2015 (10) TMI 1861 - AT - Income Tax

Calculation of depreciation - CIT(A) not directing the Assessing Officer to calculate the depreciation on the basis of written down value as on 31.3.1994 and not setting off of the loss carried forward from assessment year 1994-95 - Held that - The written down value relevant for the assessment year 1994-95 remains the written down value of the assessment year 1995- 96 if there is a valid claim in the valid return, and the same should be considered for working out the depreciation for the assessment year 1996-97. Allowing set off of the brought forward losses, we find that this part of the ground was not attended to by the CIT(A). Therefore, we remand this issue to the file of the CIT(A) with the direction to adjudicate the same by passing a speaking order and after granting a reasonable opportunity of being heard to the assessee. - Decided partly in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Calculation of depreciation based on written down value for assessment year 1996-97.
2. Setting off of loss carried forward from assessment year 1994-95.

Issue 1: Calculation of depreciation based on written down value for assessment year 1996-97:
The appeal pertains to the order of the Commissioner of Income-tax (Appeals)-I, Chennai, for assessment year 1996-97. The Tribunal initially dismissed the appeal of the assessee related to depreciation calculation for this assessment year. The assessee contended that the written down value as on 31.3.1994 should be considered for computing allowable depreciation for 1996-97. The Hon'ble Madras High Court allowed this claim, emphasizing that the written down value for 1994-95 remains relevant for subsequent years if there is a valid claim in the valid return. The Tribunal was directed to reconsider this issue based on the High Court's judgment.

Issue 2: Setting off of loss carried forward from assessment year 1994-95:
The second issue involved the setting off of loss carried forward from 1994-95, which was not adjudicated by the CIT(A). The Tribunal dismissed this issue as it did not arise from the CIT(A)'s order. The matter was remanded to the ITAT by the High Court, which subsequently allowed the appeal of the assessee. The Tribunal, in light of the High Court's judgment, remanded this issue back to the CIT(A) for proper adjudication. The Tribunal directed the CIT(A) to pass a speaking order after granting a reasonable opportunity of being heard to the assessee.

In conclusion, the appeal was partly allowed for statistical purposes. The Tribunal directed the Assessing Officer to calculate depreciation based on the written down value as per the judgment of the Hon'ble Madras High Court. Additionally, the issue of setting off brought forward losses was remanded to the CIT(A) for proper consideration. The decision highlighted the importance of valid claims and proper adjudication in tax assessments, ensuring fair treatment for the assessee.