2018 (3) TMI 1801 - AT - Income Tax

ITAT affirms depreciation disallowance but rules in favor of appellant on partner payments

Asst. CIT-16 (3), Mumbai Versus Wadia Ghandy & Co. AND Vice-Versa

The ITAT dismissed both the assessee's and Revenue's appeals, upholding the Commissioner of Income Tax (Appeals)'s decisions. The disallowance of ... Disallowance of deprecation on tenancy rights - tenancy rights were a form of license - HELD THAT:- As regards the assessee’s appeal we find the issue of deprecation of tenancy rights has been decided against the assessee by following the ITAT order in assessee’s own case [2015 (11) TMI 997 - ITAT MUMBAI] . Hence, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals). Hence, we uphold the same. Hence, the appeal by the assessee stands dismissed. Payment to retired partners - HELD THAT:- No case has been made out that this has been reversed by the Hon’ble High Court. As regards the issue of payment to legal heirs of deceased partners, the same was also considered by the ITAT in assessee’s own case [2015 (11) TMI 997 - ITAT MUMBAI].The tribunal has elaborately considered the issue in by referring extensively to partnership deed on various case laws and thereafter held the issue in favour of the assessee and against the Revenue. Since the above has not been reversed by the Hon’ble High Court, we follow the same and uphold the order of the ld. Commissioner of Income Tax (Appeals). Issues involved:1. Disallowance of deprecation on tenancy rights2. Addition made on account of payments to legal heirs of deceased partner and disallowance of payment made to retired partnerAnalysis of Judgment:Issue 1: Disallowance of deprecation on tenancy rightsThe appellant contested the disallowance of depreciation on tenancy rights by the Assessing Officer. The Commissioner of Income Tax (Appeals) upheld the disallowance following an ITAT order against the appellant in their own case. The ITAT decision was based on consistent rulings against the appellant over the years. The ITAT emphasized that the disallowed depreciation on tenancy rights had been upheld in previous assessments and that the facts were similar. Consequently, the Commissioner of Income Tax (Appeals) dismissed the appellant's appeal on this issue.Issue 2: Addition on account of payments to legal heirs of deceased partner and disallowance of payment made to retired partnerRegarding the addition made on payments to legal heirs of a deceased partner and disallowance of payment to a retired partner, the Commissioner of Income Tax (Appeals) referred to previous orders and decisions. The Commissioner followed an ITAT order in the appellant's own case, which favored the appellant. The ITAT decision highlighted that the payments to the retired partner were not part of the firm's income due to an overriding title in the partnership deed. As the facts were similar to previous cases where the ITAT ruled in favor of the appellant, the Commissioner directed the Assessing Officer to allow the payment to the retired partner. The Commissioner also upheld the decision in favor of the appellant regarding payments to legal heirs of deceased partners, as the ITAT had previously ruled in favor of the appellant on this issue as well.In conclusion, both the appeals by the assessee and the Revenue were dismissed by the ITAT. The ITAT upheld the Commissioner of Income Tax (Appeals)'s decision on both issues, citing consistent rulings and similar facts from previous cases in favor of the appellant. The judgment reaffirmed the decisions made in the appellant's favor regarding payments to retired partners and legal heirs of deceased partners, while dismissing the appeal on the disallowance of depreciation on tenancy rights.