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TMI Blog2021 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the source for construction as well as demonstrated the cost of construction. Disallowance of depreciation as disallowed in respect of the expenditure incurred in construction of staff quarters - HELD THAT:- CIT(A) has examined the issue in detail and held that the assessee has correctly claimed the depreciation on staff quarters. We have decided in this order that the addition made by the AO is unwarranted and accordingly upheld the order of the CIT(A). Having decided the issue in favour of the assessee with regard to the cost of construction of staff quarters, we, hold that the assessee is eligible for Depreciation on Staff quarters. Addition relating to staff quarters maintenance - As viewed that the assessee has claimed the excess expenditure and accordingly allowed the proportionate expenses on the basis of electricity service connections and disallowed the balance amount - HELD THAT:- In the instant case the assessee has debited the staff quarters maintenance - assessee was maintaining regular books of accounts which were duly audited by the qualified chartered accountant. During the assessment proceedings, the AO called for various details, which was furnished b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the assessee is also having dying unit at Kunkupadu village in Addanki Mandal of Prakasam district and furnished the electricity service connection numbers allotted to each dwelling unit and submitted that all the dwelling units of staff quarters were constructed at Kunkupadu village, but not at Chowdavaram. The AO found that as against 151 quarters constructed by the assessee in the immediately preceding assessment year, new electricity connections were given in the impugned year was 152 as per the details given under : A.Y. Value pertaining to additions made during the year for which depreciation @5% is claimed under buildings No. of electricity connections for which supply as initiated in the year 2016-17 12,49,67,676 152 2015-16 6,83,39,192 151 The AO found that for the A.Y.2015-16, the assessee had constructed 151 dwelling units with the cost of ₹ 6,83,39,192/- and hence viewed that the cost of construction of 152 dwelling units at a cost of ₹ 12,49,67,676/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes other amenities provided by the assessee in the factory premises. Therefore, argued that the entire cost of construction of staff quarters along with other infrastructure provided by the assessee was ₹ 12.50 crores which was constructed with the financial assistance of banks. Therefore, submitted that the assessee has correctly reported the capital expenditure under staff quarters and there is no case for making addition u/s 69C as rightly observed by the Ld.CIT(A). Even otherwise, the AO has visited the unit at Chowdavaram and he has not disputed the fact that the assessee has constructed 152 units during the year under consideration at Kunkupadu village. Against 151 units constructed in the immediately preceding financial year, the AO estimated the cost of construction of 152 units at ₹ 7.5 crores with cost inflation @10%, whereas as per the information placed by the assessee in the paper book, the cost of construction of staff quarters was around ₹ 7,95,60,000/- which appears to be reasonable @₹ 900/- per sq.ft and comparable with the estimation of AO. Remaining ₹ 4.5 crores was related to the other amenities provided by the assessee as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction. Hence, we find no reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of revenue on this ground is dismissed. 8. Ground No.4 is related to the disallowance of depreciation on ₹ 4,97,94,565/- which was disallowed by the AO in respect of the expenditure incurred in construction of staff quarters. The AO disallowed the depreciation relating to the construction of staff quarters in respect of additions made. The AO viewed that since, the assessee has inflated the cost of construction and made the addition u/s 69C to the extent of ₹ 4,97,94,565/- and held that the assessee is not eligible for depreciation and accordingly, disallowed the depreciation. 9. Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition of depreciation of ₹ 55,000/- on construction of Vinayaka temple and deleted the remaining addition of ₹ 12,44,864/-. 10. Against which the department is in appeal before this Tribunal. 11. We have heard both the parties and perused the material placed on record. In this regard, the CIT(A) has examined the issue in detail an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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