TMI Blog2021 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... en though a general finding has been recorded - HELD THAT:- The mistake in the final Order of Assessment against which Ground No.14 was raised by the assessee was that instead of allowing ₹ 14,80,094/- as depreciation, the AO erroneously disallowed a sum of ₹ 1,49,65,386/- and added the said sum to the total income of the assessee. The Tribunal, while adjudicating the said issue, has rightly held in para 22 of its order that the AO should allow deduction of a sum of ₹ 14,80,094/- as depreciation instead of disallowing a sum of ₹ 1,49,65,386/-. There is no mistake much less a mistake apparent on the face of the record. These is no alternate plea and there could be only one plea i.e., to allow depreciation of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile passing the final order when the same was neither disallowed in the draft assessment order nor by the Hon'ble DRP. c. Notwithstanding and without prejudice to the above, the learned AO has erred in treating the lease rental payments made by the Appellant as capital expenditure. d. The learned AO has erred in not appreciating the fact that the Appellant has paid lease rentals towards fit-outs provided by the lessor. e. Notwithstanding and without prejudice to the above, the learned AO ought to have granted consequential allowance of depreciation should the claim of lease rental payments be treated as capital expenditure. 20. In the earlier AY i.e., AY 2010-11, the assessee had taken a premise on lease and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO, however, came to the conclusion that the payment was capital in nature and therefore cannot be allowed as a deduction. The same was accordingly added to total income of the assessee. The DRP on this issue concurred with the view of the AO that the expenditure in question was capital expenditure but however held that assessee can claim depreciation on the amount disallowed. On further appeal by the Assessee, the Tribunal remanded the issue to the AO for consideration afresh of the nature of expenses in the light of details of the expenses to be furnished by the Assessee. 22. In AY 2011-12 that is the Assessment Year which is subject matter of this appeal, the Assessee claimed depreciation on the Written Down IT(TP)A Nos. 403 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,49,65,386/- by treating the same as capital expenditure, the assessee had raised Grounds objecting to the disallowance, both on facts and on legal principles (Ground No 14 in the Form 36). As an alternate plea {Ground No. 14 (e)}, the assessee had raised the Ground that even if the lease rentals are to be treated as capital expenditure, consequential depreciation on the same is to be allowed. It is the plea of the assessee in this MP that while the order of the Tribunal has specifically ruled on the alternate plea of granting depreciation, the substantive issue that the disallowance of the lease rentals is to be quashed, both on facts and legal principles, does not appear to have been specifically adjudicated, even though a general findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction for lease rentals amounting to ₹ 1,64,45,484. The AO had disallowed the claim treating the same as capital expenditure. The DRP upheld the contention of the AO that the expenses are capital in nature, however treated the same as part and parcel of building and accordingly, directed the AO to grant depreciation on such expenses at the rate of 10%. Further to the directions of the DRP, the learned AO had granted depreciation on the leased rentals amounting to ₹ 16,44,548 for the AY 2010-11. Accordingly, the learned AO ought to have granted depreciation on written down value of leased rentals (capitalized) for the AY 2011-12 amounting to ₹ 14,80,094. Workings for computing the depreciation is provided in the table b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- Particulars Amounts(Rs.) Lease rentals 1,64,45,484/- Less: Depreciation for the A Y 2010-11 16,44,548/- Written Down Value as on April 1,2011 1,48,00,936/- Less: Depreciation for the A Y 2011-12 14,80,094/- Written Down Value as on April 1,2012 1,33,20,842/- Accordingly, disallowance of lease rental worked out at ₹ 1,49,65,386/- (₹ 1,64,45,480 - ₹ 14,80,094) and added to the total income. 8. Thus, the mistake ..... X X X X Extracts X X X X X X X X Extracts X X X X
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