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2016 (5) TMI 158 - AT - Income TaxGrant of Depreciation on advertising hoarding structures - treated as‘Plant’ or ‘Building’ - Held that:- These hoarding structures which are permanent structures embedded in the building having foundation, which were constructed and erected by the assessee firm do not satisfy functional test and it cannot be said that these hoarding structures are tools or apparatus with which the assessee firm is carrying on the business rather these hoarding structures are building simplicitor which are constructed and erected by the assessee firm and which has been given for advertisement by the assessee firm to Creation Publicity Private Limited who in turn has given these hoarding structures to the entities for putting their advertisements on these hoarding structures. Thus, it cannot be said that these hoarding structures play any operative role as apparatus or tool in the carrying of the trade by the assessee firm or in the functioning of the assessee firm’s business but rather these hoarding structures constructed and erected by the assessee firm are building simplicitor constructed and erected for entities to put their advertisements and erected by the assessee firm for entities to put their advertisment. Thus, functional test also is not satisfied in the case of these hoarding structures and it cannot be treated as ‘Plant’ and are merely a ‘Building’ constructed and erected by the assessee firm which are given on commercial terms and conditions for ultimate user as a space by the entities who are desirous of putting their advertisement of products and / or services on these hoarding structures.Thus, in our considered view, these advertising hoarding structures which are permanent structures embedded in the building having foundation being erected and constructed by the assessee firm are in-fact ‘Building’ and the assessee firm is entitled for depreciation @ 10% Claim of interest by the assessee firm - Held that:- We have observed that the assessee firm has borrowed funds which were utilized for the purpose of its business. The assessee has made turnover of ₹ 54.23 lacs which was with respect to transactions with M/s Creations Publicity P. Ltd., assessee’s group concern and this is the only sale made by the assessee firm during the assessment year . The assessee firm stated that the said sale has been made based on commercial expediency. Thus we allow the claim of interest expenditure of the assessee company which was disallowed by the CIT(A) Allowance of hoarding expenses - treated as capital expenditure or revenue expenditure - Held that:- The assessee firm has undertaken repairs of the hoarding structures with respect to the existing structure. We find that the issue has already been decided in favour of the tax-payer by the co-ordinate Bench of this Tribunal in the case of Empress Advertising being sister concern of the assessee firm on identical facts and issue’s in the appeal to held the assessee is entitled to deduction on account of hoarding expenditure being in the nature of revenue expenditure.
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