Tribunal upholds deletion of excess depreciation claimed; Supreme Court dismisses SLP.

The Tribunal upheld the deletion of excess depreciation claimed by the assessee for the Assessment Year 2007-08 in a case challenging the validity of proceedings under section 147 of the Income-tax Act, 1961. The CIT(A) found that the assessee did not qualify for a higher rate of depreciation as they were not a mineral oil concern but granted relief based on a jurisdictional High Court decision. The Supreme Court's dismissal of the SLP against the High Court's decision allowed the Tribunal to maintain the deletion of excessive depreciation, leading to the dismissal of both the revenue's appeal and the assessee's cross objection.

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Issues Involved:
Challenging order dated 14/07/2014 in Appeal No. 389/11-12 - Revenue filed ITA 5709/del/2014, assessee filed cross objection No. 201/del/2017. Validity of proceedings under section 147 of the Income-tax Act, 1961. Claiming excessive depreciation on plant and machinery for Assessment Year 2007-08. Disallowance of excessive depreciation by Assessing Officer. Application of higher rate of depreciation. Dismissal of SLP preferred against the order of the Hon'ble jurisdictional High Court. Upholding deletion of excess depreciation claimed by the assessee.

Analysis:
The case involved a challenge to an order dated 14/07/2014 in Appeal No. 389/11-12, where the revenue filed ITA 5709/del/2014 and the assessee filed cross objection No. 201/del/2017. The primary issue was the validity of proceedings under section 147 of the Income-tax Act, 1961, concerning the claim of excessive depreciation on plant and machinery for the Assessment Year 2007-08. The Assessing Officer disallowed the excessive depreciation claimed by the assessee, citing that the assessee was not eligible for a higher rate of depreciation as they were not a mineral oil concern. This led to the initiation of proceedings under section 147 of the Act.

During the appeal, the CIT(A) upheld the validity of the section 147 proceedings but found that the assessee, engaged in providing plant and machinery on hire, owned oil rigs leased out to mineral oil concerns. The CIT(A) observed that the assessee did not fulfill the conditions to claim depreciation at 60% as they were not a mineral oil concern. However, relying on a decision of the jurisdictional High Court, the CIT(A) granted relief to the assessee and deleted the addition of excessive depreciation.

The Tribunal noted that the SLP preferred against the jurisdictional High Court's decision was dismissed by the Supreme Court. As there was no legal impediment to follow the High Court's decision, the Tribunal upheld the deletion of excess depreciation claimed by the assessee. Consequently, the Tribunal dismissed the appeal of the revenue and the cross objection raised by the assessee, as the relief had already been granted on the merits of the case. The order was pronounced in open court on 18th December 2018.

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