Depreciation claim not defeated by book entries where statutory conditions are met; matter remitted for fresh consideration.

The article addresses whether depreciation can be claimed on project assets and set off against interest income despite capitalisation in the books. It notes that book treatment alone does not defeat the statutory depreciation claim if the legal conditions under the Act are otherwise met. Relying on the jurisdictional High Court, the Tribunal indicated that the Assessing Officer must examine the assessee's substantive entitlement under law and follow binding precedent. The matter was therefore remitted for fresh consideration, and the depreciation claim was not finally rejected.

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Issues: Whether the assessee was entitled to claim depreciation on assets used for the project and set off the same against interest income, despite the treatment given in the books of account.

Analysis: The dispute turned on whether the accounting treatment of the assets as capitalised in the assessee's books could by itself defeat the statutory claim to depreciation. The Tribunal noted that the issue stood covered by the jurisdictional High Court decision relied upon by the assessee, which held that the manner of disclosure in the books is not ative where the assessee otherwise satisfies the legal requirements for depreciation. The Tribunal therefore held that the Assessing Officer had to examine the assessee's substantive right to deduction under the Act and follow the binding directions of the High Court.

Conclusion: The matter was restored to the Assessing Officer for fresh consideration in accordance with the High Court's directions, and the assessee's claim was not finally rejected.

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