2013 (1) TMI 370

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....while accepting the expenses are incurred for purpose of business, disallowing depreciation amounting to Rs.1,80,58,339/- (calculated @ 25% on Rs.7,22,33,356) granted by the A.O. in the original order consequent to R&D expenses being assessed as being capital in nature (having enduring benefit) on the ground that no asset is generated on which depreciation can be allowed as per rules." 2. In this case, the order u/s.143(3) was passed by DCIT, Panchmahal Circle, Godhra on 27.12.2006, wherein ld. A.O. made addition under the head 'Research & Development' expenses at Rs.7,22,33,356/- after allowing the depreciation @ 25%. The A.O. observed that the assessee had debited Rs.9,58,00,000/- under the head 'Research & Development expenses" which ....

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....are not capital and are to be allowed. It is submitted that the same be allowed and the assessment order passed by the ld. A.O. be amended accordingly.     (ii) Depreciation on Non-factory building Rs.74,35,885/- Non factory building consists of administrative office building situated in Halol. They are no residential building/premises owned by the company. This is further substantiated by the tax audit report as well as facts examined by the Ld. A.O. prior to passing of the assessment order." After considering the assessee's reply, ld. CIT-III, Baroda has held as under:     "However such expenditure does not give rise to any asset on which depreciation can be allowed as per rules and hence the Assessi....