M/s Ascent Circuits Pvt. Ltd., Bangalore V. DCIT, Bangalore

ITA 1490/BANG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4435 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR
• Keywords: Capital asset; Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T. A. NO.1490/BANG/2012 (ASSESSMENT YEAR : 2007-08) M/S. ASCENT CIRCUITS PVT. LTD. , B-13, ITI ANCILLARY ESTATE, MAHADEVAPURA, BANGALORE-560 048. . APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX , CIRCLE 11(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI S. PARTHASARATHI. RESPONDENT BY : SHRI BIJOY KUMAR PANDA. DATE OF HEARING : 21.8.2013. DATE OF PRONOUNCEMENT : 25.10.2013. O R D E R PER SHRI JASON P. BOAZ, A.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, BANGALORE DT.24.8.2012 FOR ASSESSM ENT YEAR2007-08. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE MANUFACT URE OF PRINTED CIRCUIT BOARDS, FILED ITS RETURN OF INCOME ON 28.8.2007 FOR ASSESSMENT YEAR 2 007-08 DECLARING INCOME AT RS.5,60,09,960. THE RETURN WAS PROCESSED U/S.143(1 ) OF INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT') AND THE CASE WAS SUBSEQU ENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT 2 ITA NO.1490/BANG/2012 WAS COMPLETED BY AN ORDER U/S.143(3) OF THE ACT DT. 24.12.2009 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8,44,40,179 AS AGAINS T THE RETURNED INCOME OF RS.5,60,09,960 IN VIEW OF THE FOLLOWING ADDITIONS / DISALLOWANCES MAD E BY THE ASSESSING OFFICER :- (I) DISALLOWANCE OF EXPENSES CLAIMED FOR REPAIRS AN D MAINTENANCE (AF TER ALLOWING DEPRECIATION @ 15%) : RS.41,34,280. (II) DISALLOWANCE OF DEPRECIATION CLAIMED ON EFFLU ENT TREATMENT PLANT. : RS.1,01,57,889. III) DISALLOWANCE OF EXPENDITURE INCURRED ON REPLAC EMENT OF MACHINERY CLAIMED AS REVENUE EXPENDITURE (AFTER ALLOWING DEPR ECIATION @ 15%) : RS.1,61,44,050. 2.0 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSE SSMENT YEAR 2007-08 DT.24.12.2009, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A)-I, BANGALORE, WHICH WAS DISPOSED OFF BY ORDER DT.24.8.2012 ALLOWING THE ASS ESSEE PARTIAL RELIEF. 3.0 AGGRIEVED BY THE ORDER OF CIT(A)-I, BANGALORE F OR ASSESSMENT YEAR 2007-08 DT.24.8.2012,THE ASSESSEE IS BEFORE US RAISING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN PASSING THE ORDER IN THE MANNER WHICH HE D ID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.27,11,973 WITH REGARD TO REPAIRS AND MAINTENANCE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF CLAIM U/S.37 (1) TO THE EXTENT OF RS.1,61,44,050. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE EXPENDI TURE CLAIMED U/S.37(1) OF THE ACT WAS REVENUE IN NATURE AND THEREBY THERE WAS NO ENDU RING BENEFIT BY REPLACEMENT OF THE MACHINERY. 5. THE CIT (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST OF RS.36,59,212 U/S.234B & RS.2,09,212 U/S.234C AS MADE BY THE ASSE SSING OFFICER. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE U RGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 4. THE GROUNDS RAISED AT S.NOS.1 AND 4 , BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLE D FOR THEREON. 