2. Facts of the Case

  • The revenue filed multiple Income Tax Appeals (ITAS No. 1093/2009, 1091/2009, and 1094/2009) before the Hon'ble High Court of Delhi against the respondent-assessee.
  • The dispute arose across different assessment years regarding the entitlement and calculation of depreciation on machinery purchased by the respondent-assessee.
  • The revenue challenged the previous orders of the Income Tax Appellate Tribunal (ITAT) which had decided the issue in favour of the assessee.

3. Issues Involved

  • Whether the respondent-assessee is lawfully entitled to claim depreciation under Section 32 of the Income Tax Act, 1961, on machinery purchased during the relevant assessment years?
  • Whether the lower appellate authorities were justified in allowing the depreciation claims given the specific facts of the transactions under review?

4. Petitioner’s (Appellant - Revenue) Arguments

  • Represented by Senior Standing Counsel Mr. Sanjeev Sabharwal, the Revenue contended that the depreciation on the newly purchased machinery was not allowable under the law for the respective assessment years.
  • It was argued that the criteria required to safely qualify for such depreciation under Section 32 were not fulfilled by the assessee, and the lower authorities erred in granting relief.

5. Respondent’s Arguments

  • Represented by Senior Advocate Mr. C.S. Aggarwal and Advocate Mr. Prakash Kumar, the respondent argued that the machinery was duly acquired and intended/put to use as per statutory configurations.
  • The respondent emphasized that the core question of law regarding the depreciation of this machinery had already been thoroughly addressed, adjudicated, and decided in their favor in a connected matter, specifically ITA No. 1092/2009. Therefore, the same principle must apply to these sequential assessment years.

6. Court Findings & Order

  • The Division Bench, comprising Hon’ble Mr. Justice A.K. Sikri and Hon’ble Mr. Justice M.L. Mehta, observed that the fundamental question of law raised in these three appeals explicitly matches the issue of depreciation on purchased machinery decided in the primary case.
  • Adhering to the doctrine of consistency, the Court ruled that for the detailed reasons already enumerated in the judgment of ITA No. 1092/2009, these appeals lack merit.
  • Held: All three appeals (ITAS No. 1093/2009, 1091/2009, and 1094/2009) alongside all connected pending applications stand dismissed.

7. Important Clarification

  • When a foundational question of law concerning depreciation on an asset is evaluated and decided by the High Court for one assessment year (as in ITA No. 1092/2009), subsequent appeals covering the exact same factual baseline and asset depreciation queries for alternative assessment years will be dismissed in alignment with the precedent established in the lead case.

1. Section Involved

  • Section 32 of the Income Tax Act, 1961 (pertaining to Depreciation on Assets/Machinery)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2011:DHC:11481-DB/AKS23032011ITA10932009_103500.pdf

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