2010 (10) TMI 1115 - HC - Income Tax

Summary

Issues involved:
The issue in this case is whether the assessing officer was required to consider depreciation while computing deduction under Section 80O of the Income Tax Act, 1961, even if the assessee had not claimed depreciation.

Judgment Summary:

1. Background:
The Revenue raised a question regarding the correctness of the ITAT's decision dated 10.10.2006, which set aside the order of the Appellant Commissioner dated 14.02.2005 passed u/s. 263 of the Act. The issue was whether the assessing officer should have allowed depreciation to the Assessee Company before computing the deduction u/s. 80O of the Act.

2. Assessment Year 1993-94:
In the relevant assessment year, the assessee did not claim depreciation while computing the deduction under Section 80O. The assessment order was passed without considering the depreciation that could be claimed by the assessee.

3. CIT's Order:
The CIT invoked jurisdiction u/s. 263 of the Income Tax Act, 1961, holding that the assessment order was erroneous and prejudicial to the revenue's interest as the assessing officer should have considered depreciation while computing the deduction under Section 80O. However, the Tribunal set aside the CIT's order, stating that the assessing officer's decision was a possible view based on previous Tribunal decisions.

4. Legal Precedents:
The Revenue argued that a judgment favoring the revenue was available on the date of the original assessment order. However, the ITAT had distinguished this judgment in a different case where depreciation had not been claimed. Therefore, on the date the CIT invoked jurisdiction u/s. 263, the issue was in favor of the assessee as no depreciation had been claimed.

5. Court's Decision:
The High Court upheld the ITAT's decision, stating that as the assessee had not claimed depreciation, the CIT was not justified in invoking jurisdiction u/s. 263. The Court found no fault with the ITAT's decision to set aside the CIT's order.

6. Conclusion:
The appeal was dismissed, and no costs were awarded.