3 ITA NO.1490/BANG/2012 5. IN GROUND NO.5 , THE ASSESSEE CHALLENGES THE ACTION OF THE LEARNED CIT (APPEALS) IN CONFIRMING THE CHARGING OF INTEREST U/S.234B & 234C OF THE ACT. THE CHARGING OF INTEREST IS CONSEQUENTIAL AND MANDATORY AND THE A.O. HAS NO DIS CRETION IN THE MATTER. WE, THEREFORE, UPHOLD HIS ACTION IN CHARGING THE AFORESAID INTERES T. THE A.O. IS, HOWEVER, DIRECTED TO RECOMPUTE THE INTEREST CHARGEABLE U/S.234B & 234C O F THE ACT, IF ANY, WHILE GIVING EFFECT TO THIS ORDER. 6.0 DISALLOWANCE OF REPAIRS & MAINTENANCE EXPENDITURE : RS.41,34,280 6.1 IN THE GROUND NO.2 , THE ASSESSEE CONTENDS THAT THE LEARNED CIT (APPEA LS) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.27,11,973 IN RESPE CT OF REPAIRS AND MAINTENANCE MADE BY THE ASSESSING OFFICER. BEFORE US, THE LEARNED AUTHORIS ED REPRESENTATIVE SUBMITTED THAT THE PAYMENT OF RS.27,11,973 WAS MADE TO M/S. KAMPRESS AUTOMATION SYSTEM (P) LTD. TOWARDS CONVERSION OF THE EXISTING MACHINERY ASSEMBLY LINE, WHICH IS NOTHING BUT A REPLACEMENT OF THE EXISTING SYSTEMS AND DID NOT RESULT IN ENHANCEMENT OF INSTALLED CAPACITY. IT WAS FURTHER SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSEMBLY LINE WAS MADE UP OF SEVERAL SUPPLEMENTARY MACHINES WHICH ARE INTER-CONN ECTED AND NONE OF THESE INDIVIDUAL PRICES OF MACHINERY WOULD BE FUNCTIONAL INDEPENDENTLY, UNLESS INCLUDED IN THE MAIN SYSTEM. IN VIEW OF THE ABOVE, THE LEARNED AUTHORISED REPRESENTATIVE CONTEN DED THAT THIS EXPENSE SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 6.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT (APPEALS) CONTENDING THAT THIS EXPENDIT URE WAS CAPITAL IN NATURE AND WAS THEREFORE 4 ITA NO.1490/BANG/2012 TREATED AS SUCH BY THE LEARNED CIT (APPEALS). IN T HIS VIEW OF THE MATTER, THE LEARNED DEPARTMENTAL REPRESENTATIVE PRAYED FOR DISMISSAL OF THE ASSESSEE'S APPEAL ON THIS GROUND. 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS. THE FAC TS OF THE MATTER, ON THIS ISSUE, AS EMANATES FROM THE MATERIAL ON RECORD IS THAT IN THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED AN A MOUNT OF RS.1,70,55,362 UNDER THE HEAD REPAIRS & MAINTENANCE. ON EXAMINATION OF THE DETA ILS THEREOF, THE ASSESSING OFFICER OBSERVED THAT OUT OF THE ABOVE EXPENSES, AN AMOUNT OF RS.48, 63,860 WAS TOWARDS INSTALLATION OF VARIOUS MACHINES AS LISTED OUT AT PARA 3 ON PAGE 2 OF THE O RDER OF ASSESSMENT. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THESE MACHINES ARE ASSET S THAT RENDER ENDURING BENEFIT TO THE ASSESSEE COMPANY, THEY ARE TO BE TREATED AS CAPITAL IN NATURE AND NEGATIVED THE ASSESSEE'S CLAIM FOR ALLOWING THE SAME AS REVENUE EXPENDITURE. THE ASSESSING OFFICER, HOWEVER, ALLOWED DEPRECIATION @ 15% ON THESE ASSETS AND THEREBY THE NET DISALLOWANCE MADE BY HIM WAS RS.41,344,280. 