section 32

Disallowance of Depreciation | Section 43(1) | Cash Payment for Fixed Assets

Income Tax - Disallowance of Depreciation section 43(1)) Disallowance of Depreciation where cash payment exceeding Rs. 10,000 is made for purchase of asset (Amendment to section 43(1)) Clause (1) of section 43 defines ‘actual cost’ for the purposes of claiming depreciation. The cost in acquisition of any asset or part thereof in respect of...

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Analysis of claim of Additional Depreciation

Income Tax - Like most other laws tax law is also an ever evolving subject. Tax laws, every now and then result into difference of opinion between the revenue authorities and tax payers on various issues. Indian Income-tax law has many such issues one of which is benefit of Additional Depreciation....

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Depreciation on car Registered in partners or directors name

Income Tax - Income-tax Department cannot refuse the claim for depreciation on a vehicle owned by a company or a firm, on a mere ground that it is not registered in its name, but stands in the name of its director or partner. Interestingly, there is no decision of any court or the Tribunal that has taken a contrary view on the subject....

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Depreciation – Avoid Last Moment Purchase

Income Tax - Depreciation allowance for use at any time: Depreciation for assets ‘owned’ by assessee and ‘used’ by him in the business can be claimed and allowed if the asset is purchased and used or if it is kept ready for use at any time during the previous year. Therefore, if an asset is purchased and put […]...

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Depreciation on leasing? An ageing puzzle

Income Tax - A finance lease is essentially a financing arrangement whereby the lessee assumed the ownership of the asset in as much as it is the borrower who chooses the property to be purchased, takes delivery, enjoys the use of occupation of the property, bears the wear and tear and takes the risk of loss or damage.The decision of the Tribunal coul...

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Additional 15% depreciation on Motor Vehicles- No TDS on cash payments by APMCs

Income Tax - Addressing the concerns raised by Agriculture Produce Market Committees (APMCs), it has been decided not to levy the 2% TDS on cash payments above Rs 1 crore made through APMCs, in order to make immediate payments to farmers for their produce. Further to the announcement made by Smt@nsitharaman on 23-08-2019, an additional 15% depreciatio...

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Depreciation in case of slump sale based on proportionate number of days by transferor and transferee company- Clarify legal position- ICAI

Income Tax - The proviso to section 32 provides that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor...

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Depreciation not allowed on Leasehold Rights as same is not Intangible Assets

Mahanadi Coalfields Ltd. Vs DCIT (ITAT Cuttack) - The issue under consideration is whether the leasehold rights is considered as intangible assets and hence eligible for depreciation under section 32(1)(ii)? ITAT hold that the lease hold rights are not eligible for depreciation u/s.32(1)(ii) of the Act considering it as intangible rights and, accor...

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Mere depreciation claim on Goodwill cannot be termed As Colorable

Urmin Marketing P.Ltd. Now known as Unicorn Packaging LLP Vs DCIT (ITAT Ahmedabad) - Urmin Marketing P.Ltd. Now known as Unicorn Packaging LLP Vs DCIT (ITAT Ahmedabad) Vs DCIT (ITAT Ahmedabad) Scheme of the amalgamation can be approved under the provisions of section 2(1B) of the Act where shareholders holding not less than 75% in the value of shares of the amalgamating company beco...

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Excavators, Bull dozers & Wheel Loaders eligible for higher rate of depreciation

DCIT Vs Dozco Infratech Pvt. Ltd. (ITAT Kolkata) - CIT Vs Dozco Infratech Pvt. Ltd. (ITAT Kolkata) Assessee shows that depreciation claimed by the Assessee @ 30% on Excavators, Bull dozers and Wheel Loaders has been rightly claimed and should be allowed in full as against @ 15% allowed by the Assessing Officer. Learned departmental representative ve...

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Duly recorded goodwill & customer contracts eligible for depreciation

DCIT  Vs Infrasoft Technologies Ltd (ITAT Delhi) - DCIT  Vs Infrasoft Technologies Ltd (ITAT Delhi) Undisputedly, during the year under assessment, the assessee has acquired certain business interest from M/s. KPIT Cummins Infosystems Ltd. for a consideration of Rs.19,02,00,000/- out of which an amount of Rs.6,52,80,577/- and Rs.10,89,60,000/- has ...

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Depreciation cannot be disallowed under section 40(a)(ia)

Wipro Limited Vs. Addl CIT (ITAT Bangalore) - Wipro Limited Vs Addl. CIT (ITAT Bangalore) Claim of depreciation on software- Depreciation claimed by the assessee on the amount of software capitalized was disallowed invoking provisions of section 40(a)(ia) for non-deduction of tax at source. Held, depreciation is a statutory allowance and hence ...

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CBDT notifies Additional depreciation on Motor car & motor vehicles

Notification No. 69/2019-Income Tax [G.S.R. 679 (E).] - (20/09/2019) - Income-tax (9th Amendment) Rules, 2019 – Additional depreciation on motor cars and motor vehicles shall be allowed in certain conditions- Notification No. 69/2019-Income Tax Dated 20th September, 2019. MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) Notification No....

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Commercial rights in the nature of intangible assets eligible for depreciation

I.T.A. No. 496/Delhi/2014 - (15/04/2015) - A reading of the agreement between STL and the assessee clarifies that a specific amount, i.e., Rs.9 Crores was paid by the assessee to the transferor who owned commercial rights towards the network and the facilities. The consideration was a specific value but for which the network would not have b...

