Advertising Hoardings qualify as ‘Tangible Assests’: ITAT Allows 100% Depreciation [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal, while allowing 100 per cent depreciation to the assessee on Friday held that advertising hoardings irrespective of their life span and construction material will fall under the category of “Tangible assets” under part-A, Appendix-I, entry (4) of the Income Tax Rules, 1962.

Before the Tribunal, the assessee, M/s One Ad Display Pvt. Ltd. relied on the decisions of the Commissioner of income tax in a case of one of their own sister company M/s Selvel Advertising Pvt. Ltd, where the commissioner himself has approved advertisement hoardings as “purely temporary erections” and had allowed 100% depreciation.

According to the Assessing Officer, development of hoardings consists of cement base on which an iron structure is fabricated. On this iron structure, there is a wooden board on which the final advertisement sheet is displayed. He stated that the hoardings therefore, have life time for a considerable period and therefore cannot be regarded as “purely temporary erection”.

The AO therefore disallowed the depreciation claimed at 100% hoardings. He regarded the hoardings as plant and machinery on which allowable depreciation as per the Income Tax Rules was only 15%. Accordingly, he disallowed the difference between the depreciation claimed by the assessee.

The bench consisting of Judicial Member N.V. Vasudevan and Accountant Member M. Balaganesh was not convinced with these contentions and disposed of the appeal in favour of the assessee. “We are of the view that the Tribunal has already taken a view in favour of the assessee in the past assessment referred to in the earlier part of this order. It cannot be argued by the ld. DR at this stage that in none of these decisions the question whether the hoardings were temporary or permanent structure was considered by the Tribunal. Going by the principle of consistency we are of the view that it would be just and proper to take a view different from the view which has already been taken in assessee’s own case in the past.”