Depreciation on Assets is allowed, when such assets are kept ready for use - ITAT Delhi.

Last updated: 25 January 2021

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The Income Tax Appellate Tribunal (ITAT) Delhi Bench has ruled that depreciation can be claimed on assets that are purchased and kept ready for use, even if they haven't commenced commercial production. The tribunal considered machinery purchased late in the financial year, which was installed, commissioned, and even trial-run by engineers, as eligible for depreciation.

Court :
ITAT New Delhi

Brief :
The aforesaid appeal has been filed by the assessee against the impugned order dated 07.09.2017 passed by Commissioner of Income Tax (Appeals)-XXXV, New Delhi forthe quantum of assessment passed u/s. 143(3) for theAssessment Year 2013-14. In the grounds of appeal, the assessee has raised grounds as under:

Citation :
I.T.A. No.6965/DEL/2017

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “C” NEW DELHI

BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
SHRI O.P. KANT, ACCOUNTANT MEMBER

I.T.A. No.6965/DEL/2017
Assessment Year 2013-14

Garg Acrylic Ltd.,
A-50/1, Wazipur Industrial
Area, Delhi,
New Delhi.
TAN/PAN: AAACG3332N
(Appellant)

vs.

DCIT, Circle-10(1),
New Delhi.
(Respondent)

Appellant by: Shri Ashwani Kumar, CA & Shri
Rahul Chaurasia, CA
Respondent by: Shri Gurmil Singh, Sr.DR

Date of hearing: 06 01 2021
Date of pronouncement: 22 01 2021

O R D E R

PER AMIT SHUKLA, J.M.:

The aforesaid appeal has been filed by the assessee against the impugned order dated 07.09.2017 passed by Commissioner of Income Tax (Appeals)-XXXV, New Delhi forthe quantum of assessment passed u/s. 143(3) for theAssessment Year 2013-14. In the grounds of appeal, the assessee has raised grounds as under:

“1. The Ld. CIT(A) erred in confirming the disallowance ofDepreciation claimed on the machineries purchased at the endof the year amounting to Rs. 36,35,372/-.

a) Because the assessee has submitted bills of machinerypurchased on 26.02.2013 which were installed on 30.03.2012by engineers of Voltas Ltd. a unit of Tata and the proof of visitfor installation and commissioning of engineers weresubmitted, thus the machine was not only installed & commissioned but also subjected to trial run by Engineers of TATA, that was ignored by the ld. CIT(A).

To know more in details find the attachment file

FAQ :

Yes, according to the ITAT Delhi ruling, depreciation is allowed on assets that are purchased and kept ready for use, even if they have not yet started commercial production.

The ruling specifically considered machinery purchased by the assessee.

The assessee provided bills for the machinery purchase and proof of installation and commissioning by engineers, including evidence of a trial run.

No, the tribunal determined that the asset only needed to be ready for use, not necessarily in commercial production, to be eligible for depreciation.