Allowability of Depreciation on Gym Equipment Installed at House of Managing Director

So far as dis allowance of depreciation of Rs. 1,75,048/- claimed on gym equipments installed in the premises of Managing Director, the assessee’s case before the A.O. as well as Ld. CIT(A) has been that as per the corporate policy the provision of fitness centre has been done for purposes to ensure employees to stay fit and healthy and in any case it can be treated as perquisite in hands of Managing Director but cannot be disallowed in the hands of the assessee company and in support reliance was placed on various decisions. The AO and Ld. CIT (A) have disallowed the depreciation on the ground that though ownership belongs to the assessee but installation of the equipment at residential premises of the Directors share holders makes its usage private which cannot be held to be for the business purpose.

ITAT held that it is not in dispute that the equipment has been bought by the company and is appearing at the fixed assets in the balance sheet of the assessee company and said assets has been acquired during the running of hotel business. Then simply because it is being used by Managing Director it cannot be held to be for private use so as to warrant dis allowance of depreciation. At the most if any equipment has been placed for exclusive use of Managing Director the same should be added as perquisite in the hands of the said Director but cannot be disallowed in the hands of the assessee company when this asset already forms part of the block of the assets and depreciation has been allowed earlier. Accordingly, we do not find any reason to sustain such dis allowance and the same is directed to be deleted.