High Court affirms depreciation claim for plant & machinery in business use for assessment year 1995-96.

The High Court upheld the Tribunal's decision to allow depreciation on plant and machinery for the assessment year 1995-96. The court dismissed the revenue's appeal, emphasizing that as the assets were used for business purposes and the purchase had been deemed genuine in a previous assessment year, the depreciation claim was valid. The judgment relied on the finality of the CIT(A)'s finding for the assessment year 1994-95 and affirmed the allowance of depreciation based on established precedents.

---

---

Issues:
- Disallowance of depreciation on plant and machinery for assessment year 1995-96.
- Justification of disallowance by Assessing Officer.
- Appeal filed by revenue against order of Commissioner of Income Tax (Appeals).
- Tribunal's decision upholding order of Commissioner of Income Tax (Appeals).
- Arguments by appellant-revenue and respondent assessee.
- CIT(A)'s order for assessment year 1994-95.
- Finality of CIT(A)'s finding for assessment year 1994-95.
- Tribunal's observations and decision.
- Answering the substantial question of law against the revenue.
- Dismissal of appeals.

Analysis:
The judgment by the High Court of Punjab and Haryana involved the disallowance of depreciation on plant and machinery for the assessment year 1995-96. The revenue filed an appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, which had allowed the depreciation claim disallowed by the Assessing Officer. The substantial question of law revolved around whether the Tribunal was correct in upholding the depreciation claim on assets not used for business purposes under Section 32(1) of the Income Tax Act.

The facts revealed that the Assessing Officer disallowed the depreciation claim amounting to Rs. 9,10,568 on plant and machinery, leading to the appeal by the assessee before the Commissioner of Income Tax (Appeals). The CIT(A) partly allowed the appeal by permitting the depreciation claim. Subsequently, the revenue filed an appeal before the Tribunal, which upheld the CIT(A)'s decision, prompting the revenue to approach the High Court.

The appellant-revenue argued that the machinery was let out without commercial expediency, and the Assessing Officer's disallowance was justified. However, the respondent assessee contended that the purchase and letting out of machinery were legitimate, citing a previous order by the CIT(A) for the assessment year 1994-95 that supported the depreciation claim.

The High Court noted that the CIT(A)'s finding for the assessment year 1994-95 had not been challenged and had attained finality. As the genuineness of the machinery purchase was not in doubt, the depreciation for subsequent years could not be disallowed. The Tribunal concurred with this view, emphasizing that the assets were used for the assessee's business, and the depreciation had been allowed in earlier assessment years.

Ultimately, the High Court dismissed the appeals, upholding the Tribunal's decision and answering the substantial question of law against the revenue. The judgment affirmed the allowance of depreciation on the plant and machinery for the assessment year 1995-96 based on the findings and precedents established in the earlier assessment year of 1994-95.

---