2021 (10) TMI 64 - AT - Income Tax

Tax Appeals Dismissed: Depreciation, Loss, Expenses Deleted

The Tribunal dismissed all appeals filed by the Revenue for the assessment years 2012-13, 2013-14, and 2014-15, upholding the Ld. CIT(A)'s decisions to ... Depreciation on account intangible assets - CIT-A deleted the addition - HELD THAT:- As decided in own case [2019 (1) TMI 1399 - ITAT DELHI] when in the valuation report, which is given by PDIL, a Government of India Undertaking, intangibles assets and their benefits have been specifically valued and the assessee had paid a sum in a slump sale agreement for approvals, licences, permits, registration to run the business over and above the total price of fertilizer plant the same are intangibles and deprecation thereon is allowable u/s 32(l)(ii) of the Act apart from the depreciation claimed by the assessee on tangible assets. - Decided against revenue. Loss on sale of investment in the form of fertilizers bonds - CIT-A deleted the addition - HELD THAT:- We find that the Ld.CIT(A) has recorded a finding on fact that the amount of the fertilizers bonds (subsidy) has been declared as a revenue receipt in the respective assessment years. This finding on facts is not rebutted by Revenue by placing any contrary material. Therefore, we do not see any reason to interfere in the finding of Ld.CIT(A). Issues Involved:1. Deletion of addition on account of depreciation on intangible assets.2. Deletion of addition on account of loss on sale of investment in the form of fertilizer bonds.3. Deletion of addition on account of disallowance of depreciation on spare machinery parts.4. Deletion of addition on account of disallowance of expenses on vehicle repair and maintenance.Issue-wise Detailed Analysis:1. Deletion of Addition on Account of Depreciation on Intangible Assets:The Revenue raised multiple grounds challenging the deletion of additions related to depreciation on intangible assets for the assessment years 2012-13, 2013-14, and 2014-15. The primary contention was that the Ld. CIT(A) erred in law and on facts by relying on previous appellate orders which had not been accepted by the Department and were pending before the ITAT. The Revenue argued that the assessee failed to furnish proper valuation of the intangible assets and that the valuation included non-depreciable items such as Gas Price Rights and trained manpower, leading to double deductions.The Tribunal noted that the issue had been consistently decided in favor of the assessee in previous years. Specifically, it referred to ITA No. 746/Del/2011 for AY 2006-07 and ITA No. 4963/Del/2015 for AY 2011-12, where it was held that the valuation report from PDIL, a Government of India Undertaking, specifically valued intangible assets, and depreciation was allowable under Section 32(1)(ii) of the Income Tax Act. The Tribunal found no reason to deviate from its earlier decisions and affirmed the findings of the Ld. CIT(A), dismissing the Revenue's grounds.2. Deletion of Addition on Account of Loss on Sale of Investment in the Form of Fertilizer Bonds:For AY 2012-13, the Revenue challenged the deletion of an addition of Rs. 5,75,53,800/- related to the loss on the sale of fertilizer bonds. The Ld. CIT(A) had observed that the loss was incurred in the normal course of business and was a result of the government-regulated subsidy mechanism. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the loss had been declared as a revenue receipt in the respective assessment years and that the Revenue had not provided any contrary material to rebut this finding.3. Deletion of Addition on Account of Disallowance of Depreciation on Spare Machinery Parts:For AY 2014-15, the Revenue contested the deletion of an addition of Rs. 37,76,959/- related to depreciation on spare machinery parts. The Tribunal referred to its earlier decision in ITA No. 248/Del/2014 for AY 2009-10, where it was held that depreciation on capital spares was allowable. The Tribunal found no change in the facts and circumstances of the case and affirmed the Ld. CIT(A)'s decision, dismissing the Revenue's ground.4. Deletion of Addition on Account of Disallowance of Expenses on Vehicle Repair and Maintenance:For AY 2014-15, the Revenue also challenged the deletion of an addition of Rs. 10,09,679/- related to expenses on vehicle repair and maintenance. The Tribunal noted that the disallowances were made on an ad-hoc basis and had been consistently deleted in previous years. The Tribunal found no reason to interfere with the Ld. CIT(A)'s findings and dismissed the Revenue's ground.Conclusion:The Tribunal dismissed all appeals filed by the Revenue for the assessment years 2012-13, 2013-14, and 2014-15, upholding the Ld. CIT(A)'s decisions to delete the additions related to depreciation on intangible assets, loss on the sale of fertilizer bonds, depreciation on spare machinery parts, and expenses on vehicle repair and maintenance. The Tribunal's decisions were based on consistent findings from earlier years and a lack of contrary evidence from the Revenue.