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Amendment in Income Tax Rules Related to Depreciation on Fixed Assets

Notification No. 43/2014-Income Tax - (16/09/2014) - Notification No. 43/2014-Income Tax S.O. 2399(E).—In exercise of the powers conferred by Section 295 read with Section 32 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:— 1. (1) Thes...

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MVAT circular on Issuing of Tax Clearance Certificates

Trade Circular No. 1 T of 2010 - (05/01/2010) - In view of this situation, it is necessary that the procedure for the issuing of such certificates should be standardized. Such certificates are very often required to be produced before various government authorities, local bodies or other bodies etc. for the purpose of tender renewal of licenses e...

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Claim for depreciation- Where required particulars not been furnished

Circular : No. 29-D(XIX-14) [F. No. 45/239/65-ITJ], - (31/08/1965) - Numerous instances have come to the notice of the Board where assessee’s claim for depreciation duly shown in the return was not considered by the Income-tax Officer because books of account produced were not properly maintained and it was necessary to estimate profits by invoking the proviso to ...

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Recent Posts in "section 32"

Depreciation not allowed on Leasehold Rights as same is not Intangible Assets

Mahanadi Coalfields Ltd. Vs DCIT (ITAT Cuttack)

The issue under consideration is whether the leasehold rights is considered as intangible assets and hence eligible for depreciation under section 32(1)(ii)? ITAT hold that the lease hold rights are not eligible for depreciation u/s.32(1)(ii) of the Act considering it as intangible rights and, accordingly, dismiss the ground of appeal of ...

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Disallowance of Depreciation | Section 43(1) | Cash Payment for Fixed Assets

Disallowance of Depreciation section 43(1)) Disallowance of Depreciation where cash payment exceeding Rs. 10,000 is made for purchase of asset (Amendment to section 43(1)) Clause (1) of section 43 defines ‘actual cost’ for the purposes of claiming depreciation. The cost in acquisition of any asset or part thereof in respect of...

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Posted Under: Income Tax |

Mere depreciation claim on Goodwill cannot be termed As Colorable

Urmin Marketing P.Ltd. Now known as Unicorn Packaging LLP Vs DCIT (ITAT Ahmedabad)

Urmin Marketing P.Ltd. Now known as Unicorn Packaging LLP Vs DCIT (ITAT Ahmedabad) Vs DCIT (ITAT Ahmedabad) Scheme of the amalgamation can be approved under the provisions of section 2(1B) of the Act where shareholders holding not less than 75% in the value of shares of the amalgamating company become the shareholders of the amalgamated [...

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Excavators, Bull dozers & Wheel Loaders eligible for higher rate of depreciation

DCIT Vs Dozco Infratech Pvt. Ltd. (ITAT Kolkata)

CIT Vs Dozco Infratech Pvt. Ltd. (ITAT Kolkata) Assessee shows that depreciation claimed by the Assessee @ 30% on Excavators, Bull dozers and Wheel Loaders has been rightly claimed and should be allowed in full as against @ 15% allowed by the Assessing Officer. Learned departmental representative vehemently contended during the course of ...

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Analysis of claim of Additional Depreciation

Like most other laws tax law is also an ever evolving subject. Tax laws, every now and then result into difference of opinion between the revenue authorities and tax payers on various issues. Indian Income-tax law has many such issues one of which is benefit of Additional Depreciation....

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Posted Under: Income Tax |

Duly recorded goodwill & customer contracts eligible for depreciation

DCIT  Vs Infrasoft Technologies Ltd (ITAT Delhi)

DCIT  Vs Infrasoft Technologies Ltd (ITAT Delhi) Undisputedly, during the year under assessment, the assessee has acquired certain business interest from M/s. KPIT Cummins Infosystems Ltd. for a consideration of Rs.19,02,00,000/- out of which an amount of Rs.6,52,80,577/- and Rs.10,89,60,000/- has been shown as goodwill and customer cont...

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Depreciation cannot be disallowed under section 40(a)(ia)

Wipro Limited Vs. Addl CIT (ITAT Bangalore)

Wipro Limited Vs Addl. CIT (ITAT Bangalore) Claim of depreciation on software- Depreciation claimed by the assessee on the amount of software capitalized was disallowed invoking provisions of section 40(a)(ia) for non-deduction of tax at source. Held, depreciation is a statutory allowance and hence it cannot be considered as expenditure. ...

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Depreciation on intangible assets transferred by Firm allowable to Company

Padmini Products Pvt. Ltd. Vs DCIT (Karnataka High Court)

Section 32(1) of the Act provides for depreciation in respect of trademarks owned wholly or partly by the assessee. In the instant case, the assessee succeeded to the business of the partnership firm, which had trademarks registered in its name. Therefore, the assessee under Section 32(1) of the Act was entitled for depreciation....

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Depreciation eligible on goodwill recorded pursuant to a business transfer agreement

DCIT Vs Ebix Software India Pvt. Ltd. (ITAT Delhi)

DCIT Vs Ebix Software India Pvt. Ltd. (ITAT Delhi) The Assessing Officer has held that the cost of the purchase consideration over the tangible assets is to be treated as payment for the non-compete fees as there was no goodwill with the seller and creation of the goodwill is misleading. The aforesaid finding is based […]...

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Depreciation on car Registered in partners or directors name

Income-tax Department cannot refuse the claim for depreciation on a vehicle owned by a company or a firm, on a mere ground that it is not registered in its name, but stands in the name of its director or partner. Interestingly, there is no decision of any court or the Tribunal that has taken a contrary view on the subject....

