Tribunal remits case for verifying lease documents & asset nature for depreciation allowance

The Tribunal remitted the matter back to the Assessing Officer for further verification of lease documents and relevant information to decide on the allowability of 100% depreciation on a temporary structure in the lease premises for the assessment year 2007-08. The Tribunal emphasized the importance of clarifying the nature of the asset and documentation provided before making a final determination, allowing the appeal for statistical purposes.

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Issues:
Allowability of depreciation at the rate of 100% on temporary structure.

Analysis:
The appeal involved a dispute regarding the allowability of depreciation at the rate of 100% on a temporary structure in the lease premises for the assessment year 2007-08. The Assessing Officer initially issued a notice under section 154 to rectify the claim of 100% depreciation, which was objected to by the assessee. Subsequently, a notice under section 148 for reopening the assessment was issued, leading to scrutiny and completion of assessment under section 143(3) r.w.s. 147. The assessee then appealed to the CIT(A), who dismissed the claim based on the disallowance of depreciation. The Tribunal, in a previous order for a later assessment year, had confirmed the CIT(A)'s decision, which was cited in the current appeal.

The assessee argued that the expenditure incurred was revenue in nature and eligible for 100% depreciation, citing various precedents including the decision of the Jurisdictional High Court. The Assessing Officer treated the expenditure as capital, allowing 10% depreciation and disallowing the rest. The Tribunal noted that the premises needed modifications for business operations, and the Assessing Officer's decision was based on precedents classifying the expenditure as capital. The assessee contended that the temporary structures were not reusable and should be considered revenue expenditure, referencing the Jurisdictional High Court's decision on depreciation for construction or renovation works.

The Tribunal observed a lack of clarity regarding the nature of the asset for which 100% depreciation was claimed, as the documents provided did not specify whether the expenditure was on partitions, false ceilings, etc. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for further verification of lease documents and other relevant information to decide the issue in accordance with the law and the precedent cited by the Jurisdictional High Court.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of the asset nature and documentation to determine the allowability of depreciation on the temporary structure in the lease premises.

Order pronounced on 20.11.2015.

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