Gujarat High Court Dismisses Revenue's Appeal, Upholds ITAT Order Allowing Additional Depreciation U/S 32(1)(iia) For Oil Well Classified As 'Plant & Machinery'
The Gujarat High Court has ruled against the revenue's appeal regarding a decision by the Income Tax Appellate Tribunal (ITAT), which had permitted the assessee to claim additional depreciation on an oil well classified as 'plant & machinery' under Section 32(1)(iia) of the Income Tax Act, 1961.The core issue raised in the appeal was: “Whether in the facts and circumstances of the case,...
The Gujarat High Court has ruled against the revenue's appeal regarding a decision by the Income Tax Appellate Tribunal (ITAT), which had permitted the assessee to claim additional depreciation on an oil well classified as 'plant & machinery' under Section 32(1)(iia) of the Income Tax Act, 1961.
The core issue raised in the appeal was: “Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in allowing the additional depreciation u/s.32(1)(iia) of the Act on oil well treating the same as 'Plant & Machinery?”
Senior Standing Counsel Varun K. Patel, appearing on behalf of the revenue, contended that the appeal concerned the additional depreciation applicable to assets used in the extraction of mineral oil. Patel highlighted that a similar issue had been previously adjudicated in Tax Appeal No. 514 of 2022, where the department's appeal for the assessment year 2006-07 had been dismissed on its merits.
The division bench comprising Justices Bhargav D. Karia and Niral R. Mehta, taking into account their previous observations and the judgment in the Niko Resources case against the Assistant Commissioner of Income Tax.
In the Niko Resources case, it was established that the allowances for depreciation under Section 32 are governed by Section 34 of the Act and are applicable only to certain assets such as buildings, machinery, and plants used in business operations. The court also considered the definition of 'plant' as outlined in Section 43(3) of the Act.
“Adopting the above reasoning, in our opinion, no question of law much less substantial question of law, as proposed by the revenue arise. Therefore, this appeal is accordingly dismissed,” the bench concluded.
Case Title: Commissioner Of Income Tax (International Taxation And Transfer Pricing) Versus Joshi Technologies International Inc.
LL Citation: 2024 LiveLaw (Guj) 117