2015 (1) TMI 480 - HC - Income Tax

Double deduction - Depreciation on the assets costs of which have already been allowed as deduction on account of application of income, would amount to double deduction? - Held that - The amount spent on acquiring the assets has been treated as application of income in the year in which the income was spent in acquiring these assets. This does not mean that in subsequent years, depreciation in respect of those assets cannot be taken into account. The present Appeal does not raise any substantial question of law. It is accordingly dismissed.

Summary

Issues:
1. Allowance of depreciation on assets already deducted as expenses.
2. Claim of double deduction.
3. Application of income for asset acquisition.
4. Interpretation of legal judgments on depreciation claims.
5. Relevance of Supreme Court decisions on depreciation claims.
6. Consistency in legal interpretations on depreciation claims.

Analysis:
1. The judgment pertains to an appeal by the Revenue against the Income Tax Appellate Tribunal's order for the Assessment Year 2007-08. The main contention raised by the Petitioner is regarding the allowance of depreciation on assets for which costs have already been deducted as expenses, potentially leading to double deduction. The Petitioner cites the Excort Ltd. vs. Union of India case as a precedent overlooked by the Tribunal.

2. The Respondent, represented by Mr. Vaidya, argues against admitting the Appeal as substantial questions of law. Mr. Vaidya relies on previous orders by the Court that have refused to admit similar questions as substantial. These include orders in Income Tax Appeal No.822 of 2012 and Income Tax Appeal No.797 of 2012.

3. The Tribunal found that the Assessee declared income as 'Nil' initially but had income determined at Rs. 1,75,88,387. The claim for depreciation on assets like printing machinery and computers was denied by the Assessing Officer. The Commissioner partially allowed the appeal, reversing the Assessing Officer's decision on double deduction based on precedents like CIT vs. Institute of Banking Personal Selection and CIT vs. Nagpur Hotel Owners' Association.

4. The Tribunal concluded that the Assessee's depreciation claim was valid based on previous judgments. The Court referenced cases like Director of Income Tax (Exemption) v/s. Framjee Cawasjee Institute and Commissioner of Income Tax v/s. Institute of Banking Personnel Selection to support the Assessee's position on depreciation.

5. The Tribunal dismissed the Revenue's arguments regarding the Supreme Court's decisions on depreciation claims, stating that those decisions did not support the Revenue's contentions. The Tribunal found no error of law in the Commissioner's decision to allow the depreciation claim.

6. The Court emphasized the consistency in its interpretations of the law regarding depreciation claims, citing previous cases like Director of Income Tax v/s. Parmeshwaridevi Gordhandas Garodia Charitable Trust. The Court concluded that the present Appeal did not raise any substantial question of law and dismissed it without costs.