Roads Highway was a building & not a plant for the purpose of claiming depreciation

Whether  Bypass Toll Road Highway was a building and not a plant for the purpose of claiming depreciation?

Toll road was treated as building for the purpose of claiming depreciation @ 10% and not as a plant irrespective of the facts that assessee has sole object of construction of roads and highways.

In the case of Moradabad Toll Road Co. Ltd. Versus ACIT – DELHI HIGH COURT  Continue reading

Depreciation & interest deductable even where the profit of assessee is determined on percentage basis

Even if the income is determined on estimated percentage basis under section 144 by AO on account of “books of account” were disbelieved, the benefit of claiming depreciation and interest cannot be denied if proof of purchase of machinery and other items and payment of interest is available with assessee.

The Commissioner of Income Tax Versus Y. Ramachandra Reddy – ANDHRA PRADESH HIGH COURT

The respondent is a civil contractor, and is an assessee under the Act. He submitted returns for the Assessment Year 1994-95 declaring loss of Rs.15,24,198/-. Thereafter, revised returns were filed showing enhanced figures of loss, being Rs.93,11,879/-. The Assessing Officer issued notice to the respondent. The books of account were not believed and obviously, by taking recourse to Section 144 of the Act, the Assessing Officer passed an order to the effect that the total receipts are to the tune of Rs.9,52,52,636/- and net profit at 9%, works out to Rs.85,72,737/-. A sum of Rs.1,49,294/- was added towards miscellaneous receipts. AO took the view that since the profit is determined on estimation basis, deduction of depreciation or interest would not be allowed. Continue reading

Civil construction & installation cost eligible for windmill depreciation 80%

Civil construction & installation cost incurred for setting up the windmill is a integral part of windmill and same is also eligible for windmill depreciation at the rate of 80%.

In the case, The Dy. Commissioner of Income Tax Versus Aminity Developers & Builders -ITAT PUNE

The assessee has installed turbine in the wind mill and aggregate cost of turbine incurred is Rs. 7,41,56,986/- and claim windmill depreciation at the rate of 80% on aggregate cost.

The total cost of the wind mill after segregation is as under :

1. Cost of Turbine                                                  Rs.5,64,40,792/-
2. Cost of Civil Construction                                    Rs.52,23,108/-
3. Installation and Commissioner                             Rs.1,23,93,086/-

In the opinion of the A.O, the depreciation is to be allowed at 10% on the civil work and 15% on the erection and commissioning work treating such expenses in the block of building and plant & machinery respectively as against claim of 80% made by assessee. Continue reading