The case of ITA No. 1014/DEL/2019 involves Cosmo Films Ltd., a company engaged in the manufacture of BOPP films and trading of thermal lamination machines, appealing against the order of the Commissioner of Income Tax (Appeals)-33, New Delhi. This appeal relates to the assessment year 2014-15, challenging disallowances made by the lower tax authorities regarding claims of additional depreciation.
The primary issue in this appeal is the claim of additional depreciation by Cosmo Films Ltd. The company filed a loss in its return of income, which was adjusted by the authorities upon scrutiny. The main contention is around the claim of additional depreciation amounting to Rs. 9,11,314 which was disallowed by the Assessing Officer (AO) and upheld by CIT(A).
The AO disallowed the additional depreciation claim because it pertained to assets added in the second half of the previous financial year. Although the Tribunal had previously allowed similar claims in other years, the AO denied the claim pending a final decision from higher judicial authorities.
The CIT(A) supported the AO’s decision, emphasizing that the disallowance was justified as the assets on which depreciation was claimed were not installed in the year under consideration but in a prior year. This decision was challenged by Cosmo Films Ltd., leading to the current appeal.
In the tribunal, Cosmo Films Ltd. reiterated its entitlement to the depreciation claim, supported by previous Tribunal decisions favoring the company in similar circumstances. The tribunal reviewed these precedents and found them in favor of the company, directing the AO to allow the additional depreciation claim.
This decision highlights the complexities involved in the interpretation of tax laws concerning depreciation claims. It underscores the importance of judicial precedents and the need for consistency in the application of tax laws across different assessment years. The outcome not only affects the appellant but also sets a precedent for other cases involving similar claims.
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