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of <h1>Tribunal affirms CIT(A) decisions, grants depreciation for leased assets, orders MAT credit.</h1> <h3>D.C.I.T., Circle – 4 (1) (2), Ahmedabad Versus The Serendipity Apparels Pvt. Ltd.</h3> D.C.I.T., Circle – 4 (1) (2), Ahmedabad Versus The Serendipity Apparels Pvt. Ltd. - TMI Issues Involved:1. Depreciation Disallowance2. MAT Credit Carry ForwardIssue-wise Detailed Analysis:1. Depreciation Disallowance:The primary issue pertains to the disallowance of depreciation claims amounting to Rs. 54,57,582/- and Rs. 46,96,856/- for the assessment years 2011-12 and 2012-13, respectively. The Assessing Officer (AO) disallowed these claims on the grounds that the leased assets were not used for the assessee's business purposes, as the income from these assets was categorized under 'income from other sources.' The AO relied on Section 32(i) & (ii) read with Section 57 of the Income Tax Act, 1961, to justify the disallowance, arguing that the assets were not used for business purposes.The Commissioner of Income Tax (Appeals) [CIT(A)] reversed the AO's decision, emphasizing that the appellant was the owner of the assets and had leased them out, which should not disqualify the assets from being considered as used for business purposes. The CIT(A) noted that the conditions of Section 32(1) read with Section 38 and Section 57(ii) were fulfilled. The CIT(A) cited previous years' assessments where similar disallowances were overturned and allowed the depreciation claims, referencing the Hon'ble Supreme Court judgment in Mysore Minerals and other relevant case laws.The Tribunal upheld the CIT(A)'s decision, noting that similar issues had been resolved in favor of the assessee in previous assessment years (2009-10 and 2010-11). The Tribunal reiterated that the depreciation should be allowed as the assets were used for the purpose of business, albeit leased out, and the income was taxed under 'income from other sources.' The Tribunal referenced several judgments, including those from the Hon'ble Supreme Court, which supported the view that the depreciation on leased assets should be allowed.2. MAT Credit Carry Forward:The second issue involved the CIT(A)'s direction to the AO to allow the assessee to carry forward MAT (Minimum Alternate Tax) credit from earlier years. The AO had not computed the book profit under Section 115JB of the Act and thus did not address the MAT credit issue. The CIT(A) directed the AO to grant the MAT credit after verifying the earlier years' records, as per the provisions of Section 115JAA of the Act.The Tribunal affirmed the CIT(A)'s direction, noting that the CIT(A) had appropriately instructed the AO to verify and grant the MAT credit. The Tribunal found no prejudice against the Revenue in this direction and upheld the CIT(A)'s findings.Conclusion:Both appeals by the Revenue were dismissed. The Tribunal upheld the CIT(A)'s decisions, allowing the depreciation claims for the leased assets and directing the AO to grant the MAT credit after verification of earlier years' records. The judgments were pronounced in the open court on January 3, 2018.
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