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2020 (8) TMI 128 - AT - Income TaxDisallowance of depreciation on hawala purchase of machines - Whether should be restricted to the proportionate depreciation by applying reasonable Gross Profit rate on such alleged hawala purchase transactions? - HELD THAT:- GP rate in the extant hawala transactions is 15% and the assessee actually purchased machinery at 85% of the declared value, for which the bills were obtained for 100%. In that view of the matter, purchase value of the machines will get reduced to 85% instead of 100% and the claim of depreciation on such excess of 15% will be disallowed in the year under consideration and all the subsequent years. Addition of ₹ 59,38,955/- as having been made and confirmed u/s 69 of the Act, is unwarranted. The same is accordingly deleted. In so far as the disallowance of depreciation of ₹ 4,45,420/- is concerned, we direct to restrict it by reducing the actual cost of such machines by 15% from ₹ 59,38,955/- to ₹ 50,48,111/- and accordingly disallow the depreciation on the excess amount of ₹ 8,90,844/-. - Decided partly in favour of assessee.
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