3A Composites India Private Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that the deeming fiction of section 50C Income Tax Act cannot be extended while working out the written down value (WDV) for the purpose of claiming deprecation on the block of the asset. Thus, disallowance made is liable to be deleted.
Facts- The assessee had sold a factory building for a sale consideration of Rs.2,45,00,000/-. The said property was appearing as part of block of assets in books of account and depreciation on said block of building was claimed by the assessee for income tax purposes. The stamp duty valuation of the said building was adopted at Rs.9,76,75,509/- as against the actual sale consideration of Rs.2,45,00,000/-. The assessee claimed depreciation on the remaining value of the written down value of the block of building after reducing the actual sale consideration of Rs.2,45,00,000/- and claimed depreciation of Rs.1,81,36,734/-.
A.O. did not agree with the contention of the assessee and held that based on the provision of section 50C of the Act, the depreciation should be worked out on the remaining value of the block of the building after reducing the stamp duty value of the building of Rs.9,76,75,509/- and, accordingly, he worked out the deprecation at 1,09,41,833/-. Accordingly, A.O. disallowed excess depreciation of Rs.71,94,901/-.
