PRASIDH FINCAP LTD. ,NEW DELHI V. DCIT CIRCLE-20(1), NEW DELHI

ITA 1534/DEL/2022

AI Insights

The case involves multiple appeals by Prasidh Fincap Ltd against the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer concerning the disallowance of depreciation and the treatment of interest income. The primary legal issues revolved around the entitlement of the assessee to claim depreciation on fixed assets and the classification of interest income. The Tribunal examined the provisions of the Income Tax Act, relevant judicial precedents, and the factual matrix of the case, leading to the conclusion that the assessee was entitled to depreciation and that the interest income should be treated as business income, not as income from other sources.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36850 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-10-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 01-07-2022
• Other Referred Cases: CIT Vs. Doom Dooma India Ltd, CIT Vs. Hybrid Rice International Pvt. Ltd, CIT v. Straw Products Ltd, CIT v. Dharampur Leather Co. Ltd., CIT v. Nandlal Bhandari Mills Ltd., CIT. Mahendra Mills, Saharanpur Electric Supply Co. Ltd. v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH DHANESTA
• Assessee Lawyers: I. P. BANSAL
• Keywords: Business income; Revised return; Question of law; Depreciation; Cost of acquisition; Earning of tax free income
• Section: 143(3); 32; 13; 28; 14A; 80HHC; 43D

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 1534/Del/2022 (Assessment Year: 2014-15) Prasidh Fincap Ltd, 2nd Floor, RSN Arcade, 6 LSC, Near Peince Apartment, IP Extension, Parparganj, New Delhi Vs. DCIT, Circle-20(1), New Delhi (Appellant) (Respondent) PAN:AAACP6704D ITA Nos. 7965 & 7966/Del/2018 (Assessment Years: 2012-13 to 2013-14) Prasidh Fincap Ltd, 2nd Floor, RSN Arcade, 6 LSC, Near Peince Apartment, IP Extension, Parparganj, New Delhi Vs. ITO, Ward-20(2), New Delhi (Appellant) (Respondent) PAN:AAACP6704D Assessee by : Shri I. P. Bansal, Adv Shri Vivek Bansal, Adv Shri Vishal Chechi, Adv Revenue by: Shri Rajesh Dhanesta, Sr. DR Date of Hearing 07/10/2024 Date of pronouncement 22/10/2024 O R D E R PER M. BALAGANESH, A. M.: 1. These are the appeals filed by the assessee in ITA No. 7965 & 7966/Del/2018 and 1534/Del/2022 for AYs. 2012-13 to 2014-15, arise out of the order of the Commissioner of Income Tax (Appeals)-36, and Ld. Commissioner of Income Tax (Appeals)-7, New Delhi [hereinafter referred ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 2 to as ‘ld. CIT(A)’, in short] dated 05.10.2018 and 26.11.2018 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 20.03.2015, 06.06.2016 and 30.11.2016 by the Assessing Officer (hereinafter referred to as ‘ld. AO’). 2. Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 7965/Del/2018 – Asst Year 2012-13 – Assessee Appeal 3. The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the disallowance of depreciation in the facts and circumstances of the instant case. 4. We have heard the rival submissions and perused the materials available on record. The assessee company is a Non-Banking Finance Company (NBFC) engaged in the business of financing and investment. The return of income for the Asst Year 2012-13 was filed by the assessee company on 16.9.2013 declaring loss of Rs 2,58,523/-. The assessee company earned interest income of Rs 1,30,53,048/- against which it claimed depreciation of Rs 1,20,54,269/-/ The assessee was asked to give the details of claim of depreciation by the ld. AO. The assessee submitted that during the financial year 2002-03 relevant to Asst Year 2003-04 , it had purchased fixed assets which were installed at its office located at RSN Arcade, IInd Floor, Near Prince Apartment,Patparganj, Delhi. The entire details of the fixed assets were filed before the ld. AO. The assessee also enclosed the audited balance sheet as on 31.03.2003 to prove that the value of fixed assets was reflected in the fixed asset schedule at Rs. 5,06,64,785/-. In the said fixed assets schedule, it was seen that no depreciation has been claimed by the assessee on the gross ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 3 value of fixed assets. The assessee also enclosed the return of income filed for AY 2003-04 to prove that no deprecation was even claimed as per Income Tax Act by the assessee on the gross value of fixed assets. We also find that there has been no addition to the value of fixed assets from 31.03.2003 to 31.03.2012. We find that depreciation on those fixed assets was claimed for the first time by the assessee in AY 2012-13. 5. The ld AO completely ignored these facts and observed that the assessee had not claimed depreciation in earlier years; that bills for procurement of these assets were not produced by the assessee; that depreciation is claimed for the first time in AY 2012-13 because there are taxable profits; the depreciation claimed is only an accounting entry and the same is not genuine. The assessee submitted that these fixed assets were purchased way back in AY 2013-14 and thereafter there has been no addition thereon. The assessee is supposed to maintain books of account for 8 years. Hence, the assessee is not bound as per law to maintain the books of account, bills and vouchers for a period pertaining to AY 2003-04. The action of the ld AO was upheld by the ld CIT(A). 