2014 (4) TMI 1049

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....depreciation claimed on leased plant& machinery. 2. On the facts and circumstances of the case and in law, the ld CIT(A) had erred in restricting the addition of Rs. 21,97,918/- to the extent of Rs. 11,69,091/- made on account of disallowance of expenses not essential for the business. 3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing." 3. The brief facts of the case are as follows. The assessee company is a Govt. company. The assessee company could not carry out any business in the year under consideration and has only received rental and interest receipts. The assesse, M/s. Indian Vaccine Corporation Limited (hereinafter referred to as IVCOL), was incorporated as a compa....

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.... Aggrieved by the said order of the ld CIT(A) the revenue is before us. 5. The ld DR relied on the assessment order and contended that the lessee company has not used the plant and machinery of the assessee company for the purpose of business in the relevant assessment year. Therefore the ld DR contended that the Assessing Officer rightly disallowed the expenditure of Rs. 89,72,224/- and he prays that the order of the Assessing Officer may be restored. 6. On the other hand the ld AR Mr. Gautam Jain, contended that the Assessing Officer ought to have allowed the depreciation in view of the explicit provision of section 56(ii) read with section 57(ii) and section 32 of the Act. According to Mr. Gautam Jain, the Assessing Officer has fac....

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....01.01.2009 to 31.03.2009. According to the ld AR, the Assessing Officer did not allow the claim for depreciation of the leased plant and machinery, curiously by holding that the same was not allowable since plant and machinery has not been used by the lessee company and it is not been used for the purpose of business of assessee. This erroneous reasoning of the Assessing Officer was later rectified by the ld CIT(A) in the appellate proceedings, so according to ld AR, the impugned order should not interfered with. 7. We have heard both the sides and have perused the records and have gone through the case laws brought to our notice. Before we proceed further we would like to go through relevant section 56 and 57. Let us look into the secti....

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.... A perusal of the of the above provisions makes it explicitly clear that when the income was received from leasing out of plant and machinery; on the said rental income the assessee shall be eligible inter-alia to claim deductions u/s 32(1) of the Act. In the light of the above express provisions of the Act, the assessee is entitled to claim depreciation on plant and machinery. Since, there is no dispute on the fact that the assessee owns the asset and had rented out the said assets, i.e., plant and machinery and the rental income has been duly brought to tax by the assessee, the assesse is entitled to depreciation. In the light of express provision of law, disallowance made of Rs. 89,52,989/- representing depreciation on plant and machiner....