2016 (5) TMI 1548 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Depreciation Disallowance & EDP Equipments, Revenue Appeal Dismissed

The DCIT Circle-7 Jaipur Versus M/s. GVK Jaipur Expressway Ltd.

The Tribunal upheld the CIT(A)'s decision on both issues, disallowing depreciation on road construction treated as a building and allowing depreciation at ... Disallowance on account of depreciation claimed on road/ on road construction while treating it as a building - HELD THAT:- As decided in ow case [2014 (9) TMI 163 - ITAT JAIPUR] allowed the depreciation @ 10% on expenditure incurred on road by considering the amendment made in item number building in depreciation schedule in favour of the assessee. Claim of depreciation on EDP equipments - @ 60% as claimed by the assessee as against the rate of 15% allowed by the AO - HELD THAT:- As decided in own case by holding that the computer peripherals are eligible for the depreciation at the rates applicable to the computer system and following the decision of the Delhi Bench of the Tribunal allow this ground with the directions that the depreciation @ 60% be allowed. Decided against revenue. Issues Involved:1. Disallowance of depreciation claimed on road construction treated as a building.2. Claim of depreciation on EDP equipments at 60% instead of 15%.Analysis:Issue 1: Disallowance of Depreciation on Road ConstructionThe appeal by the Revenue challenged the deletion of disallowance of depreciation amounting to Rs. 33,01,22,188 made by the Assessing Officer (AO) on account of road construction depreciation treated as a building. The Coordinate Bench had previously decided in favor of the assessee on similar grounds in a previous case for the assessment year 2008-09. The Revenue contended that the matter was pending before the Rajasthan High Court, and the AO's view should be upheld. However, the assessee's representative supported the order of the CIT(A) and cited previous decisions by the Hon'ble ITAT in favor of the assessee. The Tribunal upheld the CIT(A)'s decision based on previous rulings and dismissed the appeal of the Revenue.Issue 2: Claim of Depreciation on EDP EquipmentsRegarding the claim of depreciation at 60% on EDP equipments instead of the 15% rate allowed by the AO, the Coordinate Bench had previously decided in favor of the assessee for the assessment year 2006-07. The Tribunal noted that the EDP equipment was integral to managing and controlling the traffic system to generate revenue. Citing a relevant decision from the Delhi Bench, the Tribunal directed the AO to allow depreciation at 60% on the EDP equipment. The Tribunal, based on similar facts and previous decisions, dismissed the Revenue's appeal in this regard.In conclusion, the Tribunal upheld the CIT(A)'s decision on both issues, citing previous rulings and decisions by the Coordinate Bench in favor of the assessee. The appeal of the Revenue was dismissed, and the order was pronounced on 13/05/2016.