ITAT Delhi Upholds CIT(A) Decision on Depreciation & Audit Fee Disallowance

The ITAT, Delhi upheld the CIT(A)'s decision, dismissing the appeal filed by the assessee. The higher depreciation claimed on roads at 25% instead of the allowed 10% was denied, with roads considered akin to buildings for depreciation purposes. Additionally, the disallowance of the audit fee of &8377;86,224 due to non-deduction of TDS was affirmed as the fee was provisioned for an audit in the next financial year without services rendered or liability incurred in the relevant year.

---

---

Issues:
1. Depreciation claimed on roads at a higher rate than allowed.
2. Disallowance of audit fee due to non-deduction of TDS.

Issue 1: Depreciation claimed on roads at a higher rate than allowed:
The assessee, a subsidiary of NHAI, constructed a highway and bypass at Moradabad on a BOT basis. The Assessing Officer found that the assessee had been claiming depreciation on roads at 25% instead of the allowed 10%. Additionally, the depreciation was calculated on the original cost instead of the WDV. The CIT(A) upheld the 10% depreciation rate. The assessee cited various case laws to support the claim that roads should be treated as plant and entitled to higher depreciation. However, the revenue authorities argued for depreciation as applicable to buildings. The Tribunal analyzed the case laws presented by both parties, including decisions by the Supreme Court and High Courts, and concluded that roads should be treated as buildings for depreciation purposes. Therefore, the order of the CIT(A) was upheld, denying the higher depreciation claimed by the assessee.

Issue 2: Disallowance of audit fee due to non-deduction of TDS:
The Assessing Officer disallowed a claimed audit fee of &8377; 86,224 due to non-deduction of TDS. The CIT(A) found that the fee was not actually paid during the relevant year but was provisioned for an audit in the next financial year. As no services were rendered or liability incurred in the relevant year, the claim was deemed inadmissible. The CIT(A) confirmed the disallowance. The Tribunal upheld this decision, stating that the expenditure did not pertain to the relevant assessment year, and no liability was incurred during that period. Therefore, the disallowance of the audit fee was deemed appropriate based on the facts presented.

In conclusion, the ITAT, Delhi upheld the decision of the CIT(A) regarding both issues. The appeal filed by the assessee was dismissed, affirming the disallowance of higher depreciation claimed on roads and the audit fee due to non-deduction of TDS.

---