High Court affirms Tribunal's decision on depreciation claim & cess appeal under Income Tax Act

The High Court of Calcutta upheld the Income Tax Appellate Tribunal's decision to delete the depreciation claim, citing Section 33AB(1) and 33AB(4) of the Act. The Court also dismissed the appeal regarding cess paid under the Agricultural Income Tax Act, stating that the judgment of a Bench of coordinate strength is binding and no substantial question of law was found. Consequently, the Court affirmed the decisions of the Tribunal and the Commissioner of Income Tax (Appeals), leading to the dismissal of the Revenue's appeal.

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Issues involved: Appeal against deletion of depreciation claim and whether cess paid under Agricultural Income Tax Act is a business expenditure.

In the present case, the High Court of Calcutta considered an appeal by the Revenue challenging the deletion of depreciation claim by the Income Tax Appellate Tribunal. The issue revolved around whether depreciation could be allowed on assets funded through withdrawals from NABARD. The Revenue contended that as per Section 43(1) of the Act, the actual cost of assets would be nil if funded by any person or authority, thus warranting no claim towards depreciation. The Court noted a change in the law from 1990 and upheld the Tribunal's decision based on the amended provisions of Section 33AB(1) u/s 33AB(4), which deemed the amount utilized for the purchase of certain assets as profits chargeable to income tax.

Regarding the second issue of cess paid under the Agricultural Income Tax Act, the Court referred to a previous judgment and the pending special leave petition in the Supreme Court. It was emphasized that a judgment of a Bench of coordinate strength is binding, and since the Division Bench's judgment had not been set aside, no substantial question of law was found in the appeal. Consequently, the Court dismissed the appeal, affirming the decisions of the Tribunal and the Commissioner of Income Tax (Appeals).

Therefore, the Court's decision was based on the interpretation of relevant legal provisions and precedents, ultimately leading to the dismissal of the appeal by the Revenue.

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