Tribunal allows depreciation and carry forward of losses in favor of assessee

The Tribunal upheld the allowance of depreciation to the assessee and the claim of carry forward of losses. The decision was based on legal provisions and judicial precedents, including higher court decisions. The Revenue's appeal was dismissed, and the Tribunal issued its order on 20.09.2018.

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Issues:
1. Allowance of claim of depreciation to the assessee.
2. Allowance of claim of carry forward of losses.

Analysis:

Issue 1: Allowance of claim of depreciation to the assessee
The dispute revolved around the disallowance of depreciation claimed by the assessee on the grounds of double deduction. The Assessing Officer contended that the entire capital expenditure on the purchase of assets was treated as application of income under section 11(1) of the Income-tax Act, thus disallowing the depreciation claim. However, the first appellate authority allowed the depreciation claim, citing a relevant decision by the Hon'ble High Court. The Tribunal, after considering the arguments and precedents, relied on the decision of the Hon'ble Supreme Court in a similar case. The Supreme Court's judgment clarified that normal depreciation is a legitimate deduction in computing the real income of the assessee, even if the assets are not business assets. The Tribunal, following the Supreme Court's decision, dismissed the Revenue's appeal regarding the allowance of depreciation to the assessee.

Issue 2: Allowance of claim of carry forward of losses
The second issue pertained to the claim of set off and carry forward of losses by the assessee. The Revenue contested this claim, relying on a decision by a co-ordinate bench. However, the Tribunal referred to a judgment by the Hon'ble jurisdictional High Court of Delhi, which addressed similar questions of law. The High Court's findings emphasized that adjusting expenses incurred in earlier years against income earned in subsequent years amounts to applying income for charitable purposes. This interpretation was consistent with provisions of the Income-tax Act and was supported by multiple High Court judgments. The Tribunal, in line with the High Court's decision, dismissed the Revenue's appeal regarding the carry forward of losses by the assessee.

In conclusion, the Tribunal upheld the allowance of depreciation to the assessee and the claim of carry forward of losses, based on relevant legal provisions, judicial precedents, and the decisions of higher courts. The appeal by the Revenue was dismissed, and the Tribunal pronounced its order on 20.09.2018.

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