2020 (2) TMI 331 - HC - Income Tax

Claim of warranty provision - allowability of the higher rate of depreciation at 40% on plastic moulds - HELD THAT - We dispose of the present Appeal filed by the Assessee and setting aside the order of the learned Income Tax Appellate Tribunal dated 03.11.2008 for assessment year 2002-03, we remand the case back to the Income Tax Appellate Tribunal for deciding the said appeal in accordance with law afresh in terms of the aforesaid order passed by the Coordinate Bench of this Court for previous assessment years viz., 2000-01 and 2001-02.

Summary

Issues involved:
1. Claim of warranty provision
2. Allowability of higher rate of depreciation at 40% on plastic moulds

Claim of Warranty Provision:
The High Court considered a case where the issue of warranty provision and higher depreciation rate on plastic moulds were in question. Referring to a previous judgment, the court highlighted that warranty provisions are valid if they arise from past events leading to a present obligation and a reliable estimate of the obligation amount. The court set aside the Income Tax Appellate Tribunal's order due to lack of discussion on the merits and remanded the case back to the Tribunal for reconsideration based on the guidelines provided by the Apex Court. The court directed the Tribunal to assess the warranty provision issue in conjunction with the claim of higher depreciation on plastic moulds.

Higher Rate of Depreciation on Plastic Moulds:
Regarding the claim for higher depreciation on plastic moulds at 40%, the court noted that this issue was previously raised and decided in a separate case. The court referred to a prior order where the matter was remitted back to the Assessing Officer for further examination. In the current case, the court decided to remand the issue back to the Income Tax Appellate Tribunal for a fresh decision. The Tribunal was instructed to seek a report from the Assessing Officer and consider any relevant certificates provided by the assessee to determine the eligibility for claiming depreciation at the higher rate.

In conclusion, the High Court disposed of the appeal by setting aside the Income Tax Appellate Tribunal's order for the assessment year 2002-03. The case was remanded back to the Tribunal for a fresh decision in line with the court's previous order related to the assessment years 2000-01 and 2001-02. The Tax Case Appeal was ultimately disposed of without any order as to costs.