2014 (10) TMI 788 - HC - Income Tax

Claim of depreciation on installation of windmill Satisfaction of requirement of second proviso to Rule 5(1A) of the Income Tax Rules or not Held that - Following the decision in CIT V. Vijaya Hirasa Kalamkar (HUF) 1992 (9) TMI 4 - BOMBAY High Court - if the assessee exercised the option in terms of second proviso to Rule 5(1A) of the Income Tax Rules at the time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to of exercise of option is required - Since the returns are filed in accordance with Section 139(1) of the Income Tax Act and the form prescribed therein make a provision for exercising an option in respect of the claim of depreciation, no separate procedure is required Decided against revenue. Unexplained cash credit u/s 68 Held that - The Tribunal rightly upheld the order of the CIT(A) that the assessee was able to produce documents and the details of repayment made through cheque - assessee had also furnished identity of persons with complete details of addresses and the FD applications showing details thus, the order of the Tribunal is upheld Decided against revenue.

Summary

Issues Involved:
1. Claim of depreciation on windmills contrary to Rule 5(1A) Appendix 1A of Income Tax Rules.
2. Additions made under Section 68 of the Income Tax Act on account of unexplained cash credit.

Analysis:

Issue 1:
The first issue in this Tax Case (Appeal) pertains to the claim of depreciation by the assessee on windmills, contested by the Revenue as conflicting with Rule 5(1A) Appendix 1A of the Income Tax Rules. The Revenue argued that the claim was not valid under the specified rules. However, the Court referred to a previous decision and highlighted that if the assessee had exercised the option in accordance with the second proviso to Rule 5(1A) at the time of filing the return of income, no separate intimation was required. The Court concurred with the Tribunal's reasoning and ruled in favor of the assessee, resolving substantial questions of law in their favor.

Issue 2:
The second issue revolves around additions made under Section 68 of the Income Tax Act concerning unexplained cash credit. The assessee, engaged in various businesses, had claimed expenditure on building construction/renovation as revenue expenditure, which was initially disallowed by the Assessing Officer. Additionally, unexplained fixed deposits were added under Section 68. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal reviewed the documents and details provided by the assessee, ultimately ruling in favor of the assessee. The Tribunal noted that the assessee had produced documents, including bank confirmations and repayment details, which satisfied the Commissioner of Income Tax (Appeals). The Tribunal, after verifying the identity of the parties involved and the transaction details, upheld the decision in favor of the assessee. The Court, considering this a factual matter, declined to interfere with the Tribunal's decision, dismissing the Tax Case (Appeal) as lacking merit.

In conclusion, the judgment addressed the issues of depreciation claim on windmills and unexplained cash credit additions under Section 68 of the Income Tax Act. The Court upheld the assessee's entitlement to depreciation based on the exercised option and supported the Tribunal's decision on unexplained cash credits, emphasizing the verification of documents and identities.