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Posted Under: Income Tax |

Depreciation – Avoid Last Moment Purchase

Depreciation allowance for use at any time: Depreciation for assets ‘owned’ by assessee and ‘used’ by him in the business can be claimed and allowed if the asset is purchased and used or if it is kept ready for use at any time during the previous year. Therefore, if an asset is purchased and put […]...

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Posted Under: Income Tax |

Depreciation cannot be claimed on Enhanced Value of second hand Windmill

V.Sabitamani Vs Asst.CIT (Madras High Court)

The issue under consideration is whether the actual purchase price of a second-hand asset can be ignored by purported recourse to Explanation 3 to Section 43(1) of the Income Tax Act, 1961?...

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Additional Depreciation u/s 32(1)(iia) Allowed even if Assessee Engaged in Generation of Electricity

West Bengal State Electricity Distribution Co. Limited Vs DCIT (ITAT Kolkata)

The issue under consideration is whether Additional Depreciation u/s 32(1)(iia) will be allowed if the assessee engaged in generation of electricity?...

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Depreciation cannot be disallowed for temporary closure of Business

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?...

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Depreciation charge must to Claim Section 80IB Deduction

Betts India (P) Ltd. Vs. ACIT (Bombay High Court)

whether depreciation is mandatory to be granted while determining the Appellant's entitlement to the deduction under Section 80IB of the Act, even though the Appellant had not claimed such depreciation?...

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Depreciation on Weaving Looms Allowed as same was ready for use

Chhatariya Firetech Industries Vs JCIT (ITAT Ahmedabad)

The issue under consideration is whether the depreciation on purchase of New Weaving Looms allowed in case of assessee?...

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Depreciation on leasing? An ageing puzzle

A finance lease is essentially a financing arrangement whereby the lessee assumed the ownership of the asset in as much as it is the borrower who chooses the property to be purchased, takes delivery, enjoys the use of occupation of the property, bears the wear and tear and takes the risk of loss or damage.The decision of the Tribunal coul...

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Posted Under: Income Tax |

Compensation to Retiring Partners as Goodwill is Eligible for Depreciation

PCIT Vs Swastik Industries (Gujarat High Court)

Whether the ITAT was right in treating the payments made to retiring partners in the nature of compensation can be termed as goodwill and subsequently eligible for depreciation?...

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Depreciation not Disallowable merely for Purchase of car in Personal Name

Desh Raj Arora Vs ITO (ITAT Delhi)

Whether the depreciation on car purchased by assessee can be disallowed only because the payment towards purchase of the same is made through his personal account?...

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Depreciation for AY 2020-2021 under Income Tax Act, 1961

Depreciation is a way of measuring decline in the value of asset. The main causes of depreciation are the usage , wear and tear and obsolescence of the asset. Since assets are used in the business/profession therefore some amount of such asset can be logically debited to the Profit and Loss Account as a non […]...

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Posted Under: Income Tax |

Assessment Initiated on Non-Existing Entity Considered as Void ab Initio

Atos India Pvt. Ltd. Vs DCIT (ITAT Mumbai)

Atos India Pvt. Ltd. Vs DCIT (ITAT Mumbai) The issue under consideration is whether the assessment initiated in the name of a non-existing entity is justified in law? ITAT states that, even after the learned DRP taking into account the fact of merger and passing order by giving directions to the learned AO in the […]...

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Depreciation under Block of Assets Allowed even for Non Used Assets during the Year

Bharat Mines And Mineral Vs ACIT (ITAT Bangalore)

The issue under consideration is whether under block of assets, the depreciation allowed even for those assets which have not been used during the year under consideration?...

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Higher depreciation on Lorry not eligible if party used for own

GVV Construction Pvt. Ltd. Vs. DCIT (ITAT Cuttack)

GVV Construction Pvt. Ltd. Vs. DCIT (ITAT Cuttack) If the assessee uses motor lorries partly for own use and for hire charges he is not entitled to claim excess depreciation @ 30% as per the provisions of Section 32 of the Income Tax Act. Case Summary: – Facts of the case: The assessee filed return […]...

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Civil and Interior Works expense eligible for Depreciation at 10%

Microsoft Corporation (India) Pvt Ltd Vs DCIT (ITAT Delhi)

Microsoft Corporation (India) Pvt Ltd Vs DCIT (ITAT Delhi) The issue under consideration is whether expenditure on account of civil and interior works liable for depreciation at 10% or at 15%? ITAT states that, they have perused the items of the expenditure which has been reproduced by the assessing officer in the assessment order and [&h...

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Depreciation eligible on Goodwill Resulting from Acquisition of Business Unit

DCIT Vs DHL Logistics Pvt. Ltd. (ITAT Mumbai)

DCIT Vs DHL Logistics Pvt. Ltd. (ITAT Mumbai) The issue under consideration is whether assessee is eligible for Depreciation on Goodwill resulting from acquisition of business unit? ITAT states that the issue as regards the entitlement of the assesses towards claim of depreciation on intangible (i.e goodwill) is squarely covered by the or...

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Form 62 filing Not Mandatory to allow carry forward of Losses u/s 72A

PCIT Vs M/s. Lotte India Corporation Ltd (Madras High Court)

whether the non-filing of prescribed Form No.62 for the third Assessment Year is restrict the Assessee to carry forward losses under Section 72A of the Income TaxAct, 1961?...

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60% depreciation eligible on UPS as Part of Computer & Peripherals

Religare Securities Ltd. Vs DCIT (ITAT Delhi)

The issue under consideration is whether the UPS is considered as essentially part of computer system and depreciation at rate of 60% charged on it?...

