- (1.) Present appeal is filed by the department under Section 260-A of the Income Tax Act, 1961 against the judgment and order dated 27.06.2007 passed by Income Tax Appellate Tribunal, Lucknow in Appeal No.1059/Luc/2006 for the assessment year 2003-04.
(2.) On 09.07.2012, a Coordinate Bench of this Court has admitted the instant appeal on the following substantial question of law: "The Tribunal while interpreting Section 10 of Income Tax Act 1961 was wrong in recording finding that persons exempted under Section 10 of the Act are not required to computate its total income in accordance with the provisions of the Act, which may include the computation of depreciation on written down value and not in any other manner?"
(3.) The brief facts of the case are that the assessee is a statutory public undertaking of the State Government, which was constituted under the Warehousing Corporation Act, 1962. It derived income from storage fees, handling and transportation services, processing charges etc. Till the assessment year i.e. up to 31.03.2003 (Assessment Year 2002-03), the assessee was exempted from the clutches of the Income Tax as per Section 10 (29) of the Act, but on 01.04.2003, the said exemption was withdrawn. So, for the assessment year under consideration, first time assessee has filed its return. In the return, the assessee had claimed the deduction on account of depreciation of "straight line method" at Rs.2,58,61,223/-. According to the A.O., the depreciation was allowable at the prescribed percentage of the actual cost of the assets in the year of acquisition and of the written down value (for short "WDV"). So, he has worked out the depreciation to Rs.22,07,08,617/- whereas the assessee has claimed the depreciation of Rs.25,98,40,226/-. Finally, the A.O. made the addition of Rs.3,91,31,609/-, which was upheld by the first appellate authority. However, the Tribunal vide its impugned order has allowed the claim of the assessee by observing that till the previous assessment years, the income was exempted from tax. So, no depreciation can "notionally" be treated. First time, the assessee has claimed the depreciation on actual cost of assets. Not being satisfied, the department has filed the present appeal.;