Case Note & Summary
The Revenue appealed against the Income Tax Appellate Tribunal's order allowing the assessee's appeal. The assessee, a company engaged in hotel business, filed a return showing total loss of Rs.12,11,91,594/-. The Assessing Officer computed loss after allowing depreciation, rejecting the assessee's contention that depreciation being optional cannot be thrust upon it. The Commissioner of Income Tax (Appeals) confirmed the Assessing Officer's order. The Tribunal allowed the assessee's appeal. The High Court upheld the Tribunal's decision, holding that depreciation is optional and cannot be forced on the assessee when there is total loss. The appeal was dismissed.
Headnote
A) Income Tax - Depreciation - Optional Nature - Section 32, Income Tax Act, 1961 - Depreciation is optional and cannot be thrust upon the assessee when the assessee has not claimed it and there is total loss - The Assessing Officer cannot compel the assessee to claim depreciation to reduce the loss - Held that the assessee is entitled to compute loss without claiming depreciation (Paras 1-4).
Issue of Consideration
Whether depreciation can be thrust upon the assessee when the assessee has not claimed it and there is total loss?
Final Decision
Appeal dismissed; Tribunal order upheld; depreciation cannot be thrust upon assessee.
Law Points
- Depreciation is optional
- cannot be thrust upon assessee
- Section 80IB deduction
- loss computation
- Section 143(1)
- Section 143(2)
Case Details
2014 LawText (BOM) (12) 97
Ms.Asha Desai for the Appellant, Mr.A.F.Diniz for the Respondent
The Commissioner of Income Tax
V.M.Salgaonkar & Brothers Pvt. Ltd.
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Nature of Litigation
Tax appeal by Revenue against Tribunal order allowing assessee's appeal on depreciation claim.
Remedy Sought
Revenue sought to set aside Tribunal order and restore Assessing Officer's order.
Filing Reason
Revenue aggrieved by Tribunal allowing assessee's claim that depreciation cannot be thrust upon it.
Previous Decisions
Assessing Officer rejected assessee's contention and computed loss after allowing depreciation; Commissioner of Income Tax (Appeals) confirmed; Tribunal allowed assessee's appeal.
Issues
Whether depreciation can be thrust upon the assessee when not claimed and there is total loss?
Submissions/Arguments
Assessee argued depreciation is optional and cannot be thrust upon it; Revenue argued depreciation must be allowed as per Act.
Ratio Decidendi
Depreciation under Section 32 of the Income Tax Act is optional and cannot be forced on the assessee when the assessee has not claimed it and there is total loss.
Judgment Excerpts
Depreciation being optional, cannot be thrust upon the assessee.
The assessee is entitled to compute loss without claiming depreciation.
Procedural History
Assessee filed return on 31.10.2001; processed under Section 143(1) on 23.09.2002; notice under Section 143(2) on 16.10.2002; Assessing Officer passed order; appeal to CIT(A) dismissed; appeal to Tribunal allowed on 28.06.2006; Revenue filed present appeal.
Acts & Sections
- Income Tax Act, 1961: Section 80IB, Section 143(1), Section 143(2), Section 32
