Tribunal Orders No Unclaimed Depreciation Imposition; Deducts Depreciation for Section 80-IA Deductions in Appeal.

The Tribunal partially allowed the assessee's appeal, directing the AO not to impose unclaimed depreciation and to compute deductions under section 80-IA without deducting depreciation. The Tribunal confirmed the CIT(A)'s decisions on other issues, as these grounds were not pressed by the assessee, including the assessment of rent income and interest earned on SBI Bonds.

---

---

Issues Involved:
1. Thrusting of depreciation u/s 32.
2. Assessment of rent income as income from house property.
3. Disallowance of depreciation in respect of Delhi office property.
4. Computation of deductions u/s 80-IA.
5. Assessment of interest earned on SBI Bonds as income from other sources.

Summary:

1. Thrusting of depreciation u/s 32:
The assessee contested the CIT(A)'s decision to uphold the Assessing Officer's (AO) action of thrusting depreciation of Rs. 2,67,69,235 on the company, despite the company not claiming it. The AO argued that not claiming depreciation was a form of tax planning to maximize deductions u/s 80-IA. The CIT(A) upheld the AO's decision, noting that the legal position changed after the deletion of section 34. However, the assessee cited the Supreme Court's decision in CIT v. Mahendra Mills, which clarified that depreciation cannot be forced upon an assessee if not claimed. The Tribunal agreed with the assessee, stating that the Bombay High Court's decision in Indian Rayon Corpn. Ltd. v. CIT was not applicable as the facts differed. The Tribunal concluded that depreciation cannot be thrust upon the assessee if not claimed, even after the deletion of section 34.

2. Assessment of rent income as income from house property:
The assessee's ground that the rent income of Rs. 3,60,000 should be assessed as business income rather than income from house property was not pressed. Therefore, the CIT(A)'s decision to assess it as income from house property was confirmed.

3. Disallowance of depreciation in respect of Delhi office property:
The assessee did not press the ground regarding the disallowance of depreciation of Rs. 2,72,583 for the Delhi office property. Consequently, the CIT(A)'s decision was upheld.

4. Computation of deductions u/s 80-IA:
The CIT(A) held that the ground regarding the computation of deductions u/s 80-IA was infructuous as it was linked to the allowance of depreciation. The Tribunal directed the AO to allow the deduction u/s 80-IA without deducting depreciation, following the decision on the first issue.

5. Assessment of interest earned on SBI Bonds as income from other sources:
The assessee did not press the ground regarding the assessment of interest earned on SBI Bonds as income from other sources. Thus, the ground was rejected as not pressed.

Conclusion:
The assessee's appeal was partly allowed, with the Tribunal directing the AO not to allow depreciation that was not claimed by the assessee and to compute deductions u/s 80-IA accordingly. Other grounds not pressed by the assessee were confirmed as decided by the CIT(A).

---