6. It is not in dispute that there has been no addition to gross value of fixed assets from 31.03.2003 to 31.03.2012. It is not in dispute that the assessee had not claimed any depreciation on the gross value of fixed assets stated supra up to AY 2011-12. Hence, no depreciation has been ‘actually allowed’ to the assessee on the said fixed assets up to AY 2011- 12. The ld AO had relied on Explanation 5 of Section 32 that depreciation is to be mandatorily allowed by the ld AO irrespective of the claim made by the assessee actually supports the case of the assessee. In any case, it is a fact that no depreciation has been allowed to the assessee up to AY 2011-12. If the case of the revenue by applying the Explanation 5 is to be accepted, then the ld AO should allow depreciation from AY 2003-04 ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 4 onwards to the assessee and allow that depreciation loss to be carried forward to subsequent years and such accumulated depreciation loss would be eligible to be treated as current year depreciation u/s 32(2) of the Act eligible for set off against taxable income of the year under consideration. Hence, in either way, there would be no difference in the computation of total income by allowance of the depreciation even if the stand of the revenue is to be accepted on application of Explanation 5 to section 32 of the Act. The value of fixed assets has been retained in the business of the assessee, being used for the purpose of the business of the assessee and duly reflected in the balance sheet of the assessee year on year commencing from 31st March 2003 onwards. Hence, the genuinity of the existence of those assets being used for the purpose of the business is proved beyond reasonable doubt. Accordingly, depreciation would be eligible to the assessee. 7. The assessee in a non-banking financial company and had disclosed the interest income as its income from business. The ld AO had sought to shift the said interest as income from other sources which is manifestly illegal. The assessee being a non banking financial company could obviously earn only interest income as its business income. Such income cannot be shifted from business income to other sources. We find that as per Section 43(6) of the Act, the value of Written Down Value (WDV) of the assets shall be calculated based on the original cost of the assets as reduced by the depreciation which was ‘actually allowed’. In the instant case, no depreciation was ‘actually allowed’ to the assessee up to AY 2011-12. Hence, the assessee would be entitled to claim depreciation on the opening WDV as on 01.04.2011 as per the provisions of the Act. The issue in dispute is no longer res integra in view of the decision of the ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 5 Hon'ble Supreme Court in the case of CIT Vs. Doom Dooma India Ltd reported in 310 ITR 392 (SC) wherein, the Apex court held as under:- “8. The key word in section 43(6)(b) of the 1961 Act is \"actually\". We quote hereinbelow an important observation, made by this Court on the meaning of the words \"actually allowed\" in section 43(6)(b) in the case of Madeva Upendra Sinai v Union of India (1975) 98 ITR 209 (SC), which reads as under: \"The pivot of the definition of 'written-down value' is the 'actual cost of the assets Where the asset was acquired and also used for the business in the previous year, such value would be its full actual cost and depreciation for that year would be allowed at the prescribed rate on such cost. In subsequent year. depreciation would be calculated on the basis of actual cost less depreciation actually allowed. The key word in clause (b) is actually. It is the antithesis of that which is merely speculative, theoretical or Imaginary. Actually contra-indicates a deeming construction of the word allowed which it qualifies. The connotation of the phrase 'actually allowed\" is thus limited to depreciation actually taken into account or granted and given effect to, i.e. debited by the Income-tax Officer against the incomings of the business in computing the taxable income of the assessee, it cannot be stretched to mean 'notionally allowed' or merely allowable on a notional basis. From the above conspectus, it is clear that the essence of the scheme of the Indian Income-tax Act is that depreciation is allowed, year after year, on the actual cost of the assets as reduced by the depreciation actually allowed in earlier years. It follows, therefore, that even in the case of assets acquired before the previous year, where in the past no depreciation was computed, actually allowed or carried forward, for no fault of the assessee the \"written-down value\" may, under clause (b) of section 43(6), also, be the actual cost of the assets to the assessee.