2001 (1) TMI 213 - AT - Income Tax

Summary

Issues:
- Whether the AO can thrust depreciation upon the assessee and reduce the profits eligible for deduction under s. 80-IA without the assessee claiming depreciation or furnishing necessary particulars.

Analysis:
1. The appeal concerns the imposition of depreciation by the AO on the assessee, affecting the deduction under s. 80-IA. The AO reduced the assessee's claim by the amount of depreciation, alleging tax avoidance due to non-claiming of depreciation for the Daman unit.

2. The CIT(A) upheld the AO's decision, citing the statutory nature of depreciation under s. 32, post the omission of requirements for furnishing particulars. The Tribunal was then tasked with determining whether the AO could impose depreciation without the assessee's claim and the impact of the omission of statutory provisions.

3. The Tribunal referred to the Supreme Court's judgment in CIT vs. Mahendra Mills, emphasizing the assessee's right to choose whether to claim depreciation. Various High Court judgments were cited, supporting the principle that depreciation cannot be thrust upon the assessee. The Tribunal noted that the absence of a claim by the assessee restricts the AO's power to allow depreciation.

4. Despite the Revenue's argument that the omission of certain provisions altered the position, the Tribunal reiterated the Supreme Court's stance that the claim for depreciation is solely the assessee's choice. The Tribunal highlighted that even without specific rules, the assessee must make a claim for depreciation to be eligible for the allowance.

5. The Tribunal rejected the Revenue's contentions, emphasizing that the assessee's decision not to claim depreciation for the Daman unit was valid. Citing the Mahendra Mills judgment, the Tribunal allowed the assessee's appeal, accepting the deduction under s. 80-IA without reducing it by the unclaimed depreciation amount.

6. In conclusion, the Tribunal's decision aligned with the principle that depreciation cannot be imposed on the assessee without a claim, even in the absence of specific statutory requirements. The judgment reaffirmed the assessee's right to choose whether to claim depreciation, ultimately ruling in favor of the assessee's appeal.