2022 (6) TMI 1352 - HC - Income Tax

Additional depreciation - Whether Tribunal is justified in deleting the disallowance of claim of additional depreciation during the year by merely relying upon the judgment passed in M/s Brakes India Limited 2017 (4) TMI 511 - MADRAS HIGH COURT not applicable to the facts of the present case and ignoring the Tax Audit Report in Form 3CD issued by the Tax Auditor certifying the allowable depreciation as per law? Whether the instant case falls under the exception clause in circular no. 3 of 2018 issued by the CBDT, where Board has directed to file an appeal on merits in cases where audit objection has been accepted by the department? HELD THAT - Issue notice on the respondent in the post admission matter, for which requisites under registered cover with A/D and speed post be filed within two weeks. Office to track the speed post-delivery. Additionally, appellant shall also effect service of notice on the official e-mail address of the Respondent containing attachment of the entire Memo of Appeal and its Annexures within the same time and file supplementary affidavit to that effect within one week thereafter.

Summary

Issues Involved:
1. Whether the Income Tax Appellate Tribunal was justified in deleting the disallowance of claim of additional depreciation.
2. Whether the case falls under the exception clause in circular no. 3 of 2018 issued by the CBDT.

Analysis:

Tax Appeal No. 08 of 2021:
1. The first issue in this appeal questions the justification of the Income Tax Appellate Tribunal in deleting the disallowance of the claim of additional depreciation. The appellant argues that the Tribunal erred in relying on a judgment not applicable to the present case and disregarding the Tax Audit Report certifying the allowable depreciation. The Tribunal's decision is being challenged based on the interpretation of the law and the facts of the case.

2. The second issue pertains to whether the case falls under the exception clause in circular no. 3 of 2018 issued by the CBDT. This circular directs the filing of an appeal on merits in cases where audit objections have been accepted by the department. The appellant seeks clarification on whether the circumstances of this case align with the criteria specified in the circular, warranting further examination of the appeal on its merits.

Tax Appeal No. 09 of 2021:
1. Similarly to the previous appeal, the first issue raised questions the justification of the Income Tax Appellate Tribunal in deleting the disallowance of the claim of additional depreciation. The appellant contests the Tribunal's decision based on the applicability of a previous judgment and the alleged oversight of the Tax Audit Report's certification of allowable depreciation. The legal interpretation and factual analysis are central to this issue.

2. The second issue in this appeal also revolves around the exception clause in circular no. 3 of 2018 issued by the CBDT. The appellant seeks to determine whether the circumstances of this case meet the criteria outlined in the circular, which mandates the filing of an appeal on merits when audit objections have been acknowledged by the department. The interpretation and application of this circular are crucial to the resolution of this issue.

In both appeals, the High Court has called for the Lower Court Records and issued notices to the respondent for further proceedings. The appellant has been instructed to ensure proper service of notice through registered post and email within specified timelines. The judgments delivered by the High Court will likely address the legal arguments presented by the appellant and assess the application of relevant laws and circulars to the specific circumstances of the cases.