2022 (9) TMI 507 - HC - Income Tax

Appeal Dismissed: Tribunal Decision Upheld on Managing Director's Residence Depreciation Claim

THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 1 Versus GUJARAT INDUSTRIES POWER COMPANY LTD.

The High Court dismissed the appeal, affirming the Tribunal's decision to delete the addition under section 14A and allow the depreciation claim on the ... Disallowance u/s 14A r.w.r. 8D - disallowance of depreciation u/s 32 - Tribunal deleted the addition made u/s 14A considering the fact for the assessment year 2006-07 - Tribunal also deleted the disallowance of depreciation recording the fact that the building was used for official-cum-residential purpose by the Managing Director with all office facilities and therefore, the assessee was entitled to depreciation @ 10% and directed AO to allow the same. HELD THAT:- In view of our order of even date passed in [2022 (9) TMI 376 - GUJARAT HIGH COURT] with regard to the issue of disallowance under section 14A and considering the finding of fact given by the Tribunal with regard to use of the building for office-cum-residential purpose by the Managing Director, we do not find any infirmity in the impugned order of the Tribunal as no question of law much less any substantial question of law proposed or otherwise arises therefrom. The appeal is accordingly dismissed. Issues:1. Appeal under section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal for A.Y. 2007-08.2. Disallowance under section 14A of the Act, 1961 and depreciation claim on Managing Director's residence.Analysis:1. The appeal was filed by the revenue under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the assessment year 2007-08. The substantial questions of law raised in the appeal pertained to the deletion of additions made under section 14A and disallowance of depreciation on the Managing Director's residence. The Tribunal passed a common order for multiple assessment years, including the one in question.2. The Assessing Officer disallowed Rs. 43,44,517 under section 14A of the Act, 1961 based on Rule 8D(2) of the Income Tax Rules, 1962. Additionally, depreciation of Rs. 3,18,126 claimed on the Managing Director's residence was also disallowed. The CIT (Appeals) upheld these additions, leading to the appeal before the Tribunal.3. The Tribunal, after considering the facts and submissions, deleted the addition made under section 14A for the assessment year 2006-07. It also overturned the disallowance of depreciation on the Managing Director's residence, noting that the building was used for official-cum-residential purposes, justifying the higher depreciation claim of 10%.4. The High Court, in alignment with a previous order on a similar issue and based on the Tribunal's findings regarding the use of the building by the Managing Director, upheld the Tribunal's decision. It concluded that no substantial question of law arose from the Tribunal's order, leading to the dismissal of the appeal.In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to delete the addition under section 14A and allow the depreciation claim on the Managing Director's residence, based on the specific circumstances and findings presented before the Tribunal.