Depreciation claim

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Querist : Anonymous

Querist : Anonymous (Querist)

01 September 2011 A company running at a loss has claimed depreciation as per th companies act in its books of accounts. The AO has denied the full depreciation on the ground that the assessee has not computed depreciation under the income tax act while claiming computing income. Need specific case laws with judgement so that the claim of the company for depreciation can be allowed by the CIT(A).

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 September 2011 Pl see explanation 5 of subsection (1) of section 32 inserted by Finance Act,2001 w.e.f 1/4/2002. The said explanation would suffice and no need of a precedence.

Querist : Anonymous

Querist : Anonymous (Querist)

02 September 2011 This clause has been inserted from the 1/4/2002. But the case is for the A.Y. 1996-97. Is this of applicable? I need case law reference for providing to the CIT (A) for passing the necessary order.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 September 2011
Whether mandatory allowance of depreciation brought in by explanation 5 to Section 32 is retrospectively applicable came up before the court in CIT vs Kerala Electric Lamp Works Ltd (2003 261 ITR 721 Kerala). The High Court held that the mandatory allowance/deduction of depreciation would be applicable only from the assessment year 2002-03 onwards.
In view of that, supreme court decision in
CIT vs Mahendra Mills (2000 243 ITR 56) will hold good and in all probability you will loose the case.

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