Assessing Officer cannot Change his Opinion in Immediate Next Assessment Year without there being any change in Facts & Circumstances: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), while quashing an order denying depreciation to the assessee, has held that the Assessing Officer cannot change his opinion in the immediate next assessment year without any change in the facts and circumstances.

The assessee developed an Industrial Park at Manesar, Haryana. The Industrial Park comprised of five commercial buildings/towers, out of which Block-C was ready to be leased out in preceding assessment year. The assessee had received Occupation Certificate in respect of the said tower on 17/03/2011. During the assessment year 2013-14 assessee had claimed interest expenditure, depreciation and administrative expenditure aggregating to Rs.39,97,18,225/-. In assessment proceedings for assessment year 2013-14, the Assessing Officer held that since only Block-C was complete, interest expenditure and administrative expenditure attributable to Block-C only can be allowed and the balance expenditure is to be capitalized. Accordingly, interest expenditure of Rs.17,08,72,034/- and administrative expenses Rs.45,35,076/- incurred during the period relevant to the assessment year 2013-14 were capitalized.

The assessee argued before the authorities that once depreciation has been allowed in the immediate preceding assessment year after having accepted that the asset is “ready to use”, the Assessing Officer cannot change its stand without there being anything contrary on record.

The department, on the other hand, submitted that assessee has claimed interest expenditure, administrative expenses and depreciation in respect of Block –C, which was allegedly complete in all respect , but not actually “put to use”. However, depreciation is allowable only if the asset is “put to use”. It was further contended that the assessee has not been able to furnish any documentary evidence to show that any part of BlockC was leased out/put to use during the relevant period.

After considering both the arguments, the Tribunal bench comprise of ITAT President Shri G.S.Pannu and Judicial Member Shri Vikas Awasthy found that in assessment year 2013-14 the Assessing Officer had accepted the contention of assessee that Block-C is complete and allowed assessee’s claim of depreciation, administrative and interest expenditure qua Block-C. In respect of the remaining project the administrative and interest expenditure was allowed to be capitalized.

“The CIT(A) in the impugned assessment year allowed assessee’s claim in respect of depreciation, interest and administrative expenditure pertaining to Block-C on the ground that Department has accepted in assessment year 2013-14 that Block-C has been “put to use”. Once having accepted this position, the Assessing Officer cannot change his opinion in immediate next assessment year without there being any change in facts and circumstances. We find no infirmity in the impugned order, hence, the same is upheld,” the Tribunal said.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.