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Unabsorbed depreciation can be Carried Forward even if ITR Not filed within Due date

Addl. CIT Vs Nortel Networks India Pvt. Ltd (ITAT Delhi)

Addl. CIT Vs Nortel Networks India Pvt. Ltd (ITAT Delhi) The issue under consideration is whether the Unabsorbed depreciation can be carried forward even if Income Tax Return has not been filed within period of Due date? ITAT states that, the assessee filed return beyond the due date prescribed u/s 139(1) of the Act. In […]...

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Mandatory Claim of Enhanced Depreciation of 15% in case of Motor Vehicle

Mandatory Claim of Enhanced Depreciation of 15% in case of Motor Vehicles (Acquired & put to use from 23rd August 2019 to 31st March 2020) In July 2019, Honorable Finance Minister Ms. Nirmala Sitharaman presented union budget for the financial year 2019-20 in the parliament. Subsequently the finance minister had announced several shor...

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Posted Under: Income Tax |

Rate of depreciation in case of ATM machines

CIT Vs NCR Corporation Pvt Ltd (Karnataka High Court)

CIT Vs NCR Corporation Pvt Ltd (Karnataka High Court) Whether the tribunal is correct on facts and in law in holding that ATMs and encoders are computers eligible for 60% depreciation even when they do not provide processing activity and do not contain all features of computers and such cannot be called as computers? It […]...

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ITAT allows depreciation on expansion expenditure treating the same as Capital

Mahindra & Mahindra Limited Vs DCIT (ITAT Mumbai)

The issue under consideration is whether the expenditure incurred by the assessee for the expansion will be considered as Capital Expenditure and allowability of the depreciation on the same?...

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Depreciation on Intangible CMS Software allowed under Income Tax

Taxman Publications Pvt. Vs ACIT (ITAT Delhi)

The issue under consideration is whether depreciation will be levied on the intangible being CMS software? CMS, which has been developed by the assessee is computer application which supports the creation and modification of content and is often used to support multiple users working in a collaborative environment....

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Goodwill is Intangible Asset & Depreciation allowed

M/s. Banc Tec TPS India Pvt. Ltd. Vs ACIT (ITAT Mumbai)

It is now fairly well settled that goodwill being an intangible asset, depreciation has to be allowed. In view of the aforesaid, we direct the Assessing Officer to allow assessee’s claim of depreciation of  on goodwill....

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Disallowance for Depreciation on Brand License Fees is unjustified

Star India Pvt. Ltd. Vs ACIT (ITAT Mumbai)

The issue under consideration is whether the disallowance made on account of depreciation on payment of brand license fees is justified in law?...

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Depreciation treatment under Companies Act, Income Tax Act, GAAP, Ind As & AS

Depreciation is a common accounting concept which the accountant comes across in their regular course of employment or in regular course of their business. This article will explore the treatment of depreciation under Companies Act, Income Tax Act and in Indian and internationally accepted Accounting Standard. DEFINITION AND TREATMENT OF ...

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Posted Under: Income Tax |

Depreciation on Goodwill arising out of Amalgamation: Tax Impact

The concept of merger and acquisition was not popular until the year 1988 in India. However, in the last five years merger and acquisition has emerged as a very important tool for growth of Indian corporates. Today, many companies are merging with each other in order to generate more revenues that the companies could have earned individua...

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Posted Under: Income Tax |

ITAT allows 60% Depreciation on Computer & Related Software

ACIT Vs Indiabulls Ventures Ltd (ITAT Delhi)

The issue under consideration is whether the depreciation at the rate of 60% will be allowed for computer related software?...

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Depreciation on Wheel loaders & Graders as Motor Vehicles

DCIT Vs Quippo Construction Equipment Ltd. (ITAT Hyderabad)

The issue under consideration is whether the CIT(A) is correct in charging depreciation at the rate of 30% on wheel loaders and graders?...

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Clarification for Depreciation on Vehicles

In this Article we are going to discuss about Higher Depreciation Rate on some vehicle and care to be taken while finalizing books of accounts in this regards for Financial Year 2019-2020....

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Posted Under: Income Tax |

Sales Promotion expenses for publicity of brand name allowable

DCIT Vs Mail Today Newspapers Pvt. Ltd (ITAT Delhi)

Whether CIT is correct in allowing expenditure on advertisement & sales promotion of product & brand promotion by considering it as Revenue in nature?...

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Depreciation eligible on intangible asset viz., goodwill/ customer list

Rentokil India Pvt. Ltd. Vs DCIT (ITAT Chennai)

The issue under consideration is whether the assessee is correct in claiming depreciation on customer list and goodwill by considering it as intangible asset?...

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Comparative Study regarding Treatment of Depreciation

Comparative Study Regarding Treatment of Depreciation As per Companies Act, 2013 and Income-tax Act, 1961 This Article Provides the Comparative Study on Depreciation as per Companies Act, 2013 and Income-tax Act, 1961. Depreciation is calculated by business enterprises for two purposes – 1.) Accounting Purpose: In accountancy, depreciat...

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Posted Under: Income Tax |

High rate Depreciation Not allowed on vehicles used for Advertisement

Tapan Kumar Biswas Vs ITO (ITAT Kolkata)

Whether the higher rate of depreciation can be granted to the vehicles used for the display of advertisement under the provisions of the Income Tax Act, 1961....

