Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 696 - AT - Income TaxAdditions towards income from other sources - estimation of net profit - claim of depreciation - Held that:- Once assessee himself has credited the income under the head “Income from other sources”, there is no merit in the assessee arguments that these items should be considered under block concept for claiming depreciation and to arrive at Written down Value as per section 50 of the Act. We further noticed that the assessee claims to have incurred a sum towards repair of the damaged excavator. Though assessee claims that it has incurred substantial amount for repair of the damaged excavator, the A.O. as well as the CIT(A) have failed to consider the fact that whether the said expenditure has been claimed as revenue in nature and debited to profit & loss account or capital in nature and added to the cost of the asset to claim depreciation. If the amount incurred towards repair of the vehicle is forming part of cost of the asset, then the assessee should have deducted the insurance claim from the block of asset. In this case, on verification of the depreciation schedule filed along with the return of income, we noticed that the assessee has not credited any amount in the depreciation schedule. At the same time, from the records, it cannot be ascertained that whether the expenditure is debited as a revenue expenditure or capital expenditure. Primafacia, from the entries in the financial statements, it appears that assessee has chooses to debit the relevant expenditure incurred towards repair of damaged Excavator to profit & loss account and credited the insurance claim into profit & loss account. However, in the absence of specific details and also the fact that both the authorities have failed to show any light on this aspect, we are of the opinion that the issue needs to be re-examined by the A.O. in the light of the above discussions. Hence, we set aside the issue to the file of the A.O. and direct the A.O. to verify the issue in the light of above discussion and pass fresh order after affording an opportunity of hearing to the assessee.
|