Case Law Details
SDS Ramcides Crop Science Pvt. Ltd Vs DCIT (ITAT Chennai)
Introduction: Dive into the intricacies of the dispute between SDS Ramcides Crop Science Pvt. Ltd and DCIT, as the Income Tax Appellate Tribunal (ITAT) Chennai addresses the controversy surrounding the disallowance of depreciation. The case revolves around the refurbishment of the assessee’s leasehold premises and the ensuing claim of 100% depreciation on specific temporary structures.
Detailed Analysis: The article provides a detailed analysis of the facts presented by the counsel for the assessee, highlighting the key contention that the Assessing Officer incorrectly assumed a 100% depreciation claim on the total amount of Rs. 1,26,20,410/-. The actual claim, as clarified, was for 50% of the amount, i.e., Rs. 63,10,205/-, in consideration of specific assets put to use from 25.03.2014. The Assessing Officer’s erroneous disallowance of the entire amount and subsequent rectification by the CIT(A) form critical points in the analysis.
The tribunal’s intervention and resolution of the depreciation dispute are examined in detail. The article elucidates the correct application of depreciation at 100%, albeit limited to 50% due to the asset’s utilization from 25.03.2014. The inability of the LD. DR to counter the presented facts, despite specific queries, adds weight to the assesse’s claim.
Conclusion: The article concludes by summarizing the ITAT’s decision, emphasizing the allowance of the assessee’s claim for depreciation. The tribunal’s correction of the initial miscalculation by the Assessing Officer and the subsequent affirmation of the rightful depreciation claim at 50% provide clarity on this aspect of the SDS Ramcides Crop Science vs. DCIT case.
Ld. Counsel for the assessee before us stated the facts that the assessee has refurbished it office which is a leasehold premises and claimed 100% depreciation on temporary structure, which are in the nature of wireless access point, false roofing, wall to wall carpet, partition walls of temporary structure which are incapable of being salvaged in the event of vacation of the premises. Ld. Counsel also explained that the Assessing Officer has considered the wrong amount for disallowance while completing the assessment and Assessing Officer has wrongly assumed that the assessee has claimed 100% depreciation on total amount of Rs. 1,26,20,410/-. He stated that the actual facts are that the assessee has made claim of 50% of amount i.e., 63,10,205/- being 50% of the total amount against these assets were put to use w.e.f. 25.03.2014. The Assessing Officer wrongly disallowed the entire amount of Rs. 1,19,89,390/- after reducing 10% of depreciation of 50% i.e., 6,31,021/-. The CIT(A) rectified this mistake but allowed depreciation @ 10% in principal and rectified that the assessee is eligible for 50% of the amount i.e., 63,10,205/-. The Ld. DR could not controvert the above fact situation inspite of specific query raised by the Bench.
We noted that the assessee has added the fixed asset for an amount of Rs. 1.26 crores and the same was put to use w.e.f. 25.03.2014 in the financial year 2013-14 relevant to assessment year 2014-15. We noted that the assessee has rightly claimed 50% of the total amount of Rs. 1,26,20,410/- that comes to Rs. 63,10,205/-. The assessee is entitled to this claim of Rs. 63,10,205/- @ 100% depreciation but only half of the depreciation because the asset was put to use only w.e.f. 25.03.2014. Hence, we allow the claim of assessee and accordingly, appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by assessee is arising out of the order of Commissioner of Income Tax (Appeals)-15, Chennai in appeal No. 474/2016-17/CIT(A)-15 order dated 28.06.2018. Assessment was framed by Deputy Commissioner of Income-tax, Corporate Circle -6(1), Chennai for AY 2014-15 u/s. 143(3) of the Income-tax Act, 1961 (herein after referred to as ‘the Act’) vide order dated 25.12.2016.
2. At the outset it is noted that this appeal is time barred by 8 days as the CIT(A) passed the order on 28.06.2018 which was received by assessee on 01.08.2018 and appeal was filed only on 26.09.2018. In the condonation petition, assessee explained that the appeal is within the time as the order of CIT(A) received only on 01.08.2018 and appeal can be filed on or before 30.09.2018, but actually filed before the Tribunal only on 26.09.2018. We note it that the appeal is filed within the time and there is no delay.
3. The only issue in this appeal of assessee is as regards to the order of CIT(A) upholding the action of the AO in making disallowance of depreciation to the extent of Rs. 63,10,205/-.
4. We have heard rival contentions and gone through the facts and circumstances of the case. Ld. Counsel for the assessee before us stated the facts that the assessee has refurbished it office which is a leasehold premises and claimed 100% depreciation on temporary structure, which are in the nature of wireless access point, false roofing, wall to wall carpet, partition walls of temporary structure which are incapable of being salvaged in the event of vacation of the premises. Ld. Counsel also explained that the Assessing Officer has considered the wrong amount for disallowance while completing the assessment and Assessing Officer has wrongly assumed that the assessee has claimed 100% depreciation on total amount of Rs. 1,26,20,410/-. He stated that the actual facts are that the assessee has made claim of 50% of amount i.e., 63,10,205/- being 50% of the total amount against these assets were put to use w.e.f. 25.03.2014. The Assessing Officer wrongly disallowed the entire amount of Rs. 1,19,89,390/- after reducing 10% of depreciation of 50% i.e., 6,31,021/-. The CIT(A) rectified this mistake but allowed depreciation @ 10% in principal and rectified that the assessee is eligible for 50% of the amount i.e., 63,10,205/-. The Ld. DR could not controvert the above fact situation inspite of specific query raised by the Bench.
5. We noted that the assessee has added the fixed asset for an amount of Rs. 1.26 crores and the same was put to use w.e.f. 25.03.2014 in the financial year 2013-14 relevant to assessment year 2014-15. We noted that the assessee has rightly claimed 50% of the total amount of Rs. 1,26,20,410/- that comes to Rs. 63,10,205/-. The assessee is entitled to this claim of Rs. 63,10,205/- @ 100% depreciation but only half of the depreciation because the asset was put to use only w.e.f. 25.03.2014. Hence, we allow the claim of assessee and accordingly, appeal of the assessee is allowed.
6. In the result, the appeal of the assessee is allowed.
Order pronounced on 15th June, 2022.
