DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD, AURANGABAD vs. MAHARASHTRA WATER CONSERVATION CORPORATION, AURANGABAD

This appeal by the Revenue against the order dated 27-01-2023 passed by the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] for assessment year 2017-18.

The only issue raised by the Revenue vide ground No.1 challenging the action of NFAC, Delhi in allowing the claim of depreciation as against the order of Assessing Officer in the facts and circumstances of the case.

At the outset, we note that the assessee claimed depreciation on its assets to an extent of Rs.52,53,75,679/-. The Assessing Officer asked explanation, as to how the assessee is entitled for claim depreciation on the assets which were not used by the assessee for its business. The assessee explained the same through its written submissions which are reproduced by the Assessing Officer in its order. The Assessing Officer found the written explanation offered by the assessee not acceptable and held no income was earned by the assessee, denied the claim of depreciation. Further, it is noted vide para 6 of the Assessing Officer‟s order that the assessee‟s main business is irrigation and water supply and no income was earned from the said business. According to him, the other business activities relating irrigation such as fisheries, pisciculture, floriculture, horticulture, sericulture, etc. are not forming the main business objects of the assessee. He treated the income earned from the said other activities as „Income from other sources‟. Further, according to him, since the assets were not used for the assessee‟s main business, disallowed the claim of depreciation and added the said amount to the total income of the assessee. Having aggrieved by the said disallowance, the assessee challenged the same before the NFAC, Delhi [CIT(A)].

We note that the assessee submitted its activities before the CIT(A) which are reproduced by the NFAC, Delhi in the impugned order.

Before us, the ld. DR admitted that the issue raised before this Tribunal is similar to the issues raised in A.Ys. 2010-11 and 2011-12 passed by the ITAT, Pune Benches and supported the order of Assessing Officer.

The ld. AR drew our attention to the paper book consisting of 17 pages and submitted that this Tribunal initially for A.Ys. 2010-11 and 2011-12 allowed the claim of depreciation and supported the order of CIT(A).

We find the order of ITAT, Pune Benches in assessee‟s own case for A.Ys. 2010-11 and 2011-12 placed at page 6 of paper book. On perusal of the relevant part at page 11, para 7, we note that the Tribunal noted the assessee earned income from allocating contract for fishing at newly created reservoir and the same is business income. Consequently, having held so, allowed the claim of depreciation. The ld. DR did not dispute the finding of ITAT and no contrary order was brought on record to the view taken by the ITAT in A.Ys. 2010-11 and 2011-12. Further, it is noted that the ITAT for A.Y. 2014-15 which is at page No.13 of paper book, by following the finding in A.Ys. 2010-11 and 2011-12 allowed the claim of depreciation made by the assessee vide paras 4, 5 and 6. Therefore, having no contrary view, we, by following the orders of Tribunal for A.Ys.

In the result, the appeal of Revenue is dismissed.