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2013 (12) TMI 355 - AT - Income TaxDisallowance of depreciation of Rs. 36,43,57,347 under section 32 The assessee has claimed depreciation of Rs.36,43,57,347 on two dredgers, namely, Ta Lung and Ta Hsing - The aforesaid two dredgers were shown to have been purchased during the financial year 2007-08 relevant to the assessment year 2008-09 from M/s. Hung Huo Construction Co. Ltd., Taiwan and M/s. Jung Hsing Marine Construction Co. Ltd., Taiwan - Held that:- The agreement to sale stipulates that till the payment of last instalment the seller was vested with exclusive charge over the dredger - In case of default in payment of instalments or extension of bank guarantee the seller had the authority to terminate the agreement, take back possession of the dredger and forfeit the amount already paid - The assessee had no dominion over the dredger in exclusion of the seller before payment of the last instalment - The assessee not being the owner of the dredgers either wholly or partly is not entitled to claim depreciation on the dredgers Decided against assessee. Whether the instalment payment for purchase of asset be treated as hire charges - TDS u/s 195 Held that:- There is nothing on record to suggest that the dredgers were given on hire and the assessee paid hire charges of USD 7,00,000 per month for each dredger - Payment of USD 7,00,000 commencing from January, 2008 was towards monthly instalment of the purchase price payable for the dredgers Even assuming that USD 7,00,000 per month is towards hire charges, the same cannot be allowed as deduction in view of section 40(a)(i) as the assessee has not deducted tax at source as per the provision contained under section 195 of the Act - Decided in favour of Revenue.
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