2017 (11) TMI 992 - AT - Income Tax

Tribunal upholds depreciation claim, rejects revenue's appeal.

The Tribunal upheld the CIT(A)'s decision to allow the assessee's claim of depreciation, dismissing the revenue's appeal against the disallowance by the ... Claim of depreciation - there was no working during the year - Held that:- As during the year under consideration the assessee has business receipts in the nature of sales in the preceding as well as subsequent years and it has made purchases during the relevant previous year and in the earlier year as well as subsequent years, except F.Y. 2011-12. Also found that the purchase invoice for the relevant P.Y. and the Sales invoice for the Preceding P.Y. bore the address of the said Bandra premises. Thus, the presumption drawn by the assessing officer that asset was not put to use is baseless. The asset was already a part of the block. Also, depreciation on the said building premises was allowed in A.Y. 2012-13 which is the assessment year relevant to the year of purchase. Furthermore, detailed finding recorded by CIT(A) at para 6 has not been controverted by bringing any positive material on record. The issue under consideration is also covered by the decision of Bombay High Court in case of G.N. Agarwal [1993 (8) TMI 5 - BOMBAY High Court]. Appeal of the revenue is dismissed. Issues:Appeal against disallowance of depreciation claim by the Assessing Officer.Analysis:The main issue in this case was the disallowance of the assessee's claim of depreciation by the Assessing Officer (AO) on the grounds that the building purchased by the assessee was not used for any business activity during the relevant assessment year. The AO observed that there were no business receipts credited to the profit and loss account, and the asset was neither ready for use nor put to use for business purposes during the year.The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the assessee's claim of depreciation after a detailed examination of the facts. The CIT(A) noted that the premises purchased by the assessee included various units and office equipment, and depreciation on the building premises was allowed in the previous assessment year. The CIT(A) found that the assessee was engaged in the business of trading paintings and artifacts, with business receipts in preceding and subsequent years. The CIT(A) also considered the bills related to renovation work at the premises and the storage/display of paintings and artifacts as evidence of business activity at the building.Furthermore, the CIT(A) relied on a decision of the Hon'ble Delhi High Court to support the claim for depreciation even in the absence of active business activity, as long as there were efforts to keep the business alive. The CIT(A) distinguished other decisions cited by the AO as not applicable to the current case. The CIT(A) directed the AO to allow the depreciation claimed by the assessee and recompute the total income accordingly.In the final assessment, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to allow the assessee's claim of depreciation. The Tribunal found that the assessee had business receipts in preceding and subsequent years, and the asset was part of the block for which depreciation was previously allowed. The Tribunal also noted that the assessing officer's presumption that the asset was not put to use was baseless, and there was no positive material brought on record to controvert the CIT(A)'s detailed findings. The Tribunal relied on a decision of the Bombay High Court to support its decision and concluded that there was no reason to interfere with the CIT(A)'s order.In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the assessee's claim of depreciation, dismissing the revenue's appeal against the disallowance by the assessing officer.