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| The Tax Publishers2021 TaxPub(DT) 0394 (Del-Trib) INCOME TAX ACT, 1961
Section 32
Where the assessee company was not using the assets for self use and assets were hired out for a fixed period, the assessee was entitled to depreciation on owned assets which were rented out to a third party for manufacturing purposes.
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Depreciation - Allowability - On rented assets -
Assessee claimed depreciation on the assets owned by it but which were rented out in the premises of a third party toll manufacturer. During the course of assessment proceedings the AO noted from the depreciation table as per I.T. Chart filed with the return of income that the assessee company has claimed depreciation of Rs. 2,96,50,443 on rented assets. He, therefore, asked the assessee to explain the justification for the same and asked the assessee to explain as to why the same should not be added to the total income by following the order of the preceding assessment years. It was submitted by the assessee that similar addition made during the preceding year was deleted by the Commissioner (Appeals). However, revenue disallowed the same citing that these were rented out or virtually sold to the third party and since assessee was not in possession of the same the depreciation deserves to be disallowed. On appeal, Commissioner (Appeals) held in favour of the assessee. Held: The assessee was entitled to depreciation on owned assets which were rented out to a third party for manufacturing purposes applying assessee's own case of earlier year.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2011-12 & 2012-13
IN THE ITAT, DELHI 'I-1' NEW DELHI BENCH
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