6.3.2 ON APPEAL, THE LEARNED CIT (APPEALS) CALLED F OR A REMAND REPORT FROM THE ASSESSING OFFICER IN THE SUBMISSIONS MADE BY THE ASSESSEE. I N HIS REMAND REPORT ON THE SEVEN ITEMS OF EXPENDITURE DISALLOWED BY THE ASSESSING OFFICER EA RLIER, THE ASSESSING OFFICER ACCEPTED THE SUBMISSIONS OF THE ASSESSEE ON FOUR OF THE ITEMS, B UT HELD THAT THE OTHER THREE ITEMS ARE CAPITAL IN NATURE. THESE THREE ITEMS WERE : I) MARIA BANCO, NV (STATIC CONVE R TOR AND STATIC AND SISTIC CONVECTOR) RS.4,19,965 II) CA L INA TECHNOLOGIES LTD. (DE BURRING MACHINE) RS.1,55,000 III) KAM P RESS AUTOMATION SYSTEMS PVT. LTD. (EN I G & SN / AG PLATING LINE) RS.27,11,973 5 ITA NO.1490/BANG/2012 6.3.3 THE LEARNED CIT (APPEALS) ACCEPTED THE ASSESS ING OFFICERS REMAND REPORT ON THE FOUR ITEMS ON WHICH THE ASSESSING OFFICER ACCEPTED THE A SSESSEE'S CLAIMS. IN RESPECT OF THE THREE ITEMS WHICH THE ASSESSING OFFICER DID NOT ACCEPT TH E ASSESSEE'S CLAIM (SUPRA), THE LEARNED CIT (APPEALS) EXAMINED THE ASSESSEE'S SUBMISSIONS AND A CCEPTED THE ASSESSEE'S CLAIM IN RESPECT OF TWO OF THESE ITEMS LISTED AT (I) AND (II) AT PARA 6 .3.2 OF THIS ORDER (SUPRA). AS REGARDS THE EXPENDITURE OF RS.27,11,973 INCURRED BY THE ASSESSE E IN RESPECT OF MACHINERY PURCHASED FROM KAMPRESS AUTOMATION SYSTEMS (P) LTD, AFTER EXAMINAT ION OF THE DETAILS OF THE MACHINERY AND ITS USAGE, THE CIT(A) HELD THAT THE INSTALLATION OF THI S MACHINERY WAS CAPITAL IN NATURE AS IT RESULTED IN A NEW TECHNOLOGY BEING INTRODUCED AND THEREBY GI VING THE ASSESSEE AN ADVANTAGE OF ENDURING NATURE. 6.3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE F ACTS AS EMANATE FROM THE MATERIAL PLACED ON RECORD IT IS SEEN THAT THE LEARNED CIT (APPEALS ) HAS EXAMINED THE EXPENSES INCURRED IN RESPECT OF EACH OF THE SEVEN MACHINERIES (TOTALLING RS.48,63,860) AND HAS ONLY HELD THE EXPENDITURE OF RS.27,11,973 MADE IN ACQUIRING THE M ACHINERY FROM M/S. KAMPRESS AUTOMATION SYSTEMS PVT. LTD., TO BE CAPITAL IN NATURE. IT IS NOT IN DISPUTE THAT THE EXISTING PLATING LINE ACQUIRED IN THE YEAR 2003-04 WAS BEING REPLACED BY INCURRING THIS EXPENDITURE. THE LEARNED CIT (APPEALS) AT PARA 3.10 ON PAGES 8 & 9 OF HIS ORDER CONSIDERED THE MATTER ELABORATELY AND HAS RENDERED A FINDING THAT THE PRESENT EXPENDITURE INC URRED ON THE EXISTING PLATING LINE HAS RESULTED IN A NEW TECHNOLOGY, THEREBY GIVING THE AS SESSEE AN ADVANTAGE OF ENDURING NATURE. THE FACT THAT THE RENOVATION HAS RESULTED IN A NEW TECH NOLOGY BEING INSTALLED IS NOT CONTROVERTED BY THE ASSESSEE. THAT BEING HIS CASE, EVEN IF TECHNIC ALLY A NEW ASSET HAS NOT COME INTO EXISTENCE OR 6 ITA NO.1490/BANG/2012 THE INSTALLED CAPACITY OF THE RENOVATED MACHINE WAS NOT ENHANCED, THE RECONDITIONING / REPLACEMENT HAS CERTAINLY RESULTED IN AN ENDURING B ENEFIT BEING OBTAINED BY THE ASSESSEE. THIS BENEFIT OF ENDURING NATURE, IN OUR CONSIDERED VIEW, WOULD CLEARLY FALL IN THE CAPITAL FIELD AND WE, THEREFORE, AGREE WITH THE DECISION OF THE LEARNED C IT (APPEALS) THAT THE EXPENDITURE OF RS.27,11,973 INCURRED ON INSTALLATION OF MACHINERY FROM M/S. KAMPRESS AUTOMATION SYSTEMS PVT. LTD. IS CAPITAL IN NATURE. CONSEQUENTLY, WE DISMIS S GROUND NO.2 RAISED BY THE ASSESSEE. 