ITAT Upholds CIT(A)'s Decision on Section 43B Claim & Depreciation Treatment (A)

The ITAT upheld the CIT(A)'s decision to allow the claim under section 43B of the Income Tax Act for electricity duty and PF liability, emphasizing timely payment. It also directed the AO to allow depreciation at 10% for assets used for less than 180 days, dismissing the Revenue's appeal. The ITAT affirmed the CIT(A)'s decisions on both issues, clarifying deduction requirements under section 43B and depreciation treatment on assets acquired during the year.

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Issues:
1. Allowance of claim under section 43B of the Income Tax Act.
2. Disallowance of depreciation and addition of assets during the year.

Issue 1: Allowance of claim under section 43B of the Income Tax Act:
The appeal by the Revenue challenged the order of the ld. CIT(A) allowing the claim of Rs. 9,09,20,000/- under section 43B of the IT Act. The dispute arose from the disallowance of electricity duty and PF liability by the AO. The electricity duty and PF liability were paid by the customers and inherited by the assessee, respectively. The assessee paid the liability before filing the return and claimed it under section 43B. The ITAT upheld the CIT(A)'s decision, emphasizing the actual payment before the due date of filing the return as a crucial factor for deduction under section 43B. The ITAT referred to relevant case laws to support its decision, dismissing the Revenue's appeal.

Issue 2: Disallowance of depreciation and addition of assets during the year:
Regarding the disallowance of depreciation and addition of assets during the year, the AO rejected the depreciation claimed by the assessee. The assessee received assets worth Rs. 834.01 crores under a transfer scheme. The AO disallowed depreciation claimed for only half of the year. The ITAT found that the assets were acquired during the year and directed the AO to allow depreciation at 10% for assets used for less than 180 days. The ITAT upheld the CIT(A)'s decision to grant relief to the assessee, as the net fixed assets received were Rs. 834.01 crores. The ITAT dismissed the Revenue's appeal on this issue, finding no infirmity in the CIT(A)'s order.

In conclusion, the ITAT dismissed the departmental appeal, upholding the CIT(A)'s decisions on both issues. The judgment clarified the requirements for deduction under section 43B and the treatment of depreciation on assets acquired during the year.

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