2019 (7) TMI 1888 - HC - Income Tax

Depreciation on hoardings - temporary v/s permanent structure - depreciation at the rate 100% by treating these hoardings to be temporary structures - HELD THAT - On examination of the impugned order of the tribunal 2016 (8) TMI 1555 - ITAT KOLKATA we find that its finding that the subject structure of the respondent was temporary and not permanent was substantially derived from the findings of the tribunal in respect of the same respondent for the earlier assessment years. This finding of fact has not been challenged by the revenue in appeal or it remains untouched by any superior Court. Appellant could not show us any case made out by his client in the subject assessment year that there was any technological advancement or modification in the temporary structure in such a manner so as to classify it as a permanent one. The issue as to whether the subject structure was temporary or permanent in the assessment year in question has become res judicata. Hence we find no infirmity in the impugned order of the tribunal holding that it was so and allowing the respondent assessee 100% depreciation. - Decided in favour of assessee.

Summary

Issues:
1. Qualification of hoarding structures for depreciation at 100%.
2. Proper appreciation of Section 263 of the Income Tax Act, 1961.

Qualification of Hoarding Structures for Depreciation:
The High Court examined whether the Tribunal's finding that hoarding structures of the respondent, an advertising company, qualified for 100% depreciation as temporary structures was valid. The Court noted that the Tribunal's conclusion was based on previous findings for the same respondent in earlier assessment years, which had not been challenged by the revenue or any superior court. The appellant failed to demonstrate any technological advancement or modification in the temporary structure to classify it as permanent in the subject assessment year. Consequently, the issue of whether the structure was temporary or permanent had become res judicata. Therefore, the Court found no error in the Tribunal's decision to allow 100% depreciation, ultimately dismissing the appeal in favor of the assessee.

Appreciation of Section 263 of the Income Tax Act, 1961:
The Court also analyzed whether the Tribunal had correctly understood the scope of Section 263 of the Income Tax Act, 1961 in deciding that exercising such power in the case was not proper. Based on the previous judgment regarding the qualification of hoarding structures for depreciation, the Court dismissed the appeal in ITA No. 183 of 2018 in line with the decision made in ITA No. 55 of 2018. This consistent ruling favored the assessee and went against the revenue, highlighting the Court's adherence to its previous findings and interpretation of the law. The dismissal of the second appeal further reinforced the Court's stance on the issues raised in both cases, maintaining the position in favor of the assessee.

In conclusion, the High Court of Calcutta upheld the Tribunal's decision regarding the depreciation of hoarding structures, emphasizing the importance of previous findings and the lack of new evidence to challenge the classification of the structures. The Court's analysis of Section 263 of the Income Tax Act, 1961 further solidified its stance in favor of the assessee, leading to the dismissal of both appeals raised by the revenue.