7. DISALLOWANCE OF CLAIM U/S.37(1) OF THE ACT RS.1,8 9,93,000. 7.1 IN THE GROUNDS RAISED AT S.NOS.3 & 4 , THE ASSESSEE CONTENDS THAT THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF TH E CLAIM OF THE ASSESSEE U/S.37(1) OF THE ACT OF EXPENDITURE ON REPLACEMENT OF MACHINERY OF RS.1, 89,93,000 BY THE A.O. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE EXPEND ITURE INCURRED WAS ONLY FOR REPLACEMENT OF OLD MACHINERY AND THAT THIS REPLACEMENT HAS NOT RES ULTED IN ANY CAPACITY ADDITION. IT IS SUBMITTED THAT THIS EXPENDITURE WAS NECESSARY FOR R UNNING OF THE PLANT AND THAT NO PART OF THE MACHINERY SO REPLACED WAS INDEPENDENTLY OPERABLE AN D AS SUCH, THERE WERE ONLY REPLACEMENT OF THE EXISTING WORN OUT MACHINERY, WHICH HAS INCREASE D THE EFFICIENCY OF THE PLANT. THEREFORE, THE LEARNED AUTHORISED REPRESENTATIVE CONTEND THAT THIS EXPENDITURE SHOULD BE ALLOWED AS REVENUE EXPENDITURE U/S.37(1) OF THE ACT. 7.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND PRAYED THAT THEIR ORDERS BE UPHELD SINCE THE EXPENDITURE INVOLVED IN REPLACEMENT OF OLD MACHINERY WAS CLEARLY CAPITAL IN NATURE. 7 ITA NO.1490/BANG/2012 7.3.1 WE HAVE HEARD BOTH PARTIES. THE FACTUAL POS ITION AS EMANATE FROM A PERUSAL OF THE MATERIAL ON RECORD INDICATE THAT IN THE COURSE OF A SSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT THE ASSESSEE HAD CAPITALISED AN AMOUNT OF RS.1 ,89,93,000, BEING EXPENDITURE INCURRED ON REPLACEMENT OF MACHINERY. IT WAS, HOWEVER, SEEN TH AT IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAD CLAIMED THIS EXPENDITURE AS REVENUE EXPENDITURE. BEFORE THE A.O., THE ASSESSEE CLAIMED THAT THIS EXP ENDITURE, INCURRED TOWARDS REPLACEMENT OF OLD MACHINERY, WERE REVENUE IN NATURE AND THEREFORE OUGHT TO BE ALLOWED AS A DEDUCTION U/S.37 OF THE ACT. THE A.O., HOWEVER, DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND TREATING THE SAID EXPENDITURE INCURRED ON REPLACEMENT OF MAC HINERY AS CAPITAL IN NATURE AND ALLOWING DEPRECIATION @ 15% THEREON, NEGATIVED THE ASSESSEE S CLAIM FOR ALLOWING THE SAME U/S.37 OF THE ACT. THE ACTUAL DISALLOWANCE THEREON AFTER ALLOWIN G DEPRECIATION @ 15% ON RS.1,89,73,000 WAS RS.1,61,44,500. 7.3.2 IN THE COURSE OF APPELLATE PROCEEDINGS, THE L EARNED CIT (APPEALS) CALLED FOR A REMAND REPORT FROM THE A.O. ON THE SUBMISSIONS MADE BY THE ASSESSEE. AFTER CONSIDERING THE ORDER OF ASSESSMENT, THE REMAND REPORT OF THE A.O. AND THE S UBMISSIONS OF THE ASSESSEE, THE LEARNED CIT (APPEALS) HAS RENDERED A FINDING THAT THE REPLACEME NT OF THE OLD MACHINERY WITH NEW MACHINERY HELPED THE ASSESSEE TO IMPROVE ITS TECHNOLOGY WHICH IS CAPITAL IN NATURE. FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V MADURA COATS REPORTED IN 205 TAXMAN 357, THE LEARNED CIT (APPEALS) HELD THAT THE EXPEND ITURE INCURRED ON REPLACEMENT OF THE OLD MACHINERY IS CAPITAL IN NATURE WHICH HAS HELPED THE ASSESSEE TO OBTAIN A NEW TECHNOLOGICAL 8 ITA NO.1490/BANG/2012 ADVANTAGE OF ENDURING NATURE AND UPHELD THE DECISIO N OF THE A.O. TO DISALLOW THE EXPENDITURE AND ONLY ALLOW DEPRECIATION @ 15% THEREON, BY HOLDI NG THE SAME TO BE CAPITAL IN NATURE. 