The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee is not eligible to claim depreciation on office premises granted on the lease as business expenditure if it is already assessed as income from house property against which statutory deduction under section 24 is already allowed.
The assessee is a share broker. The assessee return for the relevant AY was selected for scrutiny. During the assessment proceedings, the Assessing Officer observed that the assessee had earned rental income by letting out certain office premises. Such income was assessed as Income from House Property. The assessee had claimed office maintenance charges and depreciation against these premises as business expenditure. These claims were disallowed by the AO.
On the first appeal, the CIT(A) confirmed the disallowances made by the AO.
On appeal, the Tribunal held that the undisputed position that emerges is that the assessee has earned rental income from certain office premises which forms part of the block of assets.
“The rental income from these premises has been assessed under the head Income from House Property against which statutory deduction under section 24 has already been allowed to the assessee. The assessee is not disputing the disallowance of office maintenance charges claimed against the premises as business expenditure but disputing the claim of depreciation against office premises. The perusal of block of the asset, as placed on record, reveal that the assessee is in possession of various Galas, 12 to be precise, out of which few galas have been let out during the year and few galas have been used by the assessee for its own use. The depreciation on galas used for business purposes is not under dispute. However, depreciation on galas as given on rent amount to Rs.4.34 Lacs which have been disallowed by Ld. AO. It is pertinent to note that against the rental income, the assessee has already been allowed statutory deduction u/s 24 and this depreciation is being claimed as business expenditure over and above the statutory deduction which has been allowed u/s 24. The primary condition as envisaged by Section 32 to claim the depreciation is that the assets should be used for the purposes of assessee’s business which has remained unfulfilled for galas given on rent. Therefore, we are unable to concur with the stand of Ld. AR, in this regard,” the Tribunal said.
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