2015 (7) TMI 107 - AT - Income Tax

Entitlement for claiming higher depreciation - Held that - Consedering the decision in the case of CIT v. Hi Tech Arai Ltd. 2009 (9) TMI 60 - MADRAS HIGH COURT directed the Assessing Officer to allow additional depreciation as claimed by the assessee. The ld. CIT(Appeals), by following the decision of the Hon ble Jurisdictional High Court supra, directed the Assessing Officer to allow higher depreciation. No material has been brought on record to show that the above decision of the Hon ble Jurisdictional High Court has been either modified or reversed by the Hon ble Supreme Court. Therefore, we find no infirmity in the order passed by the ld. CIT(Appeals) on this issue for both the assessment years. - Decided against revenue.

Summary

Issues: Whether the assessee is entitled to claim higher depreciation in the assessment years 2005-06 and 2006-07.

Analysis:
1. Issue of Higher Depreciation: The primary issue in this case is whether the assessee is entitled to claim higher depreciation for the assessment years 2005-06 and 2006-07. The Assessing Officer initially denied the benefit, but the ld. CIT(Appeals) directed the Assessing Officer to allow additional depreciation as claimed by the assessee. The decision was based on the interpretation of Section 32(i)(iia) of the Income Tax Act, which requires the setting up of new machinery or plant after a certain date by an assessee engaged in the business of manufacturing or production. The ld. CIT(Appeals) considered the decisions in the cases of CIT v. VTM Ltd. and CIT v. Hi Tech Arai Ltd. to support the allowance of additional depreciation for the production of electricity through windmills. The Hon'ble Madras High Court's verdict in favor of the assessee was deemed binding on the Department, as the Special Leave Petition filed by the Department was dismissed by the Supreme Court at the admission stage without discussion.

2. Appeal to the Supreme Court: The Revenue contended that they are in appeal before the Hon'ble Supreme Court against the decision of the Hon'ble Jurisdictional High Court upholding the assessee's claim for higher depreciation. However, the ld. CIT(Appeals) maintained their decision based on the absence of any evidence showing modification or reversal of the High Court's decision by the Supreme Court. Therefore, the appeals filed by the Revenue were dismissed for both the assessment years.

In conclusion, the judgment upheld the assessee's right to claim higher depreciation based on the interpretation of relevant provisions of the Income Tax Act and the decisions of the High Court, deeming them binding on the Revenue. The dismissal of the Revenue's appeals indicates the acceptance of the assessee's entitlement to the claimed depreciation for the specified assessment years.