Income Tax : Depreciation is statutory deduction that allows businesses to set off cost of their tangible & intangible assets over their useful...
CA, CS, CMA : Learn the correct way to calculate and apportion depreciation using the Written Down Value method for accurate scrap value over an...
Income Tax : Explore allowable tax deductions for AY 2025-26, covering salaries, house property, business, and personal expenses. Maximize your...
Income Tax : Rates of depreciation applicable for income tax purposes from assessment year 2003-04 to 2025-26. This guide includes rates for ta...
Income Tax : Learn how to optimize corporate tax planning through depreciation. Explore key provisions, asset considerations, and methods for m...
Company Law : Key Features of Fixed Asset Management Tool with Depreciation Calculator for Companies ♦ Line wise SLM and WDV Depreciation as p...
Income Tax : Addressing the concerns raised by Agriculture Produce Market Committees (APMCs), it has been decided not to levy the 2% TDS on cas...
Income Tax : The proviso to section 32 provides that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furn...
Income Tax : During the assessment proceedings, it was observed that the assessee sold two trademarks “Coldarin” and “Raricap”. The gai...
Income Tax : It was a case where the statutory procedure mandated in section 144C had been attempted to be by passed by merely mentioning the n...
Income Tax : ITAT Mumbai held that the receipt from parking facilities is to be treated as business income instead of income from other sources...
Income Tax : Assessee being a subsidiary of M/s. Rajasthan State Mines and Minerals Ltd. (RSMML) (a Government of Rajasthan Undertaking). It en...
Income Tax : ITAT Rajkot remanded the matter as lower authority has not exercised their power to enquiry in section 131 and 133(6) of the Act t...
Income Tax : CBDT inserts new Income Tax Rule 8AC -Computation of short term capital gains and written down value under section 50 where deprec...
Income Tax : Income-tax (9th Amendment) Rules, 2019 – Additional depreciation on motor cars and motor vehicles shall be allowed in certai...
Income Tax : A reading of the agreement between STL and the assessee clarifies that a specific amount, i.e., Rs.9 Crores was paid by the assess...
Income Tax : 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...
Goods and Services Tax : In view of this situation, it is necessary that the procedure for the issuing of such certificates should be standardized. Such ce...
Kerala High Court dismisses Fed. Bank’s appeal, ruling against 60% depreciation on EPABX and mobile phones. No merit found in prior period expenditure dispute.
M/s Frick India Ltd Vs DCIT (ITAT Delhi) – There was a composite agreement titled as ‘intellectual property license and non compete agreement’ vide which several valuable rights including the right to use the trademark, technical know-how including right to export to 30 countries have been granted over a long period of ten years to the assessee, which gave rise to a benefit of enduring nature. However, the AO has allowed the same as revenue expenditure without application of mind and without keeping in view the stand taken in earlier years by the AO which was also confirmed by the CIT(A) on the very same facts.
The assessee, a hotel, incurred expenditure on acquiring licenses and permissions from various government bodies. This was classified as “goodwill” in the books and depreciation was claimed on the ground that it was an “intangible asset” u/s 32(1)(ii). The AO allowed the claim. The CIT passed an order u/s 263 in which he took the view that the AO had not applied his mind to the issue and that the order was “erroneous & prejudicial to the interests of the revenue”. The CIT set aside the assessment order and directed the AO to pass a fresh order. On appeal by the assessee, HELD allowing the appeal: (i) The CIT had not recorded any finding to show how the assessment order was erroneous and prejudicial to the interest of the revenue. Merely because the AO had not examined whether the approvals / registrations etc. amounted to intangible assets and had not applied his mind to the examination and verification of the allowability of depreciation on intangible assets did not mean that the assessment order was erroneous and prejudicial to the interests of the revenue. It was not the case of the CIT that depreciation was not allowable on such items ofintangible assets; (ii) An authority exercising revisional power cannot direct the lower authority to complete the assessment in particular manner. UOI vs. Tata Engineering AIR 1998 SC 287 followed; (iii) On merits, approvals/registrations etc amount to “intangible assets” and entitled to depreciation u/s 32(1) (ii).
Till AY 1996-97 unabsorbed depreciation could be set off against income under any head. From AY 1997-98 to 2001-2002 unabsorbed depreciation could be set off only against business income. From AY 2002-2003 onwards unabsorbed depreciation could again be set off against income under any head of income.
The assessee has been carrying out this activity in an organized manner with the help of heavy machinery and computer. Its activity is not as simply as mixing of sand, cement etc. by a labourer on the right side.
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 etc.
Recently, the Bombay High Court in the case of CIT v. Techno Shares & Shares Limited and Various other Stock Broking Houses (ITA no. 971 of 2006 and 218 of 2007) held that the depreciation cannot be granted on Bombay Stock Exchange Membership Card (BSE card) acquired on or after 1 April 1998 either by nomination or directly through the stock exchange.
Even if an asset is described as goodwill but it fits in the description of section 32(1)(ii), depreciation is to be granted on the same; the true basis of depreciation allowance is the character of the asset and not it’s description.
The effect of omission of section 34 and Rule 5AA and consequential amendment in section 32 by omitting reference to section 34 makes it clear that one cannot taken support from the decision of the Hon’ble Apex Court in the case of Mahendra Mills, supra, after the amendment. Section 43(6) of the Act which defines the term “Written Down Value” reads as under :-
Each of the sub-sections to section 41 deal with different and distinct topics and one cannot read recoupment under one sub-section into another; the depreciation recovered on sale of the capital asset was includible in the total income as balancing charge only under section 41(2); that concept was foreign to the scheme of section 41(1).
