2018 (9) TMI 2044 - AT - Income Tax

ITAT Delhi allows assessee's appeal on depreciation revision under IT Act

The ITAT Delhi allowed the appeal of the assessee concerning the revision of depreciation allowance under section 263 of the IT Act for the assessment ... Revisionary power of the Commissioner under section 263 - Allowance of depreciation as application of income by a charitable trust - Binding effect of a Supreme Court precedent on identical issue - Finality of appellate decision on the issueRevisionary power of the Commissioner under section 263 - Allowance of depreciation as application of income - Binding effect of a Supreme Court precedent - Validity of the order under section 263 setting aside allowance of depreciation where the assessing officer and the appellate authority have already considered the matter and the appellate authority allowed the depreciation following a Supreme Court decision. - HELD THAT: - The revisionary exercise under section 263 was directed to verify whether the cost of assets had earlier been allowed as application of income. Pursuant to that revision the assessing officer disallowed depreciation, but the Commissioner (Appeals) allowed the depreciation treating it as application of income in view of the decision of the Hon'ble Supreme Court in CIT vs. Rajashthan & Gujrat Charitable Foundation. The Tribunal observed that once the appellate authority has decided the issue in favour of the assessee and the conclusion is supported by the binding Supreme Court precedent on the identical point, there remains no subsisting controversy for which the section 263 order can survive. Accordingly, the Tribunal held that the revisional order could not be sustained and set it aside. [Paras 3, 4]Order under section 263 set aside and the appeal allowed, thereby restoring the allowance of depreciation as held by the CIT(A) in reliance on the Supreme Court authority.Final Conclusion: The Tribunal set aside the revisional order passed under section 263 and allowed the assessee's appeal, holding that the appellate decision in favour of the assessee, reinforced by a binding Supreme Court precedent, left no scope for sustaining the revision. Issues:1. Revision of depreciation allowance under section 263 of the IT Act for the assessment year 2011-12.Analysis:The appeal in question stemmed from an order under section 263 of the IT Act issued by the ld. CIT(E), New Delhi, pertaining to the allowance of depreciation on assets for the assessment year 2011-12. The ld. CIT(E) directed the matter back to the AO to conduct further inquiries regarding whether the cost of the assets had been previously allowed as an application of income. Subsequently, the AO disallowed the depreciation claimed by the assessee amounting to Rs. 40,62,845 in compliance with the revision order. However, the ld. CIT(A) reversed this decision and allowed the depreciation as an application of income, citing a precedent set by the Hon'ble Supreme Court in a specific case.Upon reviewing the submissions from both parties, the ITAT Delhi observed that since the ld. CIT(A) had already ruled in favor of the assessee on the matter, there was no further issue to be decided in the current appeal. The tribunal noted that the Hon'ble Supreme Court had already made a decisive ruling in a similar case, supporting the assessee's position. Consequently, the ITAT Delhi set aside the order issued under section 263, thereby allowing the appeal of the assessee. As a result, the appeal was deemed successful, and the decision was pronounced in an open court session on 4th September 2018.