9911796707
TMI Blog2022 (12) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out of assessment order dated 28.12.2018 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed by Circle- 5(2), New Delhi (hereinafter referred as Ld.Assessing officer or in short Ld. AO). 2. The facts of the case are that the assessee/ appellant is a company incorporated under the Companies Act, 1956 and engaged in the business of providing sales and marketing and reservation support services to Carlson Rezidor Group's affiliated hotels. It filed return of income and declared income of Rs. 3,31,40,680/-. Case was taken for scrutiny assessment and statutory notice u/s 143(2) of the Act was issued. Ld. AO inquired as to why half of the depreciation that is Rs. 4,82,865/- claimed by the assessee should not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim. However, in its reply dated 20.12.2018 the fact that the assets were held jointly between the two aforementioned entities was denied by the assessee. Eventually, this fact was admitted by the assessee in their letter dated 27.12.2018. 3.2 However, no evidence has been brought forth by the assessee to show that the depreciation has not been claimed twice. There are no details of which assets were purchased and used jointly. In absence of any evidence to believe otherwise, it is assumed that the assets were owned jointly by the assessee and M/s Carlson Hotels (South Asia) Pvt. Ltd. in equal proportion. As a result, half of the depreciation claimed as expense in the Return of Income, that is, Rs. 4,82,865/- (50% of Rs. 9,65,729/-) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing an internal arrangement, may be done at their own end. Accordingly, as per Sec. 32, depreciation is allowable on this asset to the sister concern which has purchased the asset and not to the appellant in spite of showing the assets in the books. 8.7 The appeal in the case of sister concern for the same assessment year has been decided allowing full depreciation for the assets purchased. In view of these facts and legal provisions, the grounds are ruled against the appellant." 4. The assessee is in appeal raising following grounds :- "1) That the order of CIT(A) u/s 250 dated 21.10.2019 upholding the reduction in claim of depreciation is bad in law and on facts of the assessee's case. 2) That the Ld. AO has grossly erred in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is prayed to be deleted. 7) That the penalty proceedings-initiated u/s Sec 271(l)(c) are on wholly illegal and untenable grounds since there is no furnishing of inaccurate particulars of income, by the assessee. 8) The aforesaid grounds of appeal are without prejudice to one another. 9) The appellate craves the leave to add, amend or alter all or any of the grounds of appeal." 5. Heard and perused the record. 6. Ld. AR made submission with regard to the facts as narrated above. It was submitted that before Ld. CIT(A), evidence was submitted to demonstrate that there is no extra claim of depreciation. Amounts of common assets are being capitalized in the books of accounts in the defined ratio and the depreciation is also being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the ground of the sister concern's appeal observing that having purchased the assets the sister concern is entitled for full depreciation on the assets. However, Ld. AO interpreted it in some other way, while passing order u/s 250/143(3) of the Act and same is not matter of present lis. What is material is that Ld. CIT(A) has allowed full depreciation on the assets in favour of the sister concern and as accordingly observed in case of assessee/ appellant also in para no. 8.7 of order of Ld. CIT(A). 8. Further, it can be observed that assessee does not dispute the fact that only one asset is the subject matter of dispute and the same was purchased by sister concern. The invoice is in the favour of the sister concern thus, the defact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation. Rather in this judgment it is observed in para 12 and 13 as follows :- "12. In P.K Badiani v. CIT[1976] 105 ITR 642 the Supreme Court has observed that allowance for depreciation is to replace the value of an asset to the extent it has depreciated during the period of accounting relevant to the assessment year and as the value has, to that extent, been lost, the corresponding allowance for depreciation takes place. 13. An overall view of the above said authorities show that the very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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