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2023 (1) TMI 1212 - AT - Income TaxDisallowance of depreciation on purchase of assets from its holding company - HELD THAT:- CIT(A) has recorded a finding that though the transfer of assets was between holding company and subsidiary company, the exemption provided u/s 47 was not availed by the transferor company and the transferor company has offered capital gains on such transfer - we notice that the fifth/sixth proviso as the case may be, relates to the case of apportionment of depreciation between the transferor-company and transferee company. We also agree with the analysis made and decision given by CIT(A) holding that the provisions of Explanation 4A, 3 and 6 of Sec.43(1) shall not be applicable to the facts of the present case. The provisions of sec. 43(6)(c)(i)(C) was related to the computation of WDV and it is not applicable, since the assessee has purchased the assets in the hands of seller. We are of the view that the Ld CIT(A) was justified in holding that the assessee is entitled to claim depreciation on the purchase cost. Disallowance of depreciation on the claim of site restoration cost - We are of the view that the depreciation on site restoration cost is not allowable as deduction. Accordingly, we are of the view that the Ld CIT(A) was not justified in allowing depreciation on site restoration cost. Accordingly, we reverse the order passed by Ld CIT(A) on this issue and restore the disallowance made by the AO on site restoration cost. Depreciation claim relates to the disallowance of depreciation on new assets for want of evidences - HELD THAT:- We notice that the AO had made the disallowance of depreciation on the new additions without discussing anything in the assessment order. Only in the remand report, the AO has stated that the assessee did not produce bills. The submission of the assessee before CIT(A) was that the number of towers installed by TTSL on its behalf during November, 2007 to Feb. 2008 was 6603 and the assessee has installed 879 new towers. It is submitted that the materials are purchased in bulk and kept in ware houses. The materials were issued to the construction sites as per the requisition. It is also submitted that the assessee keeps track of goods received and goods issued (GR-GI) for the entire addition of fixed assets and each invoice can be tracked to GR-GI. The assessee being a limited company, its accounts are audited and hence the purchase of materials could not be doubted with. As noticed earlier, the assessee contends that the receipt and issue of materials could be tracked by it in its computer systems. The number of new towers added by the assessee during the period from November, 2007 to March, 2008 was not disputed. Hence the new towers added would definitely have corresponding cost. CIT(A) has observed that the assessee could bring 100 binders before him. Accordingly, under these set of facts, we are of the view that there is no reason to suspect the addition of new towers worth Rs.223.41 crores. Accordingly, we are of the view that the assessee would be entitled for depreciation claimed on the above said amount. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance of the same. TDS u/s 194C - Disallowance made u/s 40(a)(ia) of the Act - A.R contended that the supply of security personnal does not involve “carrying on of any work” including supply of labour for ‘carrying out any work’ - HELD THAT:- In the instant case, the security charges involve supply of manpower only and the same does not involve “carrying on of any work” within the meaning of the definition of the term “work” given in the Explanation III. Hence we are of the view that the provisions of sec.194C are not attracted for expenses claimed as “security charges”. Supply of manpower may not fall under the provisions of sec. 194J relating to “professional fees”. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the additions made u/s 40(a)(ia) relating to security charges. The balance amount of addition excluding two items, viz., tower rents and security charges are related to Repairs and maintenance - P & M, Rent, Repairs and Maintenance, Legal & Professional Expenses, Interest and Others The assessee did not show as to how the provisions of tax deduction at source are not applicable to the above said remaining amounts. Accordingly, we confirm the disallowance made u/s 40(a)(ia) of the Act in respect of above said items.
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