CIT-III vs. M/S SUBROS LIMITED

ITA - 1026 / 2005HC Delhi05 April 20111 pages

For Petitioner: MR. SANJEEV SABHARWAL

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court found that the difference between the depreciation claimed by the assessee and that allowed by the AO was ₹2,58,202.40. The Court observed that the tax effect arising from this difference would be considerably less than ₹10 lacs. On this ground alone, the appeal was dismissed. The Court did not delve into the merits of whether the jigs and fixtures were integral parts of moulds or the correct depreciation rate, relying solely on the tax effect for its decision.

What were the facts?

The Assessing Officer (AO) allowed depreciation on jigs and fixtures at 25%, whereas the assessee claimed 40%. The Income Tax Appellate Tribunal (ITAT) held that these jigs and fixtures were integral parts of moulds, on which depreciation had been previously allowed as part of a block of assets. The difference in depreciation claimed by the assessee and allowed by the AO amounted to ₹2,58,202.40. The appeal was filed by the Revenue against the order of the ITAT. The High Court noted that the tax effect of the disputed amount would be significantly less than ₹10 lacs.

What were the issues?

1. Whether the Tribunal was correct in treating jigs and fixtures as integral parts of moulds for the purpose of depreciation, and allowing depreciation at the rate claimed by the assessee (40%) instead of the rate allowed by the AO (25%)? Assessee's Contention: The assessee argued that the jigs and fixtures were integral parts of moulds, and depreciation had been allowed on the block of assets including moulds at the claimed rate. The ITAT's decision in favor of the assessee was implicitly accepted by the assessee's counsel appearing before the High Court. Revenue's Contention: The Revenue contended that the AO was correct in allowing depreciation at 25% and not 40% as claimed by the assessee. The Revenue filed the present appeal against the ITAT's order.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . 05.04.2011 . Present: Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Chandramani Bharadwaj, Advocate for the appellant/Revenue. Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Advocate for the respondent/assessee. . +ITA No.1026/2005 . The Assessing Officer allowed depreciation on jigs and fixtures @25% as against 40% claimed by the assessee. The Income Tax Appellate Tribunal has treated these jigs and fixtures as integral parts of moulds on which depreciation as claimed by the assessee has been allowed formerly on block of assets. We find that the difference between depreciation claimed by the assessee and the depreciation which would be allowed as per the AO is `2,58,202.40. Tax effect thereupon shall naturally be much less than `10 lacs. On this ground alone, this appeal is dismissed. . . . A.K. SIKRI, J. . . . M.L. MEHTA, J. . . APRIL 05, 2011 pmc . #R-27

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