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of <h1>High Court affirms Tribunal's decision on tax deductions & depreciation for assessee</h1> The High Court upheld the Tribunal's decision to allow the deduction under Section 80IB and the entitlement to depreciation under Section 32(1) of the Act ... Deduction u/s 80IB of the Act – Held that:- Section 80IB(2) is applicable only in the case, where there is an Amalgamation or demerger - That does not mean that a transferor of industrial undertaking by any other mode is not entitled to claim deduction u/s 80IB - it would not be correct to say that deduction u/s 80IB is available only where transfer of the unit/industrial undertaking is under the scheme of amalgamation or demerger - the unit/industrial undertaking enjoyed the deduction u/s 80IB from 01.04.1993 till 30.08.2000 i.e., till the unit/industrial undertaking was transferred to the assessee – thus, there is no reason to interfere with the findings of the Tribunal allowing the claim of the assessee – Decided against Revenue. Entitlement for depreciation u/s 32(1) of the Act - Whether the Tribunal was justified in holding that the land and factory building, agreed to be purchased from M/s. Wipro Ltd., which had a right under a lease cum sale agreement, would be entitled to depreciation u/s 32(1) of the Act – Held that:- The assessee got into possession of the unit/industrial undertaking from Wipro by virtue of the Agreement to sale and since then, is in possession thereof in its own right exercising such dominion over the same and have right to use, occupy and to enjoy its usufruct in its own right – the decision in [2000 (12) TMI 4 - SUPREME Court] followed - the Tribunal has rightly allowed the depreciation - it was not possible to reach the conclusion that the assessee had acquired domain over the Mill in question - there is lot of materials placed on record, which indicate that the assessee had acquired dominion over the unit/industrial undertaking on 30.08.2000 – thus, there is no merit in the appeal – Decided against Revenue. Issues:1. Interpretation of Section 80IB for deduction allowance.2. Entitlement to depreciation under Section 32(1) of the Act.Analysis:Issue 1: Interpretation of Section 80IB for deduction allowanceThe case involved a dispute regarding the interpretation of Section 80IB of the Income Tax Act, 1961. The assessee had purchased a running industrial unit from another company and claimed deduction under Section 80IB for the assessment year 2001-02. The Assessing Officer disallowed the deduction, stating that the transfer was not through amalgamation as required by sub-section (12) of Section 80IB. However, the Tribunal allowed the deduction, emphasizing that the deduction is relatable to the unit or industrial undertaking. The High Court upheld the Tribunal's decision, stating that the deduction under Section 80IB is available to whoever is running the unit or industrial undertaking, irrespective of the mode of transfer. The Court emphasized that the deduction is linked to the business itself, and as long as the conditions are met, the deduction should be allowed.Issue 2: Entitlement to depreciation under Section 32(1) of the ActThe second issue revolved around the entitlement to depreciation under Section 32(1) of the Act for the building, plant, and machinery purchased by the assessee. The Assessing Officer had disallowed depreciation, arguing that the ownership rights over the land were not transferred to the assessee. However, the Tribunal overturned this decision, citing a Supreme Court judgment that defined ownership for the purpose of depreciation. The Court held that the assessee, having acquired possession and dominion over the unit/industrial undertaking, was entitled to depreciation. The Court emphasized that the person in possession and using the property for business purposes should be allowed depreciation, regardless of formal title deeds. The Court distinguished this case from a previous judgment where the assessee had not acquired dominion over the property. Ultimately, the Court ruled in favor of the assessee on this issue as well, allowing the depreciation claim.In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision to allow the deduction under Section 80IB and the entitlement to depreciation under Section 32(1) of the Act for the assessee.
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