2020 (2) TMI 491 - HC - Income Tax

Unabsorbed depreciation claimed u/s 32(2) - Claim beyond the period of eight years - Tribunal deleted the addition - HELD THAT - ITAT has placed reliance on two decisions, namely the decision of the Gujarat High Court in M/s General Motors India Pvt. Ltd. Vs. DCIT, 2012 (8) TMI 714 - GUJARAT HIGH COURT which has been followed by this Court in Motor General Finance Limited Vs. ITO 2017 (5) TMI 637 - DELHI HIGH COURT this Court has also considered the said issued in PCIT-2 Vs. British Motor Car Co. (1934) Limite d, 2018 (1) TMI 547 - DELHI HIGH COURT thereby holding in favour of the assessee that the assessee is entitled to avail of the unabsorbed depreciation beyond the period of eight years which was prescribed under the unamended Section 32 of the Act. No substantial question of law arises

Summary

Issues involved: Revenue appeal against deletion of addition of unabsorbed depreciation under Section 32(2) of the Income Tax Act for Assessment Year 1997-98.

Analysis:
1. Issue: Revenue appeal against deletion of addition of unabsorbed depreciation
The Revenue appealed against the order of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of addition of ?6,78,59,423/- on account of unabsorbed depreciation claimed for the Assessment Year 1997-98 under Section 32(2) of the Income Tax Act. The sole issue raised by the Revenue was whether the Commissioner of Income Tax (Appeals) was justified in deleting the said addition. The ITAT relied on the decisions of the Gujarat High Court and the Delhi High Court in similar cases, where it was held that the assessee is entitled to avail unabsorbed depreciation beyond the prescribed period of eight years under the unamended Section 32 of the Act.

2. Decision of the Court
The High Court, after considering the precedents and the arguments presented, held that no substantial question of law arises for consideration in the present appeal. Therefore, the appeal was dismissed. The Court affirmed the decision of the ITAT in allowing the assessee to claim unabsorbed depreciation beyond the statutory limit of eight years, as per the interpretations of the relevant provisions of the Income Tax Act. The judgment provides clarity on the interpretation of Section 32(2) and affirms the rights of the assessee to claim unabsorbed depreciation beyond the prescribed period, in line with the decisions of the higher courts.

In conclusion, the judgment by the Delhi High Court in this case provides a significant clarification on the issue of claiming unabsorbed depreciation under Section 32(2) of the Income Tax Act for the Assessment Year 1997-98. The Court's decision to dismiss the Revenue's appeal and uphold the ITAT's decision based on established legal precedents reinforces the rights of the assessee to avail of unabsorbed depreciation benefits beyond the statutory limit, as interpreted by previous judicial decisions.