7.3.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, THE ORDERS OF THE AUTHORITIES BELOW AND THE CONTENTION OF THE ASSESSEE. IT IS SEEN THAT THE LE ARNED CIT (APPEALS) HAS EXAMINED THE EXPENDITURE INCURRED IN THIS REGARD IN DETAIL, CONS IDERED THE SUBMISSIONS OF THE ASSESSEE AND THE A.OS REMAND REPORT BEFORE RENDERING A FINDING IN PARAS 5.6 & 5.7 OF HIS ORDER THAT THE EXPENDITURE INCURRED ON REPLACEMENT OF THE EXISTING MACHINERY WAS CAPITAL IN NATURE SINCE IT HAS RESULTED IN A NEW TECHNOLOGY, THEREBY GIVING THE AS SESSEE AN ADVANTAGE OF ENDURING NATURE. EVEN AS PER THE SUBMISSIONS OF THE ASSESSEE, THE NEW MA CHINERY WHICH WAS INSTALLED REPLACING THE OLD MACHINERY HAD GREATER FEATURES, CAPABILITIES AND IS FASTER. THE FACT THAT THE REPLACEMENT HAS RESULTED IN A NEW TECHNOLOGY BEING INSTALLED IS NOT CONTROVERTED BY THE ASSESSEE AND THE FACT THAT IT WAS CAPITALISED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE RELEVANT PERIOD IS TESTIMONY TO THE FACT THAT THE ASSESSEE ALSO WAS OF THE VIEW THAT THE AFORESAID EXPENDITURE WAS CAPITAL IN NATURE. THE REPLACEMENT OF MACHINERY IN THE CASE ON HAND, CANNOT THEREFORE BE SAID TO BE INCURRED TO MERELY TO PRESERVE AN ALREADY EXISTI NG ASSET, AS MANY NEW ASPECTS AND FEATURES HAVE BEEN BROUGHT INTO EXISTENCE AS COULD BE SEEN F ROM THE SUBMISSIONS OF THE ASSESSEE, WHICH HAVE BEEN REPRODUCED IN PARA 5.5 OF THE ORDER OF THE LEARNED CIT (APPEALS). THUS, IT IS CLEAR THAT, THE OBJECT OF THE AFORESAID EXPENDITURE INCUR RED BY THE ASSESSEE IS TO BRING A NEW ASSET AND TECHNOLOGY INTO EXISTENCE, TO OBTAIN A NEW ADVA NTAGE AND BENEFIT OF ENDURING NATURE TO THE ASSESSEE. THAT BEING THE CASE EVEN IF TECHNICALLY A NEW ASSET HAS NOT COME INTO EXISTENCE OR THE INSTALLED CAPACITY OF THE REPLACED MACHINERY HAS NO T BEEN ENHANCED, THE REPLACEMENT HAS 9 ITA NO.1490/BANG/2012 CERTAINLY RESULTED IN AN ENDURING BENEFIT BEING OBT AINED BY THE ASSESSEE. THIS BENEFIT OF ENDURING NATURE WOULD CLEARLY RESULT IN THE EXPENDI TURE BEING CAPITAL IN NATURE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF MADURA COATS (SUPRA), CONCUR WITH AND UPHOLD THE DECISION OF THE LEARNED CIT (APPEALS) THAT BY THE AFORESAID REPLACEMENT OF MACHINERY, THE ASSESSEE HA S OBTAINED A NEW TECHNOLOGICAL ADVANTAGE OF ENDURING NATURE AND THEREFORE THE SAID EXPENDITURE OF RS.1,89,93,000 CANNOT BE ALLOWED AS A REVENUE EXPENDITURE U/S.37(1) OF THE ACT. AS THIS IS HELD TO BE A CAPITAL ASSET, THE ASSESSEE IS ENTITLED TO BE ALLOWED DEPRECIATION THEREON AND WE, THEREFORE, CONFIRM THE DISALLOWANCE OF RS.1,61,44,000 MADE BY THE AUTHORITIES BELOW IN THI S REGARD. CONSEQUENTLY, WE DISMISS THE GROUND NOS.3 & 4 RAISED BY THE ASSESSEE. 8. IN THE RESULT, THE ASSESSEE'S APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 TH OCTOBER, 2013. SD/- SD/- (P. MADHAVI DEVI) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. .