2008 (9) TMI 949 - HC - Income Tax

Summary

Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 against ITAT order for assessment year 2000-01. Substantial questions of law: (i) Compliance to statutory provisions on depreciation method, (ii) Examination of deduction claim by Assessing Officer, (iii) Disallowance of exaggerated profit of captive power generating unit.

Compliance to Statutory Provisions on Depreciation Method:
The Assessing Officer disallowed depreciation claimed on Written Down Value (WDV) as the assessee had not opted for it as per proviso to sub-rule (1A) of rule 5 of the Income-tax Rules, 1962. The Appellate Authority upheld this disallowance. However, the Tribunal accepted the appeal regarding permission to claim depreciation on WDV basis. The Tribunal noted that the option to claim depreciation under WDV method is to be exercised before the due date for furnishing the return of income. The Tribunal found that the assessee had made proper compliance with this requirement by claiming depreciation in accordance with the rules before the due date for the relevant assessment year. The Tribunal's decision was based on the lack of specific format or procedure for exercising this option, and the absence of any adjustment by the Assessing Officer after processing the return of income.

Examination of Deduction Claim by Assessing Officer:
The Tribunal dismissed the substantial question of law regarding the examination of the claim of deduction by the Assessing Officer. The Tribunal found no perversity in the reasoning provided and concluded that the questions related to this issue cannot be considered substantial questions of law.

Disallowance of Exaggerated Profit of Captive Power Generating Unit:
The counsel for the revenue conceded that the issue related to the disallowance made by the Assessing Officer concerning the exaggerated profit of the captive power generating unit was covered against the revenue. Therefore, this issue was not further discussed in the judgment.

In conclusion, the appeal was dismissed based on the Tribunal's decision regarding the compliance to statutory provisions on depreciation method. The Tribunal's interpretation of the rules and the assessee's timely compliance with the requirements led to the dismissal of the appeal.