Case Law Details
Super Alloy Castings P. Ltd Vs ACIT (ITAT Delhi)
ITAT Grants Higher Depreciation for Office Electric Fittings Due to Misclassification & personal user cannot be visualized in the hands of corporate assessee
Introduction: In a recent decision by the Income Tax Appellate Tribunal (ITAT) Delhi, Super Alloy Castings P. Ltd. faced off against the Assistant Commissioner of Income Tax (ACIT). The case revolves around two key issues: the rate of depreciation on electrical fittings and charges related to personal use of certain expenses. This article provides an in-depth analysis of the ITAT Delhi’s judgment and its implications for the assessee.
Depreciation on Electrical Fittings: The dispute over depreciation hinges on the rate applicable to electric fittings. The electric fittings are divided between those installed in the office premises and those in the factory premises. The assessee claimed a 10% depreciation rate on office fittings, while asserting that the Factory Genset and certain machine’s Electrical Panels installed for factory purposes should be eligible for a 15% depreciation rate. The Assessing Officer and the Commissioner of Income Tax (Appeals) both failed to recognize this distinction and allowed only a 10% depreciation rate on all electric fittings.
Notably, in a previous assessment for the 2014-15 tax year, the Assessing Officer had issued a notice under Section 148 for excess depreciation claimed on these fittings. However, upon review during assessment under Section 143(3) r.w. Section 147, the Assessing Officer accepted the higher claim. The ITAT Delhi found substantial merit in the assessee’s claim and directed the Assessing Officer to reverse the disallowance related to depreciation on factory premises electric fittings.
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