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2018 (6) TMI 1823 - ITAT AHMEDABADDisallowance of depreciation on the amount of cost of plant & machinery incurred as reimbursement to Gulbrandsen Chemicals Inc., USA - as alleged that the assessee has neither reduced the amount form the cost of asset nor disallowed the depreciation - HELD THAT:- We find that the expenditure were pertaining to professional fees for setting-up of the Plant and the travelling cost of the Architects etc. which were incurred by Gulbrandsen Chemicals Inc., USA, and were paid by it on behalf of the appellant to external third parties during the period from 2000 to 2002. We noticed that before the AO that it had set-up its Plants during the period of 2000 to 2002 in India. As per the appellant in this phase, it had very limited organizational and functional resources and therefore Gulbrandsen Chemicals Inc., USA assisted it in Plant set up phase engaging external service providers (such as Plant Consultant, Architect etc.). We hold that any expenditure incurred in relation to creation of a capital asset should be capitalized to the relevant asset. Appellant accordingly it also capitalized the amount of Rs. 1,42,66,483/- spent for setting up of the Plants to the respective plants account in FY 2006-07 when it received debit notes from Gulbrandsen Chemicals Inc., USA for such reimbursement. They made the payment. A.O. has invoked Section 43A on the basis of misconception in as much as receipt was for reimbursement from the company and same was the debit to the company and this aspect is not disputed. On account of aforesaid discussion, we allow the appeal of the appellant and direct the A.O. to allow excess depreciation - We allow this ground of appeal.
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