Assessee denied depreciation under s.32 for non-ownership of common infrastructure; refundable contributions amortised 5% annually as revenue

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The HC affirmed that the assessee is not entitled to depreciation under s.32 because it did not become an "owner" (wholly or partly) of the common infrastructural assets; a long-term leasehold or usage right does not satisfy statutory ownership required for claiming depreciation. The court upheld the disallowance of depreciation but held that the contribution towards infrastructure is not a capitalizable enhancement of building; instead, given contractual refundability diminishing at 5% per annum, the amounts must be amortised and treated as revenue deductions to the extent they crystallise (5% per annum) when they become non-refundable. The Tribunal's rejection of the revenue claim was disturbed to that extent; overall decision on depreciation was against the assessee.....