TaxTMI 
TaxTMI 
2013 (10) TMI 705
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....diture as well as the depreciation is in respect of two buildings, i.e., at Bhiwandi, Maharashtra and Kodaikanal, Karnataka. On being enquired in the matter, it was explained by the assessee in the assessment proceedings that the two properties were on the verge of getting ready to be put to use. The construction had been completed since long, i.e., on 30.09.2002 for the Bhiwandi Building, while the Kodiakanal property was in existence since 31.03.1999. The expenditure had not been capitalized as, in terms of the relevant Accounting Standard, i.e., AS-10, the expenditure subsequent to the acquisition of the fixed asset should be loaded to its cost only if it increases the future benefits from an existing asset beyond its previously assessed standard of performance. As the expenditure was being incurred in making the buildings ready to be put to use, the same was written off in accounts. Further, the buildings were intended to be used as guest houses. As such, even if there were no actual user, being complete, the depreciation thereon would be exigible, and stood accordingly claimed. The hon'ble courts have held that even a passive user would entitle a claim for depreciation. The sa....
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....) stood made during the latter part of the year under reference, would not itself lead to the inference of the said buildings being incomplete. On being enquired by the Bench as to what is the expenditure actually for, i.e., is it toward furnishing of the premises, and whether the assessee had explained that at any stage, i.e., either during the quantum or the penalty proceedings, he would take us to the detail of such expenditure as submitted before the first appellate authority in the quantum proceedings, extracted at para 2.2 in his order, which is as under:- Telephone charges Rs.4,980/- Electricity charges Rs.22,555/- Garden maintenance Rs.1,65,949/- Furniture Rs.7,18,737/- Maintenance of building Rs.5,25,250/- Total Rs.14,37,471/- The entire balance expenditure of Rs.3.98 lacs on the repair and maintenance expenditure, save for Rs. 7158/-, is on the Bhiwandi property, as apparent from the detail of the total expenditure of Rs. 18.35 lacs (at PB pg. 62). Further, on being asked as to the nature of the expenditure for Rs.5.25 lacs supra, as also for Rs. 3.98 lacs; the details being gross and not indicative of the nature of the expenditure c....
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....see's own audited accounts for the current year (placed at PB pgs.1-19), on which it places reliance, which reflect an addition of Rs.12.99 lacs during the second half of the year (PB pgs.10, 20). In fact, even during the hearing, the ld. AR on being questioned on the basis of the completion certificate, could not furnish any satisfactory answer. Further, even assuming that the said building stands completed during the second half of the year, i.e., by 31.03.2004, the year-end, how could the same lead to a concurrent claim for heavy repairs and maintenance for the f.y. 2003-04? And, further, even without having been put to use, as admitted by the assessee during the assessment proceedings, stating the same to it being on the verge of being made ready to be put to use. This is precisely the Revenue's case, and which has not been satisfactorily answered or explained at any stage, much less with reference to any evidences. Further, the said expenditure continues, and in equal measure, for the following year as well, so that it is equally inexplicable as to how expenditure in such sum follows immediately after the completion of the building, putting a question mark on the issue of its ....
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.... consequence. 3.3 So however, as it transpired during the course of hearing, the assessee is in process of building a Green-house, and has also apparently incurred expenditure on garden maintenance, electricity, telephone, etc. (Rs.1,93,484/-). The said expenditure could, depending on the nature of the work being carried on, be of revenue nature. With regard to the green-house, though there is no explanation with regard to it before the authorities below, the same is manifest from the record, as for example a bill dated 18.04.2003 for the supply & installation of double door for the Greenhouse (PB pg.64) by one M/s. Sriroz Pvt. Ltd. The ld. AR, on being questioned in this respect, or even as to the nature of the said house, was unable to provide any proper answer. We are, therefore, not in a position to issue any finding/s in this respect, which would be even otherwise inappropriate in the absence of the said matter having been set up before and examined by the authorities below. It may well be that the green-house, which is stated to be not representing a capital expenditure, is so, and to that extent, therefore, its claim for the same as revenue expenditure is not incorrect, e....