TMI Blog2014 (3) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... entitles the assessee to claim depreciation - all expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset - The definition of depreciation has been misconstrued for the purpose of allowing deduction by the Assessing Officer and the CIT(A) in holding a view on the promulgation of Section 32(1)(ii) with effect from the year 1998-99 which has been further amended w.e.f. Assessment Year 2003-04 – thus, the assessee is entitled to depreciation as charged to the P & L account in accordance with its business exigencies – Decided in favour of As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,459. That in course of scrutiny Assessment, the A.O disallowed the claim of depreciation of Rs. 14,05,500, claimed on fixed assets Land , taken on lease from OMC on the ground that the rate of depreciation so claimed is lower than the provision under Sec.32(1)(ii) of the I T Act. That the percentage so fixed for claim of Depreciation under the provision which is at the border, and Act does not permit to cross the same, and in such case the A.O have power to disallow the extra claim, but in case of the assessee, depreciation claimed at a lower side which would have no impact on Govt. revenue and the A.O is biased on the matter. 4. Aggrieved, the assessee appealed before the CIT(A) and the learned CIT(A) on the assessee s contention tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 35E which was not the case of the assessee. The agreement entered into in 1993 was as per the Government Notification handed over to the assessee in 1999 therefore could not affect the provision which explanation rather clarifies the stand taken by the assessee that the depreciation could be charged after 1999-2000 when the actual shortage of claiming of depreciation u/s.32(1)(ii) has been computed by the Assessing Officer when he held that it has been short claimed in the impugned Assessment Year. This reasoning has been taken as assessee s inability to substantiate the claim which was not the case of the assessee in the first place. Depreciation is a charge to the P L account and it has to be in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee may kindly be directed to be allowed. On the issue of direction by the learned CIT(A) totheA.O.to verify the claim of deduction/s.80G,heproduced the receipts for acknowledging donation allowable u/s.80G, which maybe allowed accordingly. 6. The learned DR supported the order of the authorities below. He submitted that intangible assets have to be recognized with the tangible assets for the purpose of claiming depreciation which has not been established or substantiated by the learned Counsel for the assessee as of now. The Assessing Officer was apprised of the fact that the depletion in the land cannot be allowed as depreciation u/s.32(1)(ii). The learned CIT(A) therefore was justified in holding a view that the claim of depreciation h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of its main business. All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset. The definition of depreciation therefore has been misconstrued for the purpose of allowing deduction by the Assessing Officer and the learned CIT(A) in holding a view on the promulgation of Section 32(1)(ii) with effect from the year 1998-99 which has been further amended w.e.f. Assessment Year 2003-04. In this view of the mater, we are inclined to hold that the assessee is entitled to depreciation as charged to the P L account in accordance with i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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