CIT vs Mysore Cements Ltd.

The Revenue has preferred this appeal against the order passed by the Tribunal which has up held the order of the appellate authority directing the assessing authority to withdraw the depreciation. This appeal was admitted on 18-9-2007 to consider the following substantial question of law:

Whether the Appellate Authorities were right in holding that no depreciation can be allowed when the assessee has not put forward the claim without considering the amended provisions of section 32 of the Act which contemplates the compulsory deduction of depreciation in those cases where no depreciation has been claimed?

The assessee did not claim depreciation in the return filed by him. However, the Assessing Authority relying on Explanation (5) to Section 32(1) of the Act, introduced with effect from 01.04.2002 inserted by the Finance Act, 2001, granted exemption.

The assessee challenged the said order before the Commissioner of Income Tax (Appeals) contending that the said amendment is only prospective and it has no application to the assessment year 1998-99. The appellate authority accepted the said contention and set aside the order of the assessing authority and granted deletion of depreciation. Aggrieved by the same, the Revenue preferred an appeal before the Tribunal, which rightly dismissed the appeal.

This Court in the case of CIT v. Mysore Cements Ltd. (IT Appeal No. 3101/05 decided on 9-3-2010) has held that the said amendment is only prospective in nature. In view of the aforesaid judgment, the order passed by the appellate authority is in order. No case for interference is made out. The substantial question of law is answered in favour of the assessee and against the Revenue. Appeal dismissed.