... X X X X Extracts X X X X X X X X Extracts X X X X
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