Tribunal Upholds CIT(A) Decisions on Depreciation & Interest Disallowance

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on the deletion of depreciation disallowance and the levy of interest under sections 234B and 234C of the Income Tax Act 1961. The Tribunal ruled in favor of the assessee, emphasizing that the assets were used for business purposes and not disposed of, leading to the rejection of the revenue's arguments. Additionally, the Tribunal concurred with the recent High Court decision that no interest could be imposed on the assessee for failure to pay tax at source, ultimately affirming the CIT(A)'s orders on both issues.

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Issues Involved: Appeal against deletion of depreciation disallowance and levy of interest u/s 234B and 234C of the Income Tax Act 1961.

Deletion of Depreciation Disallowance:
The case involved an appeal by the revenue against the deletion of disallowance of depreciation. The assessee, a non-resident company engaged in dredging operations in India, had filed its return declaring total income. The original assessment u/s 143(3) was completed, followed by a notice u/s 148. The AO completed the assessment at a higher income, including disallowance of depreciation. The ld. CIT(A) deleted both disallowances. The revenue appealed, arguing against the deletion. Both parties agreed that the issue was in favor of the assessee based on previous Tribunal decisions and High Court rulings. The Tribunal upheld the CIT(A)'s order, citing that the assets were used for business purposes and not sold, discarded, or demolished, thus rejecting the revenue's appeal.

Levy of Interest u/s 234B and 234C:
The appeal also contested the levy of interest u/s 234B and 234C. Both parties agreed that this issue favored the assessee based on a recent High Court decision. The Tribunal found merit in the parties' plea, citing the High Court's decision that when a duty is cast on the payer to pay tax at source, no interest can be imposed on the payee-assessee for failure to do so. The Tribunal upheld the CIT(A)'s order on this issue, rejecting the revenue's grounds.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the decisions of the CIT(A) on both the deletion of depreciation disallowance and the levy of interest u/s 234B and 234C.

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