2017 (10) TMI 1310 - HC - Income Tax

Depreciation on the assets not actually in the possession of the assessee - ITAT allowed the claim - Whether the order of the Tribunal ignores and does not deal with the factual findings recorded by the assessing officer and is therefore perverse ? - Held that - This Court is of the considered opinion that both the question Nos. 1 and 2 raised in this appeal are thus not question of law but they are purely questions of facts which have been decided by the Tribunal as the last authority on facts by analyzing the relevant documents and facts and the first appellate authority has also decided the issue in favour of the assessee. Thus there are concurrent findings of fact by both the appellate authorities. - Decided against revenue

Summary

Issues:
- Claim of depreciation on Wind Mills for assessment years 2006-2007, 2008-2009, and 2009-2010.
- Ownership of the Wind Mill asset.
- Legality of allowing depreciation on assets not in possession of the assessee.
- Consideration of factual findings by the assessing officer and tribunal.
- Perversity in the tribunal's order.

Analysis:
1. Claim of Depreciation on Wind Mills:
The case involved a dispute regarding the claim of depreciation on Wind Mills by the assessee for the assessment years 2006-2007, 2008-2009, and 2009-2010. The Assessing Officer contended that the Wind Mill was not owned by the assessee, leading to a challenge on the legitimacy of claiming depreciation under Section 32 of the Income Tax Act, 1961. The Commissioner, Income Tax Appeal, and the Income Tax Appellate Tribunal both ruled in favor of the assessee, resulting in the deletion of the additions made by the Assessing Officer. The High Court noted that the issue was primarily factual, and both appellate authorities had concurred on the matter after analyzing relevant documents and facts.

2. Ownership of the Wind Mill Asset:
During a search and seizure operation under Section 132 of the Income Tax Act, 1961, the business and residential premises of Kataria Group were searched. It was revealed that the Wind Mill, on which depreciation was claimed, was not owned by the assessee but by M/s. Enercon India Ltd. The Assessing Officer determined that the necessary condition for claiming depreciation was not met as the assessee was not the owner of the asset. This ownership dispute formed a crucial aspect of the case.

3. Legality of Allowing Depreciation on Assets Not in Possession:
One of the substantial questions of law raised in the appeal was whether the Income Tax Appellate Tribunal (ITAT) was legally correct in allowing depreciation on assets not actually possessed by the assessee. The High Court observed that this issue, along with the consideration of factual findings, was a question of fact rather than law. The ITAT's decision was upheld as the final authority on facts, supported by the first appellate authority's ruling in favor of the assessee.

4. Consideration of Factual Findings:
The High Court meticulously reviewed the orders of the Assessing Officer, the Commissioner, Income Tax Appeal, and the ITAT. It emphasized that the questions raised in the appeal were predominantly factual and had been conclusively determined by the tribunal as the ultimate arbiter on facts. With both appellate authorities concurring on the matter after analyzing the relevant documents and facts, the High Court affirmed the decisions made in favor of the assessee.

5. Perversity in the Tribunal's Order:
The appeal also raised concerns about the tribunal's order allegedly ignoring and not addressing the factual findings recorded by the assessing officer, leading to a claim of perversity. However, the High Court found that the tribunal had duly considered and dealt with the factual findings, making its decision based on a comprehensive analysis of the evidence presented. Consequently, the High Court concluded that there was no perversity in the tribunal's order and upheld the decisions made by the lower authorities in favor of the assessee.

In conclusion, the High Court dismissed the appeal, along with the connected appeals, based on the factual findings and decisions of the lower appellate authorities. The case highlighted the importance of ownership in claiming depreciation on assets and underscored the significance of factual analysis by the appellate bodies in tax matters.