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2020 (12) TMI 442 - AT - Income TaxDisallowance u/s 43B - expenditure debited to pre-operative expenses - HELD THAT:- In this case, the facts brought out by the lower authorities which clearly indicate that the assessee has failed to justify the genuineness of expenditure with necessary evidence. Although the assessee claimed that it has deducted tax at source u/s. 194J of the Act on such expenditure while making payment, but mere making a TDS on said payment does not automatically prove the genuineness of expenditure - the assessee itself has claimed said expenditure as revenue in nature in the previous financial year and debited to pre-operative expenses. But, during the current financial year, it has changed its stand and capitalized to said plant and machinery as part of cost of asset. We are of the considered view there is no clarity in the accounting terms given by the assessee in so far as particular expenditure is concerned because it has given differential treatment for different financial years - we are of the considered view that the issue needs to be re-examined by the AO in the light of the claim of the assessee that said expenditure is part of cost of capital asset which is incurred in connection with acquisition/installation of plant and machinery. In case, it is part of acquisition of asset, then the AO is directed to verify and allow depreciation as per law. Disallowance of depreciation of fixed asset acquired during financial year 2012-13 and put to use during financial year 2013-14, according to AO - the assessee has acquired asset during financial year 2012-13 and claimed depreciation during financial year 2013-14. No doubt, there is no bar under the Act to claim depreciation on any asset which was acquired in earlier financial year, but the only point needs to be examined is when the particular asset is installed and put to use in the premises of the assessee. It was the claim of the assessee before the lower authorities that although the asset was acquired in financial year 2012-13 but the same was put to use on 01.01.2014 relevant to assessment year 2014-15. If the claim of the assessee is correct then the assessee is entitled for depreciation on particular asset from the date the said asset is put to use in the business of the assessee. But fact with regard to date of acquisition and date of asset put to use in the business needs verification from the AO - we are of the considered view that this issue also needs to be go back to the file of the AO for fresh consideration to examine the claim of the assessee and allow depreciation in accordance with the provisions of Section 32. Appeal of the assessee is allowed for statistical purposes.
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