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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
Per Chandra Poojari, Accountant Member
This appeal by the revenue is directed against the order dated 31.7.2019 of the CIT(Appeals)-2, Bengaluru for the assessment year 2004- 05 on the following grounds:-
“a. In the facts and circumstances of the case, the Hon'ble CIT(A) has erred in granting adjustment to the taxpayer on account of accelerated depreciation charged in their books of account.
IT(TP)A No.2328/Bang/2019 Page 2 of 3 b. The Hon'ble CIT(A) has erred in on the ground that AO/TPO has not raised any objection to admission of the additional depreciation as additional evidence. c. The Hon'ble CIT(A) has erred in granting adjustment on depreciation when the taxpayer's profit margin even before the depreciation claim is not at arm's length. d. The Hon'ble CIT(A) has erred in granting depreciation adjustment without considering three years data of the taxpayer and the comparable companies as the effect of change in the rate of depreciation would be there for more than one year.”
After hearing both the parties, we are of the opinion that the issue is covered by the decision of this Tribunal in the case of Outsource Partners International (P) Ltd. [ 2017] 87 taxmann.com 332 (Bang. Trib.) wherein it has been held that the depreciation adjustment is to be granted whereby the rates of depreciation is different vis-à-vis the comparable companies. Further as regards whether adjustment should be made in the hands of the tested party i.e., the assessee or the comparable companies, the Mumbai Tribunal decision in the case of Pangea3 & Legal Database Systems (P) Ltd. v. ITO, [2017] 79 taxmann.com 303 (Mum Trib.) held that where rates of depreciation were different in case of assessee and comparable companies, Rule 10B(1) permits an adjustment in the hands of the tested party also and depreciation adjustment has to be allowed.
Being so, the CIT(Appeals) followed the ratio laid down by the above decisions of the ITAT and we do not find any infirmity in the order of the CIT(Appeals) on this issue. Accordingly, the grounds raised by the revenue are rejected.
IT(TP)A No.2328/Bang/2019 Page 3 of 3
In the result, the appeal by the revenue is dismissed.
Pronounced in the open court on this 17th day of February, 2022.