2015 (12) TMI 1229 - AT - Income Tax

Addition made on account of excess depreciation claimed by assessee - AO has disallowed the depreciation of assessee by treating the transaction as sale of building and plant & machinery inbuilt therein - CIT(A) deleted the addition - Held that - The assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee s case as decided by the ITAT to held DR could not produce any evidence in support of the contention that the space sold by the assessee was inclusive of plant and machinery. Respectfully following the order of the Tribunal in assessee s own case we are inclined not to interfere with the order of Ld. CIT(A) - Decided against revenue Addition on account of payment of gratuity - CIT(A) deleted the addition - Held that - Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account it can be inferred that the expenditure has actually been incurred by assessee. Hence we confirm the order of Ld. CIT(A).- Decided against revenue

Summary

Issues:
1. Excess depreciation claimed by the assessee.
2. Addition made on account of gratuity payment.

Analysis:
Issue 1:
The Revenue appealed against the deletion of the addition made by the Assessing Officer (AO) regarding excess depreciation claimed by the assessee. The assessee, a software technology park developer, had acquired land and constructed commercial towers in Kolkata. The AO disallowed excessive depreciation claimed by the assessee due to the sale of a portion of the property without adjusting the consideration received from the closing Written Down Value (WDV) of depreciable assets. The AO recalculated depreciation based on the sale value, disallowing a total of Rs. 33,58,453. The assessee contended that the WDV of the property sold to one party had been adjusted, and for another party, the property was not part of fixed assets. The Commissioner of Income Tax (Appeals) agreed with the assessee, citing a previous Tribunal order in favor of the assessee. The Tribunal upheld the CIT(A)'s decision, stating that the apportionment made by the AO was unjustified, as the assessee had correctly deducted the sale proceeds from the building block. The Tribunal found no infirmity in the CIT(A)'s order, dismissing the Revenue's appeal.

Issue 2:
The second issue involved the addition made by the AO on account of gratuity payment, which was deleted by the CIT(A). The AO disallowed a gratuity expense of Rs. 46,731 as the gratuity fund was not approved. However, the CIT(A) deleted the addition, noting that the payment was made when the employee left the organization and was recorded in the regular books of account. The Tribunal confirmed the CIT(A)'s decision, stating that since the expenditure was actually incurred by the assessee and recorded properly, the addition made by the AO was unwarranted. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order.

In conclusion, the Tribunal dismissed the Revenue's appeal on both issues, affirming the CIT(A)'s decisions regarding excess depreciation claimed by the assessee and the addition made on account of gratuity payment.