Tribunal rectifies depreciation error, dismisses 14A challenge, remits for factual determination.

The tribunal rectified its order disallowing depreciation on a leased building, acknowledging the error in applying the relevant provision. The tribunal directed a rectification and confirmed the disallowance of the alternate depreciation claim. The challenge to the disallowance under section 14A was dismissed due to lack of specific pleading. The classification of repair and renovation expenditure was revisited, with the tribunal recognizing the valid claim if the expenditure was part of the correct asset category. The matter was remitted for factual determination. The tribunal partly allowed the appeal and restored the case for further assessment.

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Issues Involved:
1. Rectification of the tribunal's order regarding the disallowance of depreciation on a leased building.
2. Assessee's challenge to disallowance under section 14A for lack of satisfaction recorded by the Assessing Officer.
3. Classification of repair and renovation expenditure on a leased building and its inclusion in the block of assets.

Issue-wise Detailed Analysis:

1. Rectification of the Tribunal's Order:
The tribunal noted that the assessee claimed depreciation on a leased building, which had been vacated. The initial disallowance was confirmed based on previous court decisions. However, it was later realized that section 32(1)(iii) only applies to assets of an undertaking engaged in power generation and distribution, which was not the case here. The tribunal acknowledged the mistake and decided to rectify the order. The tribunal directed the Registry to assign a number to the rectification proposed suo motu. The tribunal confirmed the disallowance of the assessee's alternate claim for depreciation on the entire amount of WDV of the relevant asset, expunging the incorrect reasoning from the original order.

2. Assessee's Challenge to Disallowance under Section 14A:
The assessee contended that the disallowance under section 14A was invalid as the Assessing Officer did not record satisfaction before making the disallowance. The tribunal observed that no specific ground or pleading was made regarding this issue before the tribunal or the first appellate authority. The tribunal noted that the matter had been set aside to the first appellate authority to adjudicate afresh, allowing the assessee to present its case on both factual and legal aspects. Therefore, the tribunal dismissed the relevant grounds, finding no prejudice caused by the earlier decision.

3. Classification of Repair and Renovation Expenditure:
The assessee argued that the expenditure was not on a building but on repair and renovation of a leased building, capitalized under 'Furniture, fixture and electrical fittings.' The tribunal found that the statement of depreciation was made during the hearing, but the tribunal had incorrectly treated the asset as a building. The tribunal acknowledged the mistake and recalled the order for reconsideration. The tribunal restored the matter to the first appellate authority to determine the facts, noting that the assessee's claim was valid if the expenditure formed part of the block of assets 'Furniture and Fittings' and was carried over from an earlier year. The tribunal clarified that the condition of ownership is not a pre-condition for depreciation under section 43(6)(c)(i)(B) and that depreciation is allowed on the value of all assets in a block of assets. The tribunal also distinguished the case from previous decisions, stating that the condition of user does not apply to assets sold, destroyed, demolished, or discarded.

Result:
The tribunal disposed of MA No. 414/2014 on the stated terms, partly allowing it. The tribunal restored the matter to the first appellate authority for factual determination regarding the repair and renovation expenditure. The assessee's appeal was partly allowed, with the tribunal recognizing the validity of the depreciation claim on the block of assets 'Furniture and Fittings.' The order was pronounced in the open court on January 30, 2015.

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