Facts of the Case

The present appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal dated 31.07.2020 for Assessment Year 2011–12.

The issues raised pertained to:

  • Deletion of addition made on account of disallowance of license fee amounting to ₹90.77 crores
  • Reduction in disallowance under Section 14A read with Rule 8D
  • Allowance of higher depreciation @60% instead of 15%
  • Deletion of disallowance of depreciation on energy-saving and pollution control devices

The Revenue contended that the Tribunal erred in granting relief on these issues.

 Issues Involved

  1. Whether the ITAT was correct in deleting disallowance of license fee?
  2. Whether reduction of disallowance under Section 14A read with Rule 8D was justified?
  3. Whether higher depreciation @60% was allowable instead of 15%?
  4. Whether depreciation on assets not put to use could be allowed?

  Petitioner’s (Revenue’s) Arguments

  • The Tribunal wrongly deleted additions made by the Assessing Officer.
  • Disallowance under Section 14A should have been upheld as per Rule 8D and CBDT Circular No. 5/2014.
  • Higher depreciation was wrongly allowed ignoring judicial precedents.
  • Depreciation on assets not put to use during the relevant year should not be permitted.

 Respondent’s (Assessee’s) Arguments

  • The issues raised were already covered by earlier decisions of the High Court.
  • The Tribunal had correctly followed settled legal principles.
  • No substantial question of law arose from the Tribunal’s findings.

 Court’s Findings / Order

The Delhi High Court held:

  • Issue (i): License Fee Disallowance
    Covered by earlier judgment dated 11.05.2011 in ITA 662/2005; Revenue’s appeal already dismissed.
  • Issues (ii) & (iv): Section 14A and Depreciation on Assets Not Put to Use
    Covered by judgment dated 17.05.2023 in ITA 281/2023, where no substantial question of law arose.
  • Issue (iii): Higher Depreciation @60%
    Already decided in ITA 303/2023 in favour of the assessee.

Final Ruling:
The Court held that no substantial question of law arises, and the appeal was dismissed.

 Important Clarifications

  • When issues are already settled by binding precedents, no fresh substantial question of law arises.
  • Section 14A disallowance and depreciation matters are largely fact-based and Tribunal findings are generally final unless perversity is shown.
  • Consistency with earlier judgments plays a decisive role in tax litigation.

 Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS04072023ITA3022023_142846.pdf

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