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No depreciation on undivided share of Land

ACIT Vs Kunnel Engineers & Contractors (P) Ltd. (ITAT Cochin)

Depreciation under section 32 could not be claimed on an undivided share of land as assessee had shown the land separately in the block of assets which was not entitled for depreciation. ...

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Depreciation on golf course- Plant & Machinery or Land & Building

Landbase India Ltd. Vs. ACIT (ITAT Delhi)

Landbase India Ltd. Vs. ACIT (ITAT Delhi) Depreciation on the golf course – Whether depreciation should be allowed considering it as ‘plant and machinery or land or building. Matter: 1. Applicable Rate of Depreciation on Gulf course.  Facts of the case 2. The Assessee is a company engaged in the business of operation of golf [&he...

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Rates of Depreciation as Per Income Tax Act, 1961

Block of Assets :-The expressions Assets and Blocks of Assets w.e.f. 1-4-1999 shall mean a group of assets falling within a class of assets comprising:–Tangible Assets being buildings, machinery, plant or furniture;Intangible Assets being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial ...

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Posted Under: Income Tax |

Set off of unabsorbed depreciation allowed irrespective of continuity of business in next year

DCIT Vs Regency Property Investment Pvt. Ltd. (ITAT Mumbai)

The issue under consideration is whether set off of the ‘unabsorbed depreciation’ can be allowed irrespective of continuity of the business in next year?...

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Depreciation on Buildings as per Income Tax Law

Depreciation allowance is provided under the Income Tax Act for building. The word building has however not been defined under the Income Tax Act and must be construed based on the ordinary grammatical sense, together with the available judicial interpretations. According to the Oxford English Dictionary, the word ‘building’ means...

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Posted Under: Income Tax |

Non-Competent Fee is Capital Expenditure, Depreciation not allowable

Hindustan Coca-Cola Beverages Pvt. ltd. Vs DCIT (ITAT Delhi)

Hence, the order of Assessing Officer was upheld to the extent that the payment of non-compete fee was a capital expenditure and the assessee was not entitled to claim depreciation u/s 32 of the Act on the said capital expenditure....

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आयकर अधिनियम के अंतर्गत ह्रास की जानकारी

ह्रास  का अर्थ यदि कोई व्यापर या पेशा किया जाता है तो उसमें आयकर बचाने का सबसे अच्छा तरीका यह है कि  ह्रास के खर्चे को क्लेम किया जा...

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Posted Under: Income Tax |

60% depreciation was allowable on ATM machines

Financial Software and Systems Pvt. Ltd. Vs DCIT (ITAT Chennai)

Higher rate of depreciation was allowable on ATM machines as these machines was to be treated as “Computers” for the purpose of Section 32 of the Income Tax Act, 1961....

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Depreciation allowable on payment of non-compete fee

India Meditronic (P) Ltd Vs Asstt. CIT (ITAT Mumbai)

India Meditronic (P) Ltd Vs ACIT (ITAT Mumbai) - Non-compete fee was allowable as capital expenditure and depreciation could be claimed on the same....

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No disallowance of depreciation if assets were not put to use because of Strike by workers

ITO Vs Ventura Textiles Ltd. (ITAT Mumbai)

Depreciation could not be disallowed due to assets were not in use as assessee had not close down the business but it was not going on because of illegal strike by the workers and therefore manufacturing had been stopped temporarily....

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Depreciation as per income tax act, 1961 short Analysis

Analysis of charging section of Depreciation followed by landmark judgements- 1) Depreciation will be charged on both tangible and intangible assets. 2) Depreciation will be equally applicable whether the assets is held as stock in trade or as a capital assets. It means that a real assets company can equally claim assets on their building...

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Posted Under: Income Tax |

Trial production machineries kept ready for use qualifies for depreciation

Tenzing Match Works Vs DCIT (Madras High Court)

Tenzing Match Works Vs DCIT (Madras High Court) Even trial production machineries kept ready for use etc., were considered to be used for the purpose of business to qualify for depreciation. In ‘CIT -Vs- Geo Tech Construction 244 ITR 452 (Kerala)’ , the machinery which was purchased by the assess from Pondicherry was yet to [&...

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Depreciation allowed on License/registration fee paid to Indian Railways

ACIT Vs Central Warehousing Corpn. (ITAT Delhi)

We find that the claim of depreciation in respect of license/ registration fee paid by the assessee to the Indian Railways is an asset whereon depreciation u/s. 32(1) is allowable....

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Depreciation allowable on Goodwill from Acquisition of Business Unit

DHL Logistics Private Limited Vs DCIT (ITAT Mumbai)

DHL Logistics Private Limited Vs DCIT (ITAT Mumbai) We have to consider whether goodwill is an intangible asset under section 32, hence, eligible for claim of depreciation. In our view, this issue is no more res integra in view of the decision of Hon’ble Supreme Court in Smifs Securities Ltd. (supra) where the Hon’ble Supreme ...

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Depreciation on Land in Case of Composite Purchase Agreements

It is a well known and understood fact that land is not a depreciable asset. By its very definition, depreciation means decrease in the value of an asset through wear and tear, deterioration or obsolescence. While these implications easily apply to buildings or other structures built upon land, the land itself as an asset has no finite li...

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Posted Under: Income Tax |

Additional depreciation on Plants & machinery installed in Captive Power Plant

PCIT Vs Kadodara Power Pvt Ltd (Gujarat High Court)

PCIT Vs Kadodara Power Pvt Ltd (Gujarat High Court) It is now a settled position as held by the Hon’ble Supreme Court and the various Co­ordinate Benches of the Tribunal that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement […]...

