High Court Upholds Assessee's Claim Over Unabsorbed Depreciation Beyond Limit

The High Court dismissed the Revenue's appeal against the deletion of unabsorbed depreciation addition for the Assessment Year 1997-98 under Section 32(2) of the Income Tax Act. The Court upheld the ITAT's decision, allowing the assessee to claim unabsorbed depreciation beyond the eight-year limit, in line with previous judicial interpretations. The judgment clarified the rights of the assessee in claiming such benefits, emphasizing consistency with established legal precedents.

---

---

Issues involved: Revenue appeal against deletion of addition of unabsorbed depreciation under Section 32(2) of the Income Tax Act for Assessment Year 1997-98.

Analysis:
1. Issue: Revenue appeal against deletion of addition of unabsorbed depreciation
The Revenue appealed against the order of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of addition of Rs. 6,78,59,423/- on account of unabsorbed depreciation claimed for the Assessment Year 1997-98 under Section 32(2) of the Income Tax Act. The sole issue raised by the Revenue was whether the Commissioner of Income Tax (Appeals) was justified in deleting the said addition. The ITAT relied on the decisions of the Gujarat High Court and the Delhi High Court in similar cases, where it was held that the assessee is entitled to avail unabsorbed depreciation beyond the prescribed period of eight years under the unamended Section 32 of the Act.

2. Decision of the Court
The High Court, after considering the precedents and the arguments presented, held that no substantial question of law arises for consideration in the present appeal. Therefore, the appeal was dismissed. The Court affirmed the decision of the ITAT in allowing the assessee to claim unabsorbed depreciation beyond the statutory limit of eight years, as per the interpretations of the relevant provisions of the Income Tax Act. The judgment provides clarity on the interpretation of Section 32(2) and affirms the rights of the assessee to claim unabsorbed depreciation beyond the prescribed period, in line with the decisions of the higher courts.

In conclusion, the judgment by the Delhi High Court in this case provides a significant clarification on the issue of claiming unabsorbed depreciation under Section 32(2) of the Income Tax Act for the Assessment Year 1997-98. The Court's decision to dismiss the Revenue's appeal and uphold the ITAT's decision based on established legal precedents reinforces the rights of the assessee to avail of unabsorbed depreciation benefits beyond the statutory limit, as interpreted by previous judicial decisions.

---