Tribunal Rules Depreciation Claim Optional for Deductions u/s 80-IA When Not in Accounts.

The ITAT held that the assessee is not obligated to claim depreciation allowance while computing deductions under section 80-IA of the Income-tax Act, 1961, if it has not been claimed in the books of account. The Tribunal deemed contrary decisions as per incuriam, emphasizing judicial consistency and binding precedent. Consequently, the appeal was allowed, providing relief to the assessee.

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Issues Involved:
1. Whether the assessee has an option to claim depreciation allowance while computing deduction under section 80-IA of the Income-tax Act, 1961, if the depreciation is not claimed in the books of account.

Issue-wise Detailed Analysis:

1. Option to Claim Depreciation Allowance under Section 80-IA:

The primary issue in this appeal is whether the assessee can opt not to claim depreciation allowance while computing deduction under section 80-IA of the Income-tax Act, 1961, if the depreciation is not claimed in the books of account.

Tribunal's Decision in Plastiblends India Ltd.:
The Tribunal's decision in the case of Plastiblends India Ltd. v. ITO [2005] 94 ITD 295 (Mum.) supports the assessee's position. This decision concluded that if the assessee has not claimed depreciation in the books of account, it cannot be imposed upon the assessee for the purpose of computing the deduction under section 80-IA.

Contrary Decisions:
The Departmental Representative argued that subsequent Tribunal decisions have favored the revenue, specifically citing Prince SWR Systems (P.) Ltd. v. Dy. CIT [IT Appeal No. 2811 (Mum.) of 2004, dated 10-9-2004] and ITO v. Venus Jewels [IT Appeal No. 3842 (Mum.) of 2001, dated 25-10-2004]. These decisions followed the Bombay High Court judgment in Indian Rayon Corpn. Ltd. v. CIT [2003] 261 ITR 98, which was perceived to support the revenue's stance.

Analysis of Conflicting Decisions:
The Tribunal noted that in the Prince SWR Systems (P.) Ltd. case, the Tribunal did not follow the co-ordinate Bench decision in Plastiblends India Ltd. and instead relied on the Bombay High Court judgment in Indian Rayon Corpn. Ltd. However, the Plastiblends decision had already considered and dismissed the relevance of the Indian Rayon Corpn. Ltd. case to the issue at hand. According to the Supreme Court in Union of India v. Paras Laminates (P.) Ltd., a co-ordinate Bench should not disregard another co-ordinate Bench's decision on an identical issue.

Per Incuriam Decisions:
The Tribunal concluded that the decisions in Prince SWR Systems (P.) Ltd. and Venus Jewels were per incuriam, meaning they were made in ignorance of a binding precedent. The Tribunal emphasized the importance of judicial consistency and the doctrine of stare decisis, as articulated in CIT v. B.R. Constructions [1993] 202 ITR 222 (FB).

Binding Precedent:
The Tribunal reiterated that a decision which is per incuriam does not constitute a binding judicial precedent. It is not open for a Bench to differ from the view taken by a co-ordinate Bench of equal strength without referring the matter to a larger Bench, as per the principles laid down by the Hon'ble Andhra Pradesh High Court in B.R. Constructions.

Conclusion:
The Tribunal followed the decision in Plastiblends India Ltd., holding that it is not permissible for the Assessing Officer to impose depreciation allowance while computing deduction under section 80-IA if the assessee has not claimed the depreciation in the books of account. Consequently, the appeal was allowed, granting relief to the assessee.

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