2019 (6) TMI 1167 - HC - Income Tax

Depreciation on leased assets - Deduction as payment towards scientific research assistance - Reduction of exemption claimed by the Appellant u/s 10 and in this regard relying upon the provisions of section 14A - HELD THAT - Appeal is admitted for consideration of following substantial questions of law - i. Whether the Tribunal erred in holding that the Appellant is not entitled to depreciation of ₹ 93,75,63,113/- on leased assets? ii. Whether the Tribunal ought to have allowed the Appellant s claim for deduction of ₹ 27,52,444/- as payment towards scientific research assistance? iii. Whether the Tribunal erred in upholding the reduction of exemption claimed by the Appellant under section 10 of the Act and in this regard relying upon the provisions of section 14A of the Act?

Issues involved:
1. Depreciation on leased assets
2. Deduction for payment towards scientific research assistance
3. Reduction of exemption claimed under section 10 of the Act
4. Deduction for write off of bad debts under section 36(1)(vii)
5. Taxability of recovery of bad debts written off under section 41(4)
6. Assessment of income earned from foreign branches
7. Deduction for depreciation on matured investments

1. Depreciation on leased assets:
The primary issue was whether the appellant was entitled to depreciation of a significant amount on leased assets. The Tribunal's decision to deny this depreciation was challenged, raising a substantial question of law for consideration.

2. Deduction for payment towards scientific research assistance:
Another issue involved the appellant's claim for deduction of a specific amount as payment towards scientific research assistance. The Tribunal's decision on this claim was questioned, seeking a review of whether the deduction should have been allowed.

3. Reduction of exemption claimed under section 10 of the Act:
The Tribunal's decision to uphold the reduction of exemption claimed by the appellant under section 10 of the Act, while relying on the provisions of section 14A of the Act, was a significant issue raised for consideration.

4. Deduction for write off of bad debts under section 36(1)(vii):
The appellant raised questions regarding the Tribunal's decision to set aside additional grounds related to the deduction for write off of bad debts under section 36(1)(vii). The issue of whether this deduction should have been granted was a key point of contention.

5. Taxability of recovery of bad debts written off under section 41(4):
An important issue was whether the recovery of bad debts previously written off could be assessed to tax under section 41(4) of the Act. The appellant challenged the Tribunal's decision on this matter.

6. Assessment of income earned from foreign branches:
The question of whether income earned by the appellant from foreign branches could be assessed in India was raised. The appellant sought clarity on the tax treatment of such income based on the tax treaty between India and the respective country.

7. Deduction for depreciation on matured investments:
Lastly, the appellant's claim for deduction of a specific amount in respect of depreciation on matured investments was disputed. The issue of whether this deduction should have been allowed was a subject of contention.

The judgment highlighted the substantial questions of law raised by the appellant and the issues surrounding each question. The decision not to entertain additional questions was explained, with reference to a separate order passed in a related case. The matter was directed to be heard along with another income tax appeal. The registry was instructed to provide a copy of the order to the Tribunal for necessary action.

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