\" (pp. 223-224) 9. Therefore, this Court has clearly laid down the meaning of the words \"actually allowed\" in section 43(6)(b) to mean - \"limited to depreciation actually taken into account or granted and given effect to, ie., debited by the Income-tax Officer against the incomings of the business in computing the taxable income of the assessee\". Answer to Question No. (2) computation of depreciation in cases covered by rule 8 which deals with taxability of composite income. 10. In the case of CITNandlal Bhandari Mills Ltd. [1966] 60 ITR 173 (SC), which judgment was in the context of composite income, the question inter alia arose whether depreciation \"actually allowed\" would ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 6 mean depreciation deducted in arriving at the taxable income or the depreciation deducted in arriving at the world income (composite income). In that case the assessee was a company incorporated in Indore. It owned and ran a textile mill. Until 1-4-1950, when Income- tax Act, 1922 was extended to Part B States including Madhya Bharat of which Indore became a part, the assessee was assessed at Bombay under the Income-tax Act, 1922 as a non-resident and for some years as resident. The assessee was also assessed in Indore under the Indore Industrial Tax Rules, 1927. For those years in which it was assessed as a non-resident under Income- tax Act, 1922, only that part of its profits attributable to the sale proceeds of goods received in British India were brought to tax. For the assessment years in question, in ascertaining the \"written down value\" of the building, machinery and plant, under paragraph 2 of the Taxation Laws Order, 1950, only the greater of the two depreciations \"actually allowed\" in British India and in Indore could be taken into account. The ITO took into account the depreciation allowances for the years up to 1944 as computed under Income-tax Act, 1922 for the purposes of ascertaining the world income of the assessee, and for the years 1945 to 1948, he took into account the income as computed under Indore Industrial Tax Rules 1927; and on that basis the ITO arrived at the \"written down value\" as on 1-1-1949. The assessee contended, inter alia, that in regard to the years up to 1944 only the proportionate depreciation attributable to the taxable income came within the meaning of the words \"actually allowed\" in the old section corresponding to section 43(6)(b) of the 1961 Act. This contention of the assessee was accepted by the majority judgment which held that in fixing the depreciation allowances for the years in which the assessee was assessed as a non-resident under the Income-tax Act, 1922, the ITO had \"actually allowed\" only a portion of the amount towards depreciation allowable in assessing its world income. It was further held that the mere fact that in the matter of calculation, the total amount of depreciation was first deducted from the world income (composite income) and thereafter a proportion was struck did not amount to an actual allowance of the entire depreciation in ascertaining the taxable income that accrued in British India. Therefore, it was held, that, the depreciation deducted in arriving at the taxable income alone could be taken into account and not the depreciation taken into account for arriving at the world income (composite income). 11. In our view the above judgment of the Supreme Court squarely applies to the present case. Assessee is engaged in the business of growing and manufacturing of tea. As per the provisions of section 10(1) of the 1961 Act read with rule 8, 40 per cent of the business income derived from the sale of tea grown and manufactured in India by the assessee was liable to tax. In the above judgment of the Supreme Court, the Court was concerned with the world income, in this case we are concerned with the composite income. Therefore, in our view the judgment of the Supreme Court, above referred to, is ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 7 squarely applicable to the present case. Therefore, we do not see any infirmity in the impugned judgment of the High Court. 12. Be that as it may, we can give the following illustration(s) which will give an example of how the \"written down value\" needs to be computed:- Illustration A Rs. Income from sale of tea Less: Expenses- Depreciation Others Business Profit Income subject to charge under the Income-tax Act by application of rule 8 (40% of 600) Illustration 'B' Income from sale of tea (40% of 1000) Less: Expenses- Depreciation Others (40% of 300) Business Profit subject to charge of income-tax (40% of 600) 100 100 300 600 240 400 40 120 240 13. Analysing the above two charts, we find that at the end of computation the income chargeable to tas by applying rule 8 comes to Rs. 240. Under Illustration 'A', the normal depreciation is Rs. 100 which is deductible from Rs. 1,000 being the income from sale of tea. On the other hand, under Illustration 'B, we have taken 40 per cent of each of the items, namely, income from sale of tea, depreciation and other expenses. Accordingly, on comparison it may be noted that whereas income from sale of tea is Rs. 1,000 under Illustration A. proportionately it comes to Rs. 400 under Illustration B'. Similarly, depreciation under Illustration 'A' which is normal depreciation is Rs 100 whereas in Illustration 'B' at 40 per cent the pro rata depreciation is 40. What is important to be noted is that at the end of computation under both the Illustrations. the Income taxable by applying rule 8 comes to Rs. 240 in both the cases. The only difference is that in Illustration B' we have gone by pro rata basis. 