Bogus creditors and half-year depreciation: factual findings sustained where Revenue failed to rebut the record.

Revenue's addition for alleged bogus creditors was deleted because no substantive material was brought to dislodge the first appellate authority's factual findings, and ledger discrepancies had already been explained; the addition could not stand on limited differences alone. Depreciation on a CNC lathe was restricted to 50% because the record showed the machine was installed and used only after the relevant mid-year cutoff, with defects noticed after initial operations and no fresh evidence to show that finding was . The appellate order was therefore sustained on both issues, and the Revenue's challenge failed.

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Issues: (i) Whether the deletion of addition on account of alleged bogus creditors was justified; (ii) Whether the restriction of depreciation on CNC Lathe to 50% was justified.

Issue (i): Whether the deletion of addition on account of alleged bogus creditors was justified.

Analysis: The Revenue did not bring any substantive material to dislodge the findings of the first appellate authority. The discrepancies noted in the ledger accounts were already addressed, and the remand report did not establish that the entire balance represented non-genuine liabilities. The addition was based on limited differences, whereas the larger claim was supported by the record.

Conclusion: The deletion of the addition on account of alleged bogus creditors was justified and is sustained in favour of the assessee.

Issue (ii): Whether the restriction of depreciation on CNC Lathe to 50% was justified.

Analysis: The record showed that the machine had been installed and used for initial operations before defects were noticed. The replacement at no extra cost and the finding that the machine was put to use after September 2016 supported allowance of only half-year depreciation. No fresh evidence was produced to show that this factual finding was erroneous.

Conclusion: The restriction of depreciation to 50% on CNC Lathe was justified and is sustained in favour of the assessee.

Final Conclusion: The appellate order interfering with neither the creditor addition nor the depreciation claim required no further interference, and the Revenue's challenge failed on both issues.

Ratio Decidendi: Where the Revenue fails to rebut the factual findings of the appellate authority with contrary material, additions based on alleged creditor discrepancies cannot be sustained; likewise, depreciation is to be restricted to half where an asset is found to have been put to use only after the relevant mid-year cutoff.

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