Depreciation being Statutory Allowance can’t be disallowed by invoking S. 40(a)(ia): ITAT [Read Order]

Depreciation - Taxscan

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the depreciation, being a statutory allowance cannot be disallowed by invoking section 40(a)(ia) of the Income Tax Act.

The assessee claimed depreciation which was disallowed by the Assessing Officer under section 40(a)(ia).

However, the first appellate authority deleted the order by following the decision of Vishakhapatnam Tribunal rendered in Merilyn Shipping & Transports Vs. ACIT.

Before the Tribunal, the assessee contended that the assessees’ case is squarely covered by the decision of the Tribunal in Skol Breweries Ltd.

The Tribunal found that Ld. first appellate authority, in the original appellate order, has already deleted the impugned addition by following the decision of Vishakhapatnam Tribunal rendered in Merilyn Shipping & Transports Vs. ACIT and the revenue are not under appeal against the same.

“Therefore, the adjudication of this ground is merely academic in nature. Nevertheless, the Ld. AR has urged that the decision of Spaco Carburettors (I) Ltd. [3 SOT 798] as relied upon by Ld. CIT(A) in rectification proceedings, does not apply to the fact of the case since that decision was rendered in the context of expenditure incurred u/s 35AB and not in the contest of depreciation u/s 32 which is the case here. Our attention is drawn to the decision of this Tribunal rendered in Skol Breweries Ltd. [142 ITD 49] to submit that the issue under appeal stood squarely covered in assessee’s favor,” the Tribunal said.

“The other decision has been rendered in the context of expenditure u/s 35AB. Respectfully following the cited decision, we find substantial force in the argument that depreciation being statutory allowance in nature and not an actual outgoing for the assessee and therefore, could not be disallowed by applying the provisions of Section 40(a)(ia). The assessee’s appeal stands allowed,” the Tribunal added.

Subscribe Taxscan Premium to view the Judgment

 

taxscan-loader