2015 (8) TMI 278 - HC - Income Tax

Eligibility of depreciation claim - whether the Tribunal right in holding that no depreciation can be thrust upon in this case, though the assessee has not forgone its right to claim depreciation in case of positive income and ought to have upheld that depreciation need to be worked out even in the cases where deduction under Chapter VI A is not claimed/allowed because of paucity of profits? - Held that - No substance in this appeal and the questions framed for our consideration are answered in the negative. We hold that it is optional for the assessee whether or not to claim the depreciation and we further hold that the authorities below were right in law in holding that the depreciation which the assessee was not desirous of claiming cannot be foisted on him. - Decided in favour of the assessee.

Summary

Issues:
Challenge to judgment of Income Tax Appellate Tribunal regarding depreciation claim.

Analysis:
1. The Commissioner of Income Tax challenged the ITAT's order regarding depreciation in the appellant's return of income.
2. The appellant declared a loss in the return, but the Assessing Officer determined a higher loss by including depreciation not claimed by the assessee.
3. Questions framed for consideration were related to the allowance of depreciation when not claimed by the assessee and the necessity of working out depreciation even in cases of paucity of profits.
4. Both parties presented arguments, with the Revenue conceding that the issue was no longer res integra based on relevant court judgments.
5. The respondent relied on prior court decisions and argued against re-agitating the issue.
6. The court considered previous Division Bench judgments and concluded that the questions raised had already been addressed in those cases.
7. The court analyzed the arguments put forth by both sides and referred to specific legal precedents to support its decision.
8. The court discussed the applicability of various court decisions, including those from the Bombay High Court and the Supreme Court, in determining the outcome of the appeal.
9. The court examined the contentions raised by both counsels and the relevance of prior court decisions to the present case.
10. After thorough consideration, the court held that the depreciation claim is optional for the assessee and cannot be imposed if not desired by the assessee.
11. The court referred to specific provisions of the Income Tax Act and relevant court decisions to support its conclusion.
12. Based on the settled legal position and precedents, the court dismissed the appeal in favor of the assessee, upholding the right of the assessee to choose whether or not to claim depreciation.
13. The court's decision was based on the principle that the authorities were correct in not allowing depreciation that the assessee did not wish to claim.
14. Consequently, the appeal was decided against the revenue and in favor of the assessee, affirming the optional nature of depreciation claims for the assessee.