Case Law Details
Jubilant Infrastructure Ltd. Vs ACIT (ITAT Delhi)
If disallowance leading to enhancement in the profits of eligible business, then Section 80IAB deduction under Chapter-VIA of Income Tax Act is admissible.
Introduction: In the case of Jubilant Infrastructure Ltd. Vs ACIT (ITAT Delhi), the issue of deductibility under Chapter-VIA of the Income Tax Act was deliberated upon, particularly in relation to disallowance leading to an enhancement in the profits of eligible businesses. This case provides insights into the admissibility of deductions under specific circumstances.
The facts of the case is this that during the previous year the assessee company capitalized assets of Rs. 3,58,94,000/- as intangibles. The assessee company has made a onetime payment to Gujarat Industrial Development Corporation ( GDC) for use of water supply connection and drainage connection of Rs.3,58,94,000/- and the same has been capitalized in fixed assets schedule under other (Rights) head. It is also submitted by the assessee that it paid Rs.7,79,80,000/- to GIDC for use of water supply connection and drainage connection. Out of this amount the assessee company has recovered the amount of Rs.3,49,00,000/- from Jubilant Life Sciences Limited and Rs.71,86,000/- deposited as a security deposit to GIDC and balance of Rs.3,58,94,000/- capitalized in Fixed assets schedule under other (Rights) head. Further, that the assessee company has claimed depreciation @ 25% on Rs.85,17,815/- (358,94,000 – 89,73,500 – 67,30,125 – 50,47,593 – 37,85,695 – 28,39,272)which comes to Rs.21,29,453/-.
Such claim, however, has been rejected by the AO on the count that right to use water neither diminishes nor enhances by any means. The Government has just given a facility to the assessee to use the same and the assessee has clearly tried to claim the depreciation on the same, this cannot be allowed against the taxable income to reduce the same.
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