Case Law Details
ACIT Vs Educomp Infrastructure & School Management Ltd. (ITAT Delhi)
it is beyond doubt that the relevant capital asset in the form of the building of the assessee corresponding to the expenditure not incurred actually by those two contractors mentioned above, did not come into existence and thus the assessee cannot be entitled for depreciation in respect of the capital asset which has never come into existence. The bills raised by the contractors on the assessee are inflated one and not of actual amount of the work done for the assessee. Consequently, the cost debited by the assessee in respect of the building, which has been capitalized is inflated and not the actual cost. The reliance placed by the Ld. counsel of the assessee in the case of M/s SSIPL Luxury Fashion Private Limited (supra) and Discovery Estate Private Limited (supra) is of no assistance as facts and circumstances of those case are different from the case of the assessee. In the case of SSIPL Luxury Fashion Private Limited (supra) a particular receipt was already taxed in the hands of the holding company and thus the assessee contested that it should not be taxed in the hands of the assessee, whereas the learned DR contested that receipt should be taxed in the hands of the correct person. The Tribunal held that same income cannot be taxed twice unless so provided in the Act. In the case of discovery Estate Private Limited (supra) , the observation of the Hon’ble High Court are regarding that no addition should be made on the basis of the suspicion or surmises or by taking note of notorious practice prevailing in that trade circles.
In the facts of the case the preponderance of the probability suggests that raising of bogus bills by the subcontractors to the contactors and then routing back of the money in the form of the cash definitely must have been done on the direction of the assessee as assessee is the ultimate beneficiary by way of excess deduction of depreciation on the capital asset in the form of building.
In view of the facts and circumstances discussed above, in principle we hold that the assessee is not entitled for the depreciation on the inflated portion of the cost of capital asset shown by the assessee as incurred through two contractors, namely, OSN and JDMS.
FULL TEXT OF THE ITAT JUDGEMENT
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