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Depreciation allowable on non-compete fees: HC

PCIT Vs Ferromatic Milacron India Pvt Ltd (Gujarat High Court)

Where non-resident agents appointed by assessee for procuring export orders did not have permanent establishment in India and their activities as commission agents are being carried out outside India, merely because a portion of the sale to the overseas purchasers took place in India, would not make assessee liable to deduct tax at source...

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Posted Under: Income Tax |

No depreciation on inflated portion of cost of capital asset

ACIT Vs Educomp Infrastructure & School Management Ltd. (ITAT Delhi)

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 de...

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ITAT allows Depreciation on car in partner name

NVR Cinema Vs ITO (ITAT Chennai)

Partnership firm can own assets only in the name of the partners. In the case of the assessee firm, the car is owned in the name of the partner of the firm. If the car is purchased from the resource of the firm or the purchase consideration is credited to the partner’s current account or capital account then it shall be construed that t...

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Treatment of unabsorbed depreciation available on 1-4- 2002

The Principal Commissioner of Income Tax-1 Vs Ankur Protein Industries Ltd. (Gujarat High Court)

The Principal Commissioner of Income Tax-1 Vs Ankur Protein Industries Ltd. (Gujarat High Court) Whether the Appellate Tribunal has erred in law and on facts in allowing carry forward of unabsorbed depreciation following Circular No. 14 of 2001 without appreciating that the amendment to the Finance Act was prospective? Current depreciatio...

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Depreciation cannot be allowed on non-existing / Impaired asset

Aramark India Pvt. Ltd. Vs DCIT (ITAT Mumbai)

Aramark India Pvt. Ltd. Vs DCIT (ITAT Mumbai) There is no dispute with regard to allowability of deprecation on goodwill, but when you compare the facts of the current year, the question of allowability of deprecation has to be examined, in the light of provision of section 32(1), where it mandates the block of assets […]...

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Company entitled for depreciation on Vehicle registered in name of director

Gold Finch Jewellery Ltd. Vs D.C.I.T. (ITAT Ahmedabad)

Though vehicles were registered in the name of directors of company, beneficial ownership vested with assessee since payment was made for the purchase of vehicles by the assessee. Thus, assessee was duly entitled for depreciation thereon, especially when assessee had claimed other expenses in connection with vehicle and non-disallowance t...

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Depreciation on Cars used for Business cannot be disallowed

M/s. Bhardwaj Construction Co. Vs ACIT (ITAT Delhi)

M/s. Bhardwaj Construction Co. Vs ACIT (ITAT Delhi) As regards to Ground Nos. 11 and 12, relating to disallowance on account of depreciation claimed at Rs. 33,726/- on Cars, the Ld. AR submitted that this disallowance is without any basis. The Ld. AR further submitted that the vehicles have been used for business purposes and […]...

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Depreciation allowable on Non-Compete Fees – Section 32

DCIT Vs IMCD Group B.V. India Branch (ITAT Mumbai)

DCIT Vs IMCD Group B.V. India Branch (ITAT Mumbai)- The issue under consideration is whether the depreciation is allowed on Non- Compete Fees under section 32 of the Income Tax Act?...

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Depreciation cannot be considered for computing section 14A disallowance

Sudha Apparels Ltd. Vs DCIT (ITAT Kolkata)

Depreciation claimed by assessee under section 32 cannot be considered for the purpose of computing disallowance under section 14A because section 14A deals only with the expenditure and not any statutory allowance, such as depreciation under section 32....

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Depreciation allowed in 1st Year cannot be disallowed in subsequent year(s) without change in facts

Bodal Chemicals Ltd. Vs Add. CIT (ITAT Ahmedabad)

Once revenue allowed the deduction for the depreciation claimed by the assessee, then it is debarred to reject the claim of the assessee in the subsequent year on the WDV carried forward from the earlier assessment year....

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Eligibility for higher rate of depreciation on Erection and installation of windmill

Pr. CIT Vs Mahalaxmi Infra Projects Ltd. (Bombay High Court)

Pr. CIT Vs Mahalaxmi Infra Projects Ltd. (Bombay High Court) Windmill was erected in the area which required special foundation of reinforced cement concrete and that the said reinforced cement concrete formed integral part of the windmill. Therefore, assessee was eligible for higher rate of depreciation on the civil construction, electri...

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Highlights of Tax concessions announced by FM on 20 Sep 2019

The objective of this document is to summarize all the tax concessions, applicable w.e.f FY 2019-20, announced by Finance Minister, Nirmala Sitharaman with intent to boost the economy and to promote ‘Make-in-India’. Highlights of  Tax Concessions by Finance Minister press Conference on 20 Sep 2019 1. Tax Concessions for Exist...

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Posted Under: Income Tax |

CBDT notifies Additional depreciation on Motor car & motor vehicles

Notification No. 69/2019-Income Tax [G.S.R. 679 (E).] (20/09/2019)

Income-tax (9th Amendment) Rules, 2019 – Additional depreciation on motor cars and motor vehicles shall be allowed in certain conditions- Notification No. 69/2019-Income Tax Dated 20th September, 2019. MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) Notification No. 69/2019-Income Tax New Delhi, the 20th ...

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Additional 15% depreciation on Motor Vehicles- No TDS on cash payments by APMCs

Addressing the concerns raised by Agriculture Produce Market Committees (APMCs), it has been decided not to levy the 2% TDS on cash payments above Rs 1 crore made through APMCs, in order to make immediate payments to farmers for their produce. Further to the announcement made by Smt@nsitharaman on 23-08-2019, an additional 15% depreciatio...

