DCIT, NEW DELHI vs. M/S. CENTRAL WAREHOUSING CORP., NEW DELHI

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ITA 1459/DEL/2014Status: DisposedITAT Delhi29 July 2016AY 2000-014 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that depreciation is an allowance, not an expenditure, for the purpose of Section 10(29). Therefore, it should not be excluded from gross receipts when computing the deductible income.

What were the facts?

The Department appealed against the CIT(A)'s decision regarding the computation of deductible income under Section 10(29). The core issue was whether depreciation should be excluded as an expenditure when calculating this deductible income.

What were the issues?

Whether depreciation is to be treated as an expenditure or an allowance when computing deductible income under Section 10(29) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 10(29)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI O.P. KANT

ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: These bunches of five appeals have been preferred by the Department on identical issue and the grounds are also common. We reproduce grounds of appeal in for a ready reference. The grounds read as under:

1. “On the facts and in the circumstances of the case, the ld. CIT (A) has erred in law and on facts in holding that the deductible income u/s 10(29) is to be computed after excluding depreciation as part of expenditure and taking gross receipts from warehousing and CFS/ICD ignoring the fact that depreciation is claimed like any other business to 1459/D/14 Page 1 of 3 Central Warehousing Corp.

expense in the P&L account which goes on to reduce the tax liability of the assessee. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

2.

The short question which needs adjudication is that whether the deductible income u/s 10(29) of the I.T. Act, 1961 is to be computed after excluding depreciation as part of the expenditure and taking gross receipts from warehousing and CFS/ICD or not.

3.

The Ld. AR submitted that the issue is covered in favour of the assessee by the decision of the Apex Court in Nectar Beverages P. Ltd. vs. DCIT 314 ITR 314, wherein the Hon’ble Apex Court has held that the depreciation is an allowance and not expenditure.

4.

The Ld. CIT DR placed reliance on the order of the AO and submitted that the Ld. CIT (A) has wrongly ignored the fact that depreciation was like any other business expense which goes on to reduce the tax liability of the assessee.

5.

We have heard the rival submissions and also perused the relevant records.

It has been held in the case of Hoshang D. Nanavati in that Section 14A deals only with the expenditure and not any statutory allowance ITA Nos. 1455 to 1459/D/14 Page 2 of 3 Central Warehousing Corp. admissible to the assessee. The decision was arrived at after considering the decision in the case of Nectar Beverages P. Ltd. vs. DCIT (2009) 314 ITR 314.

This decision was approved by the ITAT Ahmedabad Special Bench in Vishnu Anant Mahajan vs. ACIT in ITA No. 3002/Ahd./2009, wherein the Special Bench held that depreciation was an allowance and not expenditure. The Ld. CIT (DR) has not been able to displace the ratio of these cases. Thus, on consideration, we find that for the purpose of Section 10(29) depreciation does not par take the character of expenditure for the purposes of apportionment. Therefore, we are in agreement with the findings of the Ld. CIT (A) on this issue and we decline to interfere.

6.

In the result, all the five appeals of the Department are dismissed.

Order pronounced in the open court on 29/07/2016

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