Court upholds Tribunal's decision on interest income, depreciation, and assessment restoration.

The High Court dismissed the appeal, upholding the Tribunal's decision to delete the addition of interest income accrued on an advance made to the Haryana State Electricity Board based on the communication from the Haryana Government. The Court also supported the Tribunal's allowance of depreciation on capital assets, rejecting the revenue's argument of double deduction and justifying the decision in line with previous court rulings. Additionally, the Court affirmed the restoration of the issue to the assessing officer without examining the merits, following the Bombay High Court decision.

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Issues:
1. Disputed addition of interest income accrued on advance made to Haryana State Electricity Board.
2. Disputed deletion of addition of interest income based on accounting system followed by the assessee.
3. Allowance of depreciation on capital assets already considered as application of income for exemption under section 11.
4. Justification of allowing depreciation on capital assets in light of previous court decisions.
5. Disputed deletion of addition based on accounting system followed by the assessee.
6. Restoration of issue to assessing officer without examining merits as per Bombay High Court decision.

Issue 1:
The appeal involved a dispute regarding the addition of interest income accrued on an advance made to the Haryana State Electricity Board. The Tribunal deleted the addition based on a communication from the Haryana Government regarding the return of principal amount of FDRs, but the revenue contended that the interest had accrued to the assessee during the year.

Issue 2:
Another point of contention was the deletion of the addition of interest income by the Tribunal based on the assessee's cash system of accounting. The revenue argued that the assessee followed a mixed system of accounting, as evident from audit reports, and should not have been allowed to delete the addition.

Issue 3:
The Tribunal allowed depreciation on capital assets, which the revenue challenged as leading to double deduction since the capital expenditure had already been considered as "application of income" for exemption under section 11. This raised concerns about the justification of allowing depreciation on the same expenditure.

Issue 4:
The justification of allowing depreciation on capital assets was further questioned in light of a previous decision by the Hon'ble Apex Court in the case of Escorts India Ltd., where it was held that two deductions on the same expenditure should not be permitted unless there is a clear statutory indication.

Issue 5:
Similar to the first issue, the deletion of the addition of interest accrued on an advance made to the Haryana State Electricity Board was disputed based on the accounting system followed by the assessee, with the revenue arguing against the deletion due to the mixed system of accounting.

Issue 6:
The decision of the Ld. ITAT to restore the issue to the assessing officer without examining the merits was questioned, citing a decision of the Bombay High Court. The revenue contended that the issue should have been examined on its merits rather than being sent back for a fresh decision.

In conclusion, the appeal was dismissed by the High Court, noting that a similar appeal had been dismissed previously.

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