The Income Tax Appellate Tribunal (ITAT) Delhi bench held that depreciation under Section 32 of the Income Tax Act, 1961 should not be allowed on absence of carrying out business activities.
Assessee, Arrow Manpower Services filed its return of income for the AY 2013-14 on 02.12.2014 declaring the total income at Rs.1,48,380/-.
During the assessment proceedings the assessee pleaded before the AO that it is carrying on business activity. But, no evidence whatsoever was furnished by the assessee before the AO to justify the fact that the assessee was indeed carrying on any business.
Further the AO also found that during the year certain bank transactions carried out in the assessee account and concluded that entire transactions reflected in the bank statement are mere transactions carried out by the assessee in the capacity of an entry operator.
Hence the AO proceeded to charge only the commission income on those accommodation entries in the hands of the assessee. Thereafter the AO passed assessment order by making addition.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] who dismissed the Appeal filed by the assessee. Thereafter the assessee filed an appeal before the tribunal.
Kanav Bali, appeared for the revenue and no one appeared for the assessee.
Before the tribunal assessee had challenged the disallowance made by AO on excess depreciation on Rs.13,740 claimed by the assessee.
It was observed by the tribunal that no business activities are carried out by the assessee, by this reason AO disallowed the claim of excess depreciation. Also before the CIT(A) this issue was not presented by the assessee.
Thus due to the absence of carrying out the business, the tribunal held that depreciation under Section 32 of the Income Tax Act should not be allowed.
After considering the facts, the two-member bench of Shri M. Balaganesh, (Accountant Member) and Anubhav Sharma, (Judicial Member) dismissed the appeal filed by the assessee.
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