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Patricia (C.S.- Professional) (sdd) (197 Points)

03 October 2010

“Deduction of an expenditure is permissible only if profits are assessable.” Discuss.
(ii) An assessee carries on business in respect of which it holds tenancy rights. It carries out improvements to the said building at a cost of Rs. 2 lakh and claims depreciation @ 10% thereon. The Assessing Officer rejects the claim on the ground that the Assessee is not the owner of the building.

regards,

Neha

New Delhi

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madhur gupta (student/article ) (1022 Points)
Replied 03 October 2010

Ans.1-If profits are assessable under normal provisions of income tax act then all revenue expenditures are allowed although it may result into loss and then such loss shall be carried forward.Capital expenditures like scientific research etc are allowed in profit and loss acct upto the amount of profit only

Further if person assesable under presumptive tax provisions then expenditure shall not be allowed as it shall be deemed that effect relating to expenditures have been given while cal.profit.

ans.2-as per explanation of sec32 assesse is allowed dep on building constructed by him either he is not owner of that but has taken on rent.He shall be treated as deemed owner and hence can claim depreciation.