Tribunal upholds disallowance of depreciation on tenancy rights and payments to legal heirs

The Tribunal dismissed both appeals, upholding the decisions of the Commissioner (Appeals) regarding the disallowance of depreciation on tenancy rights and payments to legal heirs of deceased partners. The Tribunal held that tenancy rights are not depreciable assets and that payments to legal heirs are deductible expenses. The order was pronounced on 7th August 2019, aligning with consistent views from previous assessments.

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Issues:
1. Disallowance of depreciation on tenancy rights.
2. Disallowance of payments made to legal heirs of deceased partners.

Analysis:

Issue 1: Disallowance of Depreciation on Tenancy Rights
The case involved a partnership firm of Advocates, Solicitors, and Notary appealing against the disallowance of depreciation on tenancy rights amounting to Rs. 4,83,690 for the assessment year 2012-13. The Assessing Officer and the Commissioner (Appeals) both disallowed the claim based on the Tribunal's consistent view that tenancy rights are not depreciable assets. The Tribunal upheld the decision, citing previous orders where similar claims were rejected. The Tribunal reasoned that tenancy rights do not qualify as intangible assets eligible for depreciation under section 32 of the Act. The Tribunal dismissed the appeal, affirming the decision of the Commissioner (Appeals) based on the consistent view taken in previous assessments.

Issue 2: Disallowance of Payments to Legal Heirs of Deceased Partners
The Revenue's appeal focused on the disallowance of payments made to legal heirs of deceased partners amounting to Rs. 1,57,32,275. The Assessing Officer disallowed the deduction claimed by the assessee, but the Commissioner (Appeals) allowed the claim based on a favorable decision in a previous assessment year. The Tribunal considered the recurring issue of payment to legal heirs of deceased partners and noted that while the Assessing Officer had made similar disallowances in the past, the Tribunal consistently allowed such deductions. Citing previous orders, the Tribunal upheld the decision of the Commissioner (Appeals) to allow the deduction. The Tribunal dismissed the Revenue's appeal, aligning with its consistent view on similar cases in previous assessments.

In conclusion, both appeals were dismissed by the Tribunal, maintaining the decisions of the Commissioner (Appeals) in both cases. The Tribunal pronounced the order on 7th August 2019, upholding the disallowances of depreciation on tenancy rights and payments to legal heirs of deceased partners based on the consistent views taken in previous assessments.

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