Ready to use is a prima facie requirement for claiming Depreciation and Interest u/s 36(1)(iii) rather than put to use.

Last updated: 12 January 2021

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The Income Tax Appellate Tribunal ruled that for claiming depreciation and interest under Section 36(1)(iii) of the Income Tax Act, an asset must be 'ready for use'. This is a prima facie requirement, meaning it's the initial and most important consideration. The ruling clarified that the asset doesn't necessarily need to have been actively 'put to use' during the relevant period, but it must be prepared and available for use.

Court :
ITAT Bangalore

Brief :
This appeal is filed by the assessee and the same is directed against the order of learned CIT (A) – 4 Bengaluru dated 30.11.2017.

Citation :
ITA No. 525/Bang/2018

IN THE INCOME TAX APPELLATE TRIBUNAL
“B” BENCH : BANGALORE

BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND
SMT. BEENA PILLAI, JUDICIAL MEMBER

ITA No. 525/Bang/2018
Assessment year : 2014 – 15

M/s Mantri Developers Private Limited,
#41, Mantri House,
Vittal Malya Road,
Bangalore – 560001
PAN : AAACG4009N
APPELLANT

Vs.

DCIT Circle – 4 (1) (2),
Bengaluru
RESPONDENT

Assessee by : Shree V. Srinivasan, Advocate
Revenue by : Shree Muzaffar Hussain, CIT DR

Date of hearing : 09.09.2020
Date of Pronouncement : 27.10.2020

O R D E R

PER ARUN KUMAR GARODIA, A. M.:

This appeal is filed by the assessee and the same is directed against the order of learned CIT (A) – 4 Bengaluru dated 30.11.2017.

2. The Grounds raised by the assessee are as under:-

1. The orders of the authorities below in so far as they are against the appellant, are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in upholding the disallowance in respect of depreciation claimed by the appellanton the building known as "Business ® Mantri" at Pune to the extent of Rs.9,65 57 179/- holding that the appellant has not put the aforesaid asset to use during the year under appeal under the facts and in the circumstances of the appellant's case.

To know more in details find the attachment file

FAQ :

The primary requirement is that the asset must be 'ready for use'. This is considered a prima facie condition.

No, the judgement clarifies that being 'ready for use' is the key requirement, rather than the asset having been actively 'put to use' during the period.

'Prima facie' means that 'ready for use' is the initial and most important consideration for claiming depreciation and interest.

The judgement discusses Section 36(1)(iii) of the Income Tax Act.