2008 (2) TMI 20 - HC - Income Tax

Assessee was having certain unabsorbed depreciation and the claim is admissible whether the Assessee carry on the same business or not. The claim for unabsorbed depreciation is a matter of record for which no factual finding is necessary. Petition dismissed since no question of law arise.

Summary

Issues:
Appeal against order of Income Tax Appellate Tribunal - Disallowance of cash credit and liabilities write-off - Addition to income - Rectification under Section 154 - Allowance of carry forward depreciation - Interpretation of Section 32(2) of the Act.

Analysis:
The High Court of Delhi dealt with an appeal by the Revenue against the order of the Income Tax Appellate Tribunal regarding the Assessment Year 1998-1999. The Assessee, engaged in manufacturing steel ingots, initially showed 'Nil' income but was later assessed by the Assessing Officer at Rs.1,09,19,779/- due to disallowed cash credit and liabilities write-off. The Commissioner of Income Tax (Appeal) (CIT(A)) deleted the addition on cash credits and disallowed the addition on unsecured loans due to business cessation. The Assessee sought rectification under Section 154, claiming unabsorbed depreciation should be allowed even if the business ceased, which the CIT(A) granted. The Revenue challenged this before the Tribunal, which upheld the Assessee's claim.

The Revenue contended that the CIT(A) allowing the claim for unabsorbed depreciation was erroneous as the Assessee never claimed depreciation previously, and the amendment in Section 32(2) required continuity in the same business. The Tribunal, however, held that the Assessee could claim for set off of unabsorbed depreciation regardless of continuing the same business. The High Court noted that the Tribunal's finding on unabsorbed depreciation was a matter of record, and the claim was admissible irrespective of the business continuity, leading to the dismissal of the Revenue's appeal.

In conclusion, the High Court found no fault with the Tribunal's decision, stating that the order did not raise a substantial question of law for appeal under Section 260-A of the Act. The Court dismissed the Revenue's appeal, upholding the Tribunal's judgment on the allowance of unabsorbed depreciation even in the absence of continuing the same business.