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Posted Under: Income Tax |

ITAT on higher Rate of depreciation on Set top boxes

ACIT Vs Kerala Communicators Cable Ltd. (ITAT Cochin)

ACIT Vs Kerala Communicators Cable Ltd. (ITAT Cochin) The Assessing Officer granted depreciation at the rate of 15% being machinery and plant other than those covered by sub-items (2), (3) and (8). According to the assessee, it is covered under sub-item (8)(ix)(E)(k). Sub-item (ix) of item (8) is energy saving device and (E) is electric [...

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Additional depreciation cannot be denied to an entity engaged in business of generation and distribution of power

Pr. CIT Vs NTPC Sail Power Co. Pvt. Ltd. (Delhi High Court)

Pr. CIT Vs NTPC Sail Power Co. Pvt. Ltd. (Delhi High Court) Electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property. Following the same logic, to deny the benefit of additional depreciation to a generating entity on the basis that electricity is not an ‘...

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Allowance of depreciation on the basis of consistency: BSE Ltd. case

DCIT Vs. BSE Ltd. (ITAT Mumbai)

We noted that in the very first year i.e. AY 2011-12, the depreciation has already allowed the claim of depreciation. We noted that in the income tax code, there is a provision/ concept of block of asset and once any asset enters into block asset and claim of depreciation in very first year is allowed, in subsequent year the deprecation c...

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Depreciation @ 25% on toll way rights treating as intangible asset allowable

ACIT Vs M/s. PNG Tollway Ltd. (ITAT Chennai)

ITAT held that CIT(A) rightly directed Assessing Officer to allow the assessee’s claim of depreciation @ 25% treating the toll way rights as an intangible asset under section 32(1)(ii) of the Income Tax Act, 1961....

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Penalty cannot be sustained merely for disallowance of Depreciation claimed at higher rate

MakeMy Trip (India) Pvt. Ltd. Vs DCIT (ITAT Delhi)

MakeMy Trip (India) Pvt. Ltd. Vs DCIT (ITAT Delhi) As regards the penalty based on addition on account of difference in rate of depreciation on computer peripherals, the Assessing Officer has observed that the assessee made a wrong claim of depreciation @ 60% on printers, UPS, computer stationery, routers and scanners by clubbing them wit...

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Depreciation on Office Premises assessed as House Property Income?

Shri Prashant Jayantilal Patel Vs DCIT (ITAT Mumbai)

Shri Prashant Jayantilal Patel Vs DCIT (ITAT Mumbai) The sole subject matter of present appeal is to adjudicate whether the assessee would be eligible to claim depreciation on certain premises, which although forms part of block of assets,has been let out during the impugned AY & earned certain rental income which has been assessed as...

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Non-compete rights are Intangible asset eligible for depreciation: HC

Pr. CIT Vs Piramal Glass Limited (Bombay High Court)

Section 32(1)(ii) Rights acquired by the assessee under the said agreement not only give enduring benefit, protected the assessee's business against competence, that too from a person who had closely worked with the assessee in the same business. The expression 'or any other business or commercial rights of similar nature' used in Explana...

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Depreciation on vehicle fully allowable despite Partial personal use

Ralhan Construction Company Vs ACIT (ITAT Delhi)

Ralhan Construction Company Vs ACIT (ITAT Delhi) Regarding disallowance out of vehicle expenses of Rs.1,03,295/-, it is observed that the depreciation of Rs.49093/- is included in it. The depreciation is fixed expenditure in nature whether it is used exclusively for the business or partially for personal use. Thus, the element of some per...

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Depreciation allowable on Customer Relationship Rights as Goodwill

M/s. Incap Manufacturing Service Pvt. Ltd. Vs DCIT (ITAT Bangalore)

M/s. Incap Manufacturing Service Pvt. Ltd. Vs DCIT (ITAT Bangalore) The sole disputed issue raised by the assessee in respect of granting of depreciation on Customer Relationship Rights which is in the nature of non-compete fee. We found that the co-ordinate bench of the Tribunal based on the findings of the AO. has observed that [&hellip...

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Network Rights is Goodwill eligible for depreciation U/s. 32(1)(ii)

Apna Incable Broad Band Services Pvt. Ltd. Vs DCIT (ITAT Hyderabad)

Apna Incable Broad Band Services Pvt. Ltd. Vs DCIT (ITAT Hyderabad) The AO was of the opinion that the network rights are not intangible assets and therefore, depreciation is not allowable thereon. The AO treated the network rights as “goodwill” and observing that no depreciation is allowable on goodwill u/s 32(1)(ii) of the Act, he [...

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Electricity is an ‘article’ or ‘thing’ & additional depreciation eligible

Pr. CIT Vs. NTPC Sail Power Co. Pvt. Ltd. (Delhi High Court)

Electricity has all the necessary trappings of 'articles' or 'things' and the benefit of additional depreciation cannot be denied. As held by the Constitution Bench, electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property....

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Application of Time Value of Money concept to WDV Depreciation Calculation

Depreciation as per written down value method (WDV) has been under the spotlight after the introduction of the Companies Act, 2013. Schedule II of the act mandates to provide depreciation as per useful life of assets using either straight line method or written down value method. This article is on Application of Time Value of […]...

