Court grants Writ Petition to quash proceedings under Section 148, affirms depreciation as valid deduction

The Court allowed the Writ Petition seeking a Writ of Certiorari to quash the impugned proceedings and notice under Section 148 of the Act. The Court relied on a Supreme Court decision discussing the allowability of depreciation on assets, affirming that depreciation can be a legitimate deduction in computing the real income of the assessee. The Court upheld the view taken by the Bombay High Court and declined to interfere, noting that most High Courts share a similar perspective. The Writ Petition was allowed without costs, and the connected writ miscellaneous petition was closed.

---

---

Issues involved:
Seeking issuance of a Writ of Certiorari to quash impugned proceedings and notice under Section 148 of the Act.

Analysis:
The Petitioner filed a writ petition seeking a Writ of Certiorari to quash the impugned proceedings and notice issued by the First Respondent. The Petitioner's counsel argued that the issue is covered by a decision of the Hon'ble Supreme Court in a specific case. The Supreme Court judgment discussed the allowability of depreciation on assets whose cost was fully allowed as application of income in past years. The Court referred to a case involving a Charitable Trust claiming depreciation on assets and held that depreciation can be considered a legitimate deduction in computing the real income of the assessee. The Court emphasized that normal depreciation can be a legitimate deduction under general principles or under the Income Tax Act. The judgment also addressed a similar question raised in another case, where the Tribunal's view on allowing depreciation on assets was confirmed by the Bombay High Court, favoring the assessee against the Department.

The Court noted that the view taken by the Bombay High Court correctly states the principles of law and decided not to interfere with it. It highlighted that most High Courts have adopted a similar view, except the High Court of Kerala, which took a contrary stance in a specific case. The judgment also mentioned a legislative amendment in Section 11(6) of the Act, effective from a specific Assessment Year, emphasizing that the amendment is prospective in nature. The Respondents' counsel acknowledged that the issue is now squarely covered by the Supreme Court's decision, leading to the allowance of the Writ Petition without costs. Consequently, the connected writ miscellaneous petition was closed.

---