2019 (2) TMI 893 - AT - Income Tax

Tribunal upholds CIT(A)'s decisions on interest-free loans & depreciation.

The Tribunal dismissed the department's appeal, upholding the decisions of the ld. CIT(A) on both issues. The addition on account of interest-free loans ... Addition on account of interest free loan given to sister concerns - assessee's justification to “business expediency” and to provide necessary details regarding business purpose behind investing money in sister concerns - Held that:- As decided in assessee's own case issue concluded by the decision passed by this Court in The Pr. Commissioner of Income Tax (Central), Ludhiana v. Shri Satish Bala Malhotra, Legal Heir of Shri Ashok Kumar Malhotra, Prop. M/s Modern Publishers, MBD House, Railway Road, Jalandhar [2017 (4) TMI 1330 - PUNJAB & HARYANA HIGH COURT] whereby the questions have been decided against the revenue. Depreciation in respect of copier unit and paper unit - AO disallowed the claim of depreciation of the assessee by observing that the assessee had made the claim for deduction of depreciation without filing the revised return - Held that:- In the present case, it is an admitted fact that the assessee inadvertently could not claim the depreciation in computation of income. However, that claim was made in the tax audit report attached with the income tax return which was available on the record. Therefore, the CIT(A) rightly directed the AO to allow the depreciation claimed by the assessee by following the judgment of CIT Vs Ramco International (2008 (12) TMI 413 - PUNJAB AND HARYANA HIGH COURT). No valid ground to interfere with the findings of the CIT(A). Issues:1. Deletion of addition on account of interest-free loan to sister concerns.2. Allowing depreciation without filing a revised return.Analysis:Issue 1: Deletion of addition on account of interest-free loan to sister concernsThe department appealed against the order of the ld. CIT(A) regarding the deletion of an addition on account of interest-free loans given to sister concerns by the assessee. The ld. Counsel for the assessee argued that the issue was similar to a previous judgment of the Hon'ble Jurisdictional High Court in the assessee's own case for the assessment year 2010-11. The Hon'ble High Court had already decided against the revenue in a similar matter, as mentioned in the order dated 08.08.2017. The departmental appeal for the assessment year 2010-11 was dismissed by the High Court, concluding that the addition on account of interest expenditure deletion was not justified. The Tribunal found that the issue had been settled by the High Court in favor of the assessee, and therefore, upheld the decision of the ld. CIT(A) to delete the addition.Issue 2: Allowing depreciation without filing a revised returnThe department contested the allowance of depreciation by the ld. CIT(A) without the assessee filing a revised return. The AO had disallowed the depreciation claim, stating that no revised return had been filed. The assessee argued that the claim for depreciation was not new and was included in the tax audit report under Form 3CD. The ld. CIT(A) allowed the depreciation claim, citing the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs Ramco International. The Tribunal noted that the claim for depreciation was inadvertently omitted in the computation of income but was included in the tax audit report attached to the income tax return. The Tribunal upheld the decision of the ld. CIT(A) to allow the depreciation claim, as it was not a new claim and was supported by relevant material in the tax audit report. Therefore, the appeal of the department was dismissed, and the decision of the ld. CIT(A) was upheld.In conclusion, the Tribunal dismissed the department's appeal on both issues, affirming the decisions of the ld. CIT(A) regarding the deletion of addition on interest-free loans and the allowance of depreciation without filing a revised return.