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2018 (1) TMI 978 - AT - Income TaxDisallowance on account of depreciation - assessee has ceased to carry on its business - Held that:- It is not the case of the revenue that the assessee has ceased to carry on its business permanently. It is only a case of temporary lull in the business against which the machineries were not put to use. On introduction of concept of block assets the provisions of section 32 of the Act by the Tax Laws (Amendment) Act, 1986, which came into force w.e.f 1-4-1980 the concept of usage of asset(s) for the purpose of claiming of depreciation has become redundant. Several decisions cited by the assessee before the CIT-A clearly permits the allowance of depreciation, when the machineries are kept for ready to use. On perusal of the case laws relied on by the assessee before the CIT-A, in our opinion that the CIT-A has rightly appreciated the facts and has rightly come to the conclusion that the assessee is entitled to claim the deprecation and accordingly, directed the AO to delete the impugned addition - Decided against revenue Disallowance on account of interest - loan for non business purpose - Held that:- As clear from the findings of the CIT-A that the term loan and working capital loan both were availed by the assessee. The assessee used only interest bearing loan for the purpose of business i.e term loan used for acquiring plant & machinery and working capital loan used for working capital, which has been demonstrated by the assessee. Therefore, the disallowance on interest for non business purpose is totally erroneous and unjustified. This disallowance cannot be sustained. The existence of own fund of the assessee is far better than the advances given by the assessee. The decisions as relied on by the CIT-A clearly supports the case of the assessee. Therefore, the CIT-A was justified in directing the AO to delete the addition - Decided against revenue
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