14. The important thing to be noted is that according to the Department, in the succeeding year, the opening \"written down value of the assets would be Rs. 900 (Rs 1,000 for the cost of the assets less Rs. 100) as indicated in Illustration 'A' whereas, if one goes by Illustration 'B' the \"written down value\" comes to Rs. 960 (Rs. 1,000 for the cost of the asset(s) minus 40), being the depreciation in Illustration 'B' 15. Recording to the assessee, in view of the law laid down by the judgment of this Court in the case of Madeva Upendra Sinai (supra), ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 8 the \"written down value\" should be computed at Rs. 960 and not at Rs. 900 as claimed by the Department. 16. In our view, in cases where rule 8 applies, the income which is brought to tax as \"business income\" is only 40 per cent of the composite income and consequently proportionate depreciation is required to be taken into account because that is the depreciation \"actually allowed\". Hence we find no merit in the civil appeals filed by the Department. 17. Before concluding, we may state that the judgment of this Court in CIT v Willamson Financial Services [2008] 297 ITR 17, has no application to the present cases. Willamson Financial Services' case (supra) was rendered in the context of deduction under section 80HHC of the 1961 Act Section 80HHC comes under Chapter VI-A. Chapter VI-A refers to special deductions. It is a separate Code by itself. There is a distinction between \"deductions/allowances in section 30 to section 43D\" and \"deductions admissible under Chapter VI- A\" Deductions/allowances provided in sections 30 to 43D are allowed in determining Gross Total Income and are not chargeable to tax because the same constitute charge on profit, whereas, deductions under Chapter VI-A are allowed from Gross Total Income chargeable to tax. Therefore, the judgments rendered in the context of section 80HHC of the 1961 Act, both by this Court and by the Kerala High Court, stand on different footing. 18. For the aforestated reasons, we find no merit in the Department's civil appeals which are accordingly dismissed with no order as to costs.” 8. Similar was the view taken by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Hybrid Rice International Pvt. Ltd reported in 320 ITR 63 (Del) wherein, the Hon’ble High Court held as under:- “4. We find that the issue in question as to whether actual cost should be taken for allowing of depreciation or only market value or notional written down value (WDV) at the commencement of the assessment year is no longer res integra and covered by three judgments of the Supreme Court reported as CIT v. Straw Products Ltd [1966] 60 ITR 156, CIT v Dharampur Leather Co. Ltd.[1966] 60 ITR 165, CIT v. Nandlal Bhandari Mills Ltd. [1966] 60 ITR 173. The relevant portions of the Supreme Court judgment in. Straw Products Ltd.'s case (supra) reads as under:- \"The Appellate Assistant Commissioner, disagreeing with the Income-tax Officer, held on appeal that the assessee had not been allowed excess depreciation allowance as per the original assessment and there was no basis for initiating proceedings under section 34 He was of the view that the expression ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 9 'actually allowed' could not imply depreciation allowed by a mental phenomenon. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner and directed the computation of the allowance on that basis. On a reference the High Court by its judgment dated August 22, 1961, answered the question as follows: 'In the circumstances of this case the correct basis for computing written down value of depreciable assets of the company is the one adopted by the Appellate Assistant Commissioner.\" Mr. A V. Viswanatha Sastri, the learned counsel for the revenue, urges before us that the High Court was wrong in answering the question in favour of the assessee. He urges that the expression 'actually allowed under any laws or rules of a merged State' occurring in paragraph 2 of the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, meant allowable under the provisions of the said laws or rules he says that if the income of an assessee is exempted from taxation for a certain number of years, the assessee must be deemed to have claimed depreciation and deemed to have been allowed depreciation according to the provisions of the said laws or rules. He further says it does not matter whether the assessee