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Posted Under: Income Tax |

Amended section 32(2) by Finance Act, 2001 applicable from A.Y. 2002-03 &subsequent years

ACIT Vs Starflex Sealing India (P) Ltd. (ITAT Mumbai)

ACIT Vs Starflex Sealing India (P) Ltd. (ITAT Mumbai) i) Amendment to Sec.32(2) by Finance Act 2001 is applicable from A.Y.2002-03 and subsequent years. Therefore, unabsorbed depreciation from A. Y 97-98 upto A. Y 2001 to got carried forward to the A. Y.2002-03 and become part thereof’, ii) It came to the governed by the […]...

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‘Right to collect toll’ being intangible asset eligible to depreciation U/s. 32(1)(ii)

ITO Vs M/s. Ashoka Highways (Bhandara) Ltd. (ITAT Pune)

Depreciation on right to collect toll being infrastructure and not on toll road, where cost incurred for development and construction of infrastructure facility was a right in nature of intangible asset falling within purview of section 32(1)(ii). Order of AO in amortizing expenditure over period of facility and allowing the same was reve...

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Depreciation allowable on Right to operate project facility & collect toll charges

DCIT Vs Progressive Constructions Ltd. (ITAT Hyderabad)

DCIT Vs Progressive Constructions Ltd. (ITAT Hyderabad) Expenditure incurred for gaining right to operate the project facility and collect toll charges resulted into an intangible asset eligible for depreciation Conclusion: Expenditure incurred by assessee of Rs.214 crore for creating the project or project facilities had created an inta...

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Depreciation allowable if Factory not run due to stay order by court

PCIT Vs Babul Products (P.) Ltd. (High Court Gujarat)

Where assessee could not run the factory during the year because of stay order of court, otherwise its business was continued, in such a case depreciation was to be allowed....

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Allowability of depreciation on Plant and machinery in case of Trial Run

Depreciation under Income tax is governed U/s 32 of the IT Act. The primary condition to claim the depreciation in the assessment year is that a) assets is owned by the assessee & b) assets is used for the purpose of business or profession. Both these conditions are cumulative in nature. Once these conditions are established, assessee is...

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Posted Under: Income Tax |

Depreciation allowable on public roads by treating as buildings

PCIT Vs GVK Jaipur Expressway Ltd. (Supreme Court of India)

Whether in the facts and circumstances of the case, Hon’ble ITAT was justified in allowing the claim of depreciation on public roads treating the same as building which is not permissible in law?...

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Depreciation: All You Need to Know

The following essay will explain the meaning of depreciation and all the terms around it through a list and contrast the surrounding terms with the main concept of depreciation....

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Posted Under: Income Tax |

Depreciation on JCB cannot be disallowed merely for Delay in Registration

Shri.Ram Karan Yadav Vs ITO (ITAT Jaipur)

Shri.Ram Karan Yadav Vs ITO (ITAT Jaipur) There is no dispute that the assessee has purchased the JCB machine vide Invoice dated 3rd June, 2011 and delivery was taken on 6th June, 2011. However, the registration of JCB with the RTO was done on 29.08.2011. We further note that in the registration charges, the RTO […]...

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Depreciation on Printers, UPS, Scanners, Cash dispenser Hardware & ATM Switch

Adarsh Coopertaive Urban Bank Ltd. Vs ACIT (ITAT Hyderabad)

Adarsh Coopertaive Urban Bank Ltd. Vs ACIT (ITAT Hyderabad) ATM is a computer telecommunication device that allows Bank Customers to access banking at places other than the normal bank without having to take the trouble to go to the Bank in person and collect the cash as is done under the conventional method of withdrawing […]...

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Depreciation Eligible on Intangible asset namely Goodwill

KPIT Cummins Global Business Solutions Ltd. Vs Asstt. CIT (ITAT Pune)

Goodwill is an intangible asset under section 32(1)(ii) covered within the expression 'any other business or commercial rights of similar nature' and, therefore, assessee was entitled to claim depreciation on such goodwill....

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Depreciation on IPR cannot be disallowed merely for non use in Manufacturing

Commissioner of income tax Vs Sinochem india co. Pvt. Ltd. (ITAT Delhi)

CIT Vs Sinochem India co. Pvt. Ltd. (ITAT Delhi) The purchase of intellectual property rights by the assess are not disputed. Consideration paid is also not disputed. The nature and character of the intellectual property rights, as noticed in the order passed by the Commissioner of Income Tax (Appeals), are again not disputed. The intelle...

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Non-Competent Fee & Brand Equity eligible for Depreciation

CIT Vs M/s. Radaan Media Works (Madras High Court)

CIT Vs M/s. Radaan Media Works (Madras High Court) Department fairly admitted that the brand equity of a sum of Rs.75 lakhs valued at a sum of Rs.75 lakhs would be an intangible right coming within the purview of ‘business or commercial rights’ of a similar nature. He also brought to our notice the decision of this High Co...

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Depreciation is available on genuine goodwill

M/s CLC & Sons Pvt. Ltd., Vs ACIT (ITAT Delhi)

CLC & Sons Pvt. Ltd Vs. ACIT (ITAT Delhi) (Special Bench) Hon’ble Summit court in CIT vs. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) in which it has been held: “that goodwill will fall under the expression ‘or any other business or commercial rights of similar nature’” and, hence, qualifies for depreciation u/s 32(1)...

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Non-Competent Fee paid is Intangible Asset- Depreciation allowable

The Deputy Commissioner of Income Tax Vs M/s. Sapa Extrusion India Pvt. Ltd. (ITAT Bangalore)

ITAT held that non-compete fee paid is an intangible asset acquired by the assessee on which depreciation has to be allowed u/s. 32(1)(ii) of the act....

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