What did the Tribunal hold?

The Tribunal found that the opening WDV for the current year matched the closing WDV for the preceding year based on the provided financial documents. Therefore, the excess depreciation claim was justified.

The assessee claimed excess depreciation due to a discrepancy in the opening and closing Written Down Value (WDV) of assets. The assessee argued that the WDV figures were actually consistent, with the difference arising from assets put to use for the first time in the current year.

What were the issues?

Whether the assessee's claim for excess depreciation was valid, considering the stated WDV figures and the commencement of business operations.

Sanjay Kumar Agrawal, Kotma vs ACIT | s.144 | ITAT Jabalpur 2022

Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR

Before: SHRI SANJAY ARORA, HON’BLE & SHRI MANOMOHAN DAS, HONBLE

For Appellant: Shri Sapan Usrethe, Advocate

For Respondent: Shri Ravi Mehrotra, Sr.DR

Hearing: 13/06/2022Pronounced: 15/06/2022

Per Sanjay Arora, AM

This is an Appeal by the Assessee directed against the Order by the National Faceless Appeal Centre-NFAC (‘CIT(A)’ for short), dated 29/10/2021, dismissing the assessee’s appeal contesting his assessment under section 144 of the Income Tax Act, 1961 (‘the Act’, hereinafter) dated 04/12/2018 for Assessment Year (AY) 2016-17.

The appeal was heard on 27/05/2022 on the aspect of condonation of delay; the appeal being time barred by 50 days. Subsequently, vide order dated 02/06/2022, the delay was condoned in view of the decision by the Apex Court in (AY: 2016-17) Sanjay Kumar Agrawal v. Asst. CIT M.A.No. 21/2022, dated 10/01/2022 (in suo motu WP 03/2020), and the appeal accordingly fixed for being heard on merits.

3. The sole issue arising in this appeal is disallowance of the alleged excess depreciation claimed by the assessee in view of the opening WDV of his block of assets being in excess of the closing WDV for the immediately preceding year, being at Rs. 1,82,01,187 and Rs.26,27,821 respectively, so that the assessee had claimed excess depreciation on the differential sum of Rs. 1,55,73,366, resulting in disallowance of Rs.16,73,788. During hearing, with reference to the material on record, i.e., the assessee’s income tax return for the immediately preceding year (PB pgs. 37-40); the audited balance sheet for that year (PB pgs.41,42); and the audited balance sheet for the current year filed along with its return of income (PB pgs.16-32), Sh. Usrethe, the ld. counsel for the assessee, would exhibit that there is in fact no difference between the closing WDV for the immediately preceding year (31/03/2015) and the opening WDV (on 01/04/2015) for the current year (AY 2016-17). The figures for both of them, at a total of Rs. 1,82,01,187, are as under:

Block of assets @15% - Rs. 24,91,500 Block of assets @30% - Rs. 23,63,524 Computer @60% - Rs. 13,153 Building @10% - Rs. 1,10,59,000 Fixtures @10% - Rs. 22,74,000 The apparent difference has been on account of fact that the assessee had not claimed depreciation on building, furniture and fixtures and, indeed, plant and machinery (at Rs. 22,30,515), being assets of it’s hotel business, which had been put to use for the first time for the current year. This is as the hotel business commenced only from the current year, even as the WDV thereof has been clearly reflected in the net block of fixed assets as well as his balance-sheet as on 31/03/2015, submitted in the return form itself, being at Rs. 1,82,01,187.

(AY: 2016-17) Sanjay Kumar Agrawal v. Asst. CIT

We have, in satisfying ourselves as to the veracity of the assessee’s claims, as apparent, not relied on any document which is not already on record of the Revenue. The ld. Sr. DR also could not raise any objection to the said matching of the figures, demonstrated by Shri Usrethe during the hearing itself.

Under the circumstances, and in view of our finding, based on the material on record, we see no reason not to allow the assessee’s appeal, who accordingly succeeds. We decide accordingly.

In the result, the assessee’s appeal is allowed.

Order Pronounced in open Court on June 15, 2022

SANJAY KUMAR AGRAWAL,KOTMA vs. ACIT,CIRCLE,KATNI, KATNI

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