2023 (10) TMI 1189 - AT - Income Tax

Lorry hire vehicles qualify for 30% depreciation rate, development charges allowed as deductible expenses, Section 80IA remanded for fresh consideration

The ITAT Jodhpur allowed the assessee's appeal on depreciation claims, ruling that lorry hire vehicles qualify for 30% depreciation rate rather than the ... Excess depreciation on the lorry hire charges - @ 30% or 15% - AO restricted the depreciation @ 15% by considering the vehicles as plant and machinery related to assessee’s business - HELD THAT:- Claim of depreciation @ 30% is duly covered by order of Amar Singh Bhandari [2018 (10) TMI 296 - RAJASTHAN HIGH COURT] Accordingly, we set aside the order of the ld. CIT(A) and quash the addition related to rejection of depreciation by the ld. AO. Development charges - Assessee maintains the books of accounts in mercantile system - HELD THAT:- Assessee debited the development charge and also the contra entry was passed and treated the amount as the liability. The assessee is bound to pay the amount as per the agreement. After the settlement of dispute, the amount should be paid to the said authority. We respectfully relied on the order of Udaipur Mineral Development Syndicate (P.) Ltd [2002 (8) TMI 26 - RAJASTHAN HIGH COURT] The said expenses is allowable. The addition made by the ld. AO is quashed. Deduction u/s 80IA - admission of additional evidences - CIT(A) restricting the deduction u/s 80IA to Zero on the pretext that there was loss from business or profession for which application for admitting additional ground was raised before the CIT(A) - HELD THAT:- As assessee placed that a request was made to the ld. CIT(A) related to submission of additional ground during appeal hearing. DR had not made any objection about the submission of the assessee. The matter was remained untouched by the ld. CIT(A). So, in our considered view, ground be remanded back to the file of the ld. CIT(A) for adjudicating the issue after allowing opportunity to the assessee in the set aside proceeding. Issues involved:The appeal concerns the order of the ld. Commissioner of Income Tax (Appeals) for A.Y. 2014-15, involving disallowance of depreciation on dumper, development charges, deduction u/s 80IA, and restriction of deduction u/s 80IA due to loss from business or profession.Depreciation Disallowance on Dumper:The ld. AO rejected excess depreciation claimed on lorry hire charges and restricted it to 15%, adding back Rs. 1,33,697 to the total income. The ld. CIT(A) upheld this decision citing relevant case laws. However, the Coordinate Bench of ITAT Jodhpur and the High Court clarified that depreciation on lorry hire charges should be at 30%. Consequently, the addition amount was quashed.Development Charges Disallowance:The ld. AO added back Rs. 16,70,400 for unpaid development charges to UIT, which the assessee treated as a liability in its accounts. Despite the absence of payment, the assessee debited the amount in the P & L a/c. The ld. CIT(A) confirmed the disallowance, emphasizing that expenses can only be claimed when actually paid. However, relying on a relevant High Court judgment, the ITAT quashed the addition, stating that the expenses are allowable.Deduction u/s 80IA and Loss Restriction:The appeal raised issues regarding deduction u/s 80IA and its restriction to zero due to a loss from business or profession. The assessee sought consideration of additional grounds related to these deductions, but the ld. CIT(A) did not address them. Consequently, the ITAT remanded ground nos. 3 and 4 back to the ld. CIT(A) for adjudication after providing the assessee with an opportunity in the set-aside proceeding.Conclusion:The ITAT allowed the appeal, setting aside the disallowance of depreciation on dumper and development charges. It remanded the issue of deduction u/s 80IA back to the ld. CIT(A) for further consideration. Ground nos. 1 and 2 were allowed, while ground nos. 3 and 4 were allowed for statistical purposes.