TaxTMI 
TaxTMI 
2015 (7) TMI 117
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....30.09.2008 declaring loss of Rs. 2,88,64,295. Assessment in the case of assessee was originally completed under section 143(3) by order dated 06.12.2010 determining loss at Rs. 1,47,12,817. Subsequently, the A.O. reopened the assessment under section 147 of the Act vide notice issued under section 148 dated 29.08.2011. During the assessment proceedings, A.O. noticed that assessee has made the following payments without deducting tax at source. Rent Rs. 11,02,000 Transport Charges Rs. 36,47,987 Rent on Education Centre & District Offices. Rs. 33,79,135 Total Rs.1,07,14,603 3. Since the assessee had failed to deduct tax while making the aforesaid payments, the A.O. disallowed the expenditure claimed by applying the provisions of section 40(a)(ia) and added back the amount of Rs. 1,07,14,603 to assessee's income for the impugned assessment year. Being aggrieved of such disallowance, assessee preferred appeal before the Ld. CIT(A). Before the first appellate authority, it was submitted by the assessee that A.O. has not passed any order under section 201 treating the assessee as assessee-in-default and as such, no disallowance under section 40(a)(ia)....
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....ng to the issue in dispute are, assessee, as stated earlier, is engaged in the business of newspaper publication. Assessment in the case of the assessee was completed under section 143(3) of the Act by virtue of the order passed under section 143(3) of the Act on 06.12.2010 determining the loss at Rs. 1,47,12,817. Subsequently, as observed by the A.O. in the reasons recorded, during the audit scrutiny it was found that as per the Director's report the company has commenced its business on 27.10.2007. Whereas, the assessee has claimed depreciation for an amount of Rs. 3,45,43,794 which includes depreciation at the rate of 15% amounting to Rs. 76,87,348 on opening WDV of plant and machinery valued at Rs. 5,12,48,988 and depreciation @ 15% amounting to Rs. 1,51,015 on opening WDV on electrical equipment of Rs. 10,06,768. It was further observed that on all other assets, the assessee has claimed depreciation @ 50% of normal rate of depreciation as it is used for less than 180 days. From the aforesaid facts, the A.O. was of the opinion that the assessee having commenced its business only on 22.10.2007, it could not have used its assets before that date. Hence, assessee's claim of deprec....
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....07-2008 and the assets on which the depreciation has been claimed, form part of the opening balance of assets and therefore, disallowance of depreciation on the opening WDV was not correct. The learned A.R. submitted, though, assessee has not claimed any depreciation in the initial year of purchase, but it cannot prevent the assessee from claiming depreciation at the appropriate rate in the subsequent assessment year. It was also submitted that without disturbing the WDV of the assets of the earlier years, it will not be possible to change the WDV of its assets for the subsequent assessment year. In support of such contention, assessee relied upon the decision of Hon'ble Bombay High Court in the case of CIT-LTU vs. Silvasa Industries Ltd., (ITA.No.2583 of 2011 and others, Bombay High Court). 9. The Ld. CIT(A) after considering the submissions of the assessee however did not find merit in the same. She observed that when the formal inauguration of newspaper took place on 22.10.2007, the logical conclusion would be that assessee's business commenced with the formal inauguration. The Ld. CIT(A) also observed that assessee has not brought any evidence on record to establish its clai....
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.... assets on which depreciation has been claimed is put to use for less than 180 days. Ld. CIT(A) has also confirmed the view expressed by the Assessing Officer. At this stage, it will be appropriate to look into the relevant statutory provisions. As per section 32(1) of the Act, depreciation is allowable in respect of the capital asset owned wholly or partly by the assessee and used for the purpose of his business or profession. However, the second proviso to section 32(1) prescribes that if an asset is acquired by the assessee during the previous year and is put to use for the purpose of business or profession for a period of less than 180 days in that previous year, deduction under section 32(1) in respect of such asset shall be restricted to 50% of the amount calculated at the percentage prescribed for an asset. Thus, to qualify for full amount of depreciation, two conditions have to be satisfied as per second proviso to section 32(1). Firstly, the asset on which depreciation is claimed, must have been acquired by the assessee during the previous year and secondly, it must have been put to use for the purpose of business or profession for a period of more than 180 days. If we app....
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....relevant assessment year. The Hon'ble Kerala High Court in the case of CIT vs. Geo Tech Construction Corporation (2000) 244 ITR 452 held that if the asset on which depreciation is claimed is ready for use, then depreciation is allowable. While coming to such conclusion, the Hon'ble High Court observed that the word 'used' in section 32(1) is to be given a wider meaning. The Hon'ble Madhya Pradesh High Court in the case of CIT vs. Premier Industries (India) Limited (2010) 323 ITR 672 (M.P.) held that even if a machine is kept idle but is in a ready to use condition, then depreciation is allowable. The Hon'ble Madras High Court in the case of CIT vs. Chennai Petroleum Corporation Limited 358 ITR 314 held that if the machinery is ready for use but has not been actually used, still then assessee would be eligible for depreciation. Similar view has also been expressed in the following decisions i.e., (1) CIT vs. Oswal Agro Mills Ltd., 238 CTR 113 (2) CIT vs. Oswal Woollen Mills Ltd., 206 CTR 141 (P & H). Therefore, the principle of law which emerges from the aforesaid judicial precedents is to the effect that the term 'used' as employed in section 32(1) has to be given a wider meaning a....