TMI Blog2017 (3) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... provement to the building and the expenditure on construction is incurred by the assessee, that assessee would be entitled to depreciation to the extent of any such expenditure incurred. The construction was made by the firm. It is a different thing that the assessee had reimbursed the amount. The construction was not carried out by the assessee himself. Therefore, the explanation also would not come to the aid of the assessee - Claim of depreciation not allowed. - Civil Appeal No. 3360 of 2006 - - - Dated:- 8-3-2017 - Mr. A.K. SIKRI AND Mr. ASHOK BHUSHAN JJ. For the Appellant : Mr. Utkarsh Shrivastava, Adv., Mr. R. Gopalakrishnan, Adv., For the Respondent : Mr. Rana Mukherji, Sr. Adv., Mr. S. A. Haseeb, Adv., Ms. Rashmi Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire cost of construction of the building should be borne by the company. The relevant clause in the agreement reads: The hospital building shall belong to the company on the company taking possession thereof; but however that the firm has and will have a lien on the hospital building and on any improvements or additions thereto until the money owing by the company to the firm by virtue of this agreement is fully paid off . The company took possession of the building on its completion on 18.12.1991 and is running the hospital therein with effect from 19.12.1991. The accounts of the company have been debited with the cost of construction of the building, i.e., ₹ 1,37,83,149.83. The accounts of the firm have also been credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not become the owner of the property in question in the relevant assessment year and, therefore, rejected the claim of depreciation. Appeal preferred by the assessee-company before the Commissioner of Income Tax (Appeals) met with the same fate. However, in further appeal before the Income Tax Appellate Tribunal (ITAT), the appellant succeeded. This success, however, was proved to be only of temporary nature inasmuch as the appeal of the Revenue against the order of the ITAT filed under Section 260A of the Income Tax Act before the High Court was allowed setting aside the aforesaid order of ITAT. The High Court has held that the assessee had not become the owner of the property in question in the relevant assessment year and clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this clause shall apply as if the said structure or work is a building owned by the assessee. As is clear from the plain language of the aforesaid explanation, it is only when the assessee holds a lease right or other right of occupancy and any capital expenditure is incurred by the assesee on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension of or improvement to the building and the expenditure on construction is incurred by the assessee, that assessee would be entitled to depreciation to the extent of any such expenditure incurred. In the instant case, records show that the construction was made by the firm. It is a different thing that the assessee had reimburs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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