ITAT allows building depreciation, upholds Share Purchase Agreement fees disallowance, remands interest issue for verification.

The ITAT partially allowed the appeal, overturning the restriction on depreciation claim for a building, as the appellant proved possession and entitlement to full depreciation. However, the disallowance of professional fees for a Share Purchase Agreement was upheld due to lack of evidence contradicting the capital nature of the expenditure. The issue of disallowance based on interest amounts was remanded for further verification by the AO.

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Issues:
1. Restriction on claim of depreciation on building.
2. Disallowance of professional fees for compilation of Share Purchase Agreement.
3. Disallowance based on difference in interest amounts.

Issue 1: Restriction on claim of depreciation on building
The appellant, engaged in the manufacturing and export of jewellery, challenged the restriction on claiming depreciation on a building. The Assessing Officer (AO) restricted the depreciation to &8377; 11.84 lakhs instead of &8377; 23.68 lakhs claimed by the appellant. The First Appellate Authority (FAA) upheld the AO's decision based on possession details and society charges payment. However, during the ITAT hearing, it was established that the appellant had possession of the property and was entitled to the full depreciation amount. The possession letter and society maintenance charges payment supported the appellant's claim, leading to a reversal of the FAA's decision in favor of the appellant.

Issue 2: Disallowance of professional fees for compilation of Share Purchase Agreement
The AO disallowed &8377; 70,000 paid for compilation of a Share Purchase Agreement, considering it as capital expenditure. The FAA also upheld this decision, stating that the expenditure was related to a change in shareholding pattern and was of a capital nature. The ITAT noted that the appellant did not provide evidence contradicting the FAA's decision. As the appellant's representative did not object to treating the expenditure as capital before the FAA, the ITAT dismissed the appellant's appeal on this ground.

Issue 3: Disallowance based on difference in interest amounts
The AO disallowed a sum based on a difference in interest amounts credited in the Profit & Loss account. The appellant argued that the interest was adjusted against bills and that the matter required further verification. The ITAT agreed with the appellant and directed the AO to re-examine the issue for a fair adjudication. Consequently, this ground of appeal was partly decided in favor of the appellant.

In conclusion, the ITAT partially allowed the appeal filed by the appellant, overturning the restriction on depreciation claim while upholding the disallowance of professional fees as capital expenditure. The matter of disallowance based on interest amounts was remanded for further verification by the AO.

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