2012 (3) TMI 489 - AT - Income Tax

Whether Addl. CIT has gravely erred in law and on facts in denying the claim of depreciation? - Held No

Summary

Issues:
- Disallowance of depreciation claim of Rs. 1,57,12,754 by the Assessing Officer.
- Interpretation of the judgment in the case of Escorts Ltd. v. Union of India (1993) 199 ITR 43 by the Assessing Officer.
- Appeal against the order of the Ld. Commissioner of Income-tax (Appeals) by the Revenue.

The judgment pertains to an appeal by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) for the assessment year 2008-09. The primary issue revolves around the disallowance of a depreciation claim amounting to Rs. 1,57,12,754 by the Assessing Officer. The Assessing Officer based this disallowance on the judgment of the Hon'ble Supreme Court in Escorts Ltd. v. Union of India (1993) 199 ITR 43, which dealt with the treatment of capital expenditure for acquiring assets. The assessee, a charitable institution, argued that the judgment was not applicable to their case and cited several case laws in support of their claim. The Ld. CIT(A) allowed the appeal, finding the Assessing Officer's treatment of depreciation as unjustified.

The Revenue, feeling aggrieved by the Ld. CIT(A)'s order, presented the appeal on the grounds that the denial of the depreciation claim was erroneous. The Ld. CIT-DR supported the assessment order, asserting the correctness of the Assessing Officer's view. In contrast, the Ld. AR for the assessee contended that the judgment in Escorts Ltd. was not applicable and referenced judgments from various High Courts that favored the assessee's position. Notably, the Hon'ble High Court of Punjab and Haryana had distinguished the Supreme Court's judgment in a similar case, supporting the assessee's argument.

Upon considering the arguments and case laws presented by both parties, the Tribunal found merit in the High Court's distinction of the Supreme Court's judgment. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s order. The Tribunal emphasized that the issue had already been settled by the Hon'ble High Court of Punjab & Haryana, and therefore, found no infirmity in the Ld. CIT(A)'s decision. Ultimately, the appeal of the Revenue was dismissed, affirming the Ld. CIT(A)'s order.