High Court upholds depreciation claim on capital assets despite deduction, citing Section 32.

The High Court dismissed the appeals filed by the Revenue, affirming that the assessee could claim depreciation on capital assets despite the expenditure being allowed as a deduction. It was held that the assessee could claim depreciation even if the assets were not used in any business. The decision was based on a Supreme Court precedent establishing the assessee's entitlement to depreciation under Section 32. The court ruled in favor of the assessee, in line with the Supreme Court's decision, and no costs were awarded.

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Issues:
- Whether the assessee could claim depreciation on capital assets even though the expenditure on such assets was allowed as a deductionRs.
- Whether the assessee would be entitled to claim depreciation even if the assets were not used in any business carried on by itRs.

Analysis:
1. The appeals were filed by the appellant/Revenue under Section 260A of the Income-tax Act, 1961, against the common order passed by the Income Tax Appellate Tribunal Bench 'A', Chennai, for the assessment years 2005-06 and 2006-07.

2. The substantial questions of law raised in the appeals were whether the assessee could claim depreciation on capital assets despite the expenditure on those assets being allowed as a deduction, and whether the assessee could claim depreciation even if the assets were not used in any business carried on by it as required under Section 32.

3. The learned Senior Standing Counsel for the Revenue acknowledged that the substantial questions of law framed in the appeals had been answered against the Revenue by the Hon'ble Supreme Court in a specific case, leading to the dismissal of the appeals.

4. The judgment was based on the precedent set by the Supreme Court in CIT vs. Rajasthan and Gujarati Charitable Foundation, where it was established that the assessee could claim depreciation on capital assets even if the expenditure on those assets was allowed as a deduction, and that the assessee could be entitled to claim depreciation even without using the assets in any business carried on by it.

5. Consequently, the High Court dismissed the appeals, ruling in favor of the assessee and answering the substantial questions of law against the Revenue, in line with the Supreme Court's decision. No costs were awarded in this judgment.

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