Case Law Details
Ishwar Builders Pvt. Ltd Vs DCIT (ITAT Delhi)
The issue under consideration is whether disallowance of depreciation on car and interest on car loan by AO is justified in law?
In the present case, the depreciation have been disallowed by the Assessing Officer solely on the ground that during the year under consideration, the assessee did not carry out any business activity. The disallowance was confirmed by the ld. CIT(A).
ITAT states that the depreciation has been claimed by assessee on the written down value of the asset which means that in earlier years, the asset was used for the purposes of business. Nowhere the Assessing Officer has brought any material evidence on record to suggest that there is a closure of business activities. On the contrary, we find that in furtherance of its business activities, the assessee has further advanced Rs. 65 lakhs towards land at Chandan Hola, Delhi which means that the assessee was, in fact, carrying out business activities during the year under consideration. Further, the only condition for allowability of depreciation is that the business should not have been closed out once for all and that the assessee should demonstrate that hopes of the business being revived are alive and real. In light of the decisions of the Hon’ble High Court as mentioned elsewhere, the assessee was in fact, engaged in furtherance of its business activities and, therefore, it cannot be said that the assessee has closed down its business once for all. Therefore, the assessee is eligible for claim of depreciation. Similarly, interest on car is also coming from earlier years as the money was borrowed in earlier years. Therefore, in our humble opinion, there cannot be any disallowance for want of any business activity as the assessee was very much engaged in its business activities. The Assessing Officer is accordingly directed to delete the addition.
FULL TEXT OF THE ITAT JUDGEMENT
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