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Appeal of the Assessing Officer against deletion of disallowance u/s 14A of the Act of Rs. 2,12,74,766/-.

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Section 32 of Income Tax Act, 1961—Depreciation — Block of the assets is to be reduced by the monies payable in respect of any asset falling within that block which is sold or discarded or demolished or destroyed during the previous year.

Facts: CIT(A) has erred in confirming addition on account of claim of depreciation on building and disallowance has been confirmed rejecting the contention of assessee that building has not been transferred during the year, therefore depreciation on the same is allowable during the year.

Held, that assessee has received the total sale consideration of Rs. 2 crores only on 11/7/2012 and five shares of that society has also been transferred prior to execution of sale deed. The sale deed was executed on 12/7/2012. Thus it is apparent that full value of the consideration was received by assessee before executing sale deed on 12/7/2012. Merely because the seller agreed to pay and discharge the outstanding dues and liabilities in respect of the share in the premises , it does not amount that the assessee has not transferred/sold the property during the year. Now issue here is the claim of the depreciation on the block of the “building? owned by the assessee and used for the purposes of the business of the assessee on which depreciation is claimed. Depreciation is allowable to the assessee on the written down value which is defined under section 43 (6) . According to the subsection 43(6)( C ) (i)(b) the block of the assets is to be reduced by the monies payable in respect of any asset falling within that block which is sold or discarded or demolished or destroyed during the previous year. Therefore, definitely assessee has sold during the year this immovable property by which the written down value of the block of the asset should be reduced. Now the question is whether it should be reduced by the value as determined under section 50C or actual money received by assessee. The provisions of section 50C cannot be incorporated in the computation of block of the assets for the simple reason that it only substitutes the “full value of the consideration received or accruing as a result of transfer for the purposes of section 48 only. Therefore, AO was directed to reduce the WDV of the asset only by Rs. 2 crores, which has been received by the assessee on sale of the above property and assessee would be entitled to the depreciation @ 10 %. In the result, appeal of assessee is partly allowed. - DEPUTY CIT V/s FUTURZ NEXT SERVICES P. LTD. - [2020] 80 ITR (TRIB) 058 (ITAT-DELHI)