In a major relief to the M/s.Tally Solutions Pvt. Ltd, the Bangalore Bench of Income Tax Appellate Tribunal (ITAT) allowed the depreciation on Home Theatre as it was used for business purposes.
The Assessing Officer, during the course of scrutiny proceedings notice, noticed that the assessee-company, M/s.Tally Solutions Pvt. Ltd. had purchased home-theatre for an amount of Rs.2,01,90,028. The AO was of the opinion that the home-theatre was not for the purpose of business. Hence, he disallowed the depreciation claim on the same.
The assessee preferred an appeal to the first appellate authority. It was contended before the first appellate authority that the Assessing Officer has disallowed depreciation of Rs.30,28,504 as against depreciation claim made by the assessee of Rs.15,14,252 (50% depreciation claimed by the assessee, since home-theater was purchased after 01.09.2013). It was submitted that there is excess disallowance.
It was further submitted on merits the home-theatre is for the business purpose only and the original invoices were destroyed in fire and the same could not be produced. The CIT(A) allowed the plea of the assessee and deleted the addition.
The coram of Accountant Member, B.R.Baskaran and Judicial Member, George George K observed that the theatre is admittedly used for the business purpose of exhibiting various technologies development in the field of software to the employees and also to the customers. There was a major fire accident in the premises of the assessee and various books of account, documents and invoices were destroyed.
The ITAT while upholding the order of the CIT(A) held that there is no violation of Rule 46A(3) of the Income Tax Rules, since there are no fresh facts produced before the CIT(A). The stand taken by the assessee before the A.O. was that there was a fire accident, wherein the invoices were destroyed and hence, cannot be produced. The same is the stand taken before the CIT(A) and the same set of evidence are produced. Therefore, there is no violation of provisions of Rule 46A(3) of the Income Tax Rules.
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