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Issues involved: Appeal against order of CIT(A) u/s 143(3) of IT Act, 1961 for AY 2002-03; Disallowance of depreciation; Interpretation of provisions of s. 32 and s. 43(6)(c) regarding claim of depreciation on sold asset.
Issue 1: Impugned order of AO The appellant raised grounds challenging the order of the AO as being bad in law, arbitrary, and devoid of jurisdiction. The order was criticized for not following proper legal procedures and principles of natural justice. The CIT(A) was accused of upholding the impugned order erroneously. Issue 2: Disallowance of depreciation The AO disallowed depreciation of Rs. 1,01,400 on a car confiscated during the year, citing s. 32 provisions disallowing depreciation on sold assets. The CIT(A) upheld this disallowance. The appellant contended that the car was still in use and depreciation should be allowed, referencing relevant case law. Issue 3: Interpretation of s. 32 and s. 43(6)(c) The Tribunal analyzed the provisions of s. 32 and s. 43(6)(c) regarding the calculation of depreciation on block of assets. The appellant argued for depreciation on a car sold during the year, while the AO had declined the claim. The Tribunal found discrepancies in the treatment of the sold car and directed the AO to recompute depreciation in accordance with the law. In the judgment, the Tribunal addressed the appellant's contentions against the impugned order, the disallowance of depreciation, and the interpretation of relevant provisions. The Tribunal noted the discrepancies in the treatment of the sold car for depreciation purposes and directed the AO to recompute the claim in line with the provisions of s. 32(1) and s. 43(6)(c) of the IT Act, 1961. Ultimately, the appeal was allowed in part for statistical purposes, emphasizing the importance of correct application of depreciation rules in determining taxable income.
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