2017 (3) TMI 1255 - HC - Income Tax

Revision u/s 263 - entitled to claim additional depreciation - we allow the instant appeal, making it clear that since the assessee has not assailed the impugned judgment of the Tribunal in this appeal with respect to the issues other than that which deals with the assessee s right to carry forward the balance additional depreciation to the subsequent year, the other parts of the impugned judgment will remain intact and will not be affected by the order passed by us today. The appeal, to our minds, will have to be allowed, even, vis-a-vis Questions (i) and (ii) as well, in so far as they relate to Question no.(iii), as it cannot be said, at this juncture, that the order of the Assessing Officer was erroneous in law.

Summary

Issues:
1. Jurisdiction under Section 263 of the Income Tax Act.
2. Allowance of additional depreciation by the Assessing Officer.
3. Entitlement to claim additional depreciation during a specific assessment year.

Issue 1: Jurisdiction under Section 263 of the Income Tax Act

The appellant filed an appeal under Section 260A of the Income Tax Act, 1961, for the Assessment Year 2004-05. The Tribunal upheld the order passed by the Commissioner of Income-Tax under Section 263 of the Act. The Commissioner had issued a notice to the appellant regarding various issues, including the right to carry forward balance additional depreciation. The Tribunal's decision was based on the Commissioner's powers under Section 263.

Issue 2: Allowance of additional depreciation by the Assessing Officer

The Tribunal's judgment was influenced by the Commissioner's notice under Section 263, which included the issue of carrying forward additional depreciation. The Tribunal's decision aligned with previous judgments that favored the appellant's right to claim additional depreciation. The Tribunal considered the Assessing Officer's decision to allow additional depreciation after assessing the replies from the assessee. The Tribunal concluded that the Commissioner rightly invoked jurisdiction under Section 263 of the Act.

Issue 3: Entitlement to claim additional depreciation during a specific assessment year

The substantial questions of law framed during the appeal included whether the Tribunal was correct in holding that the assessee is not entitled to claim additional depreciation during the relevant assessment year. The judgments delivered on similar issues on the same day favored the assessee's position. The counsel for both parties agreed that the question regarding the entitlement to claim additional depreciation should be answered in favor of the assessee. The Court ordered accordingly, indicating that the assessee's right to carry forward balance additional depreciation to the subsequent year was valid.

In conclusion, the High Court allowed the appeal, emphasizing that the Tribunal's judgment would remain intact concerning issues other than the right to carry forward additional depreciation. The Court clarified that the order of the Assessing Officer was not erroneous in law, and thus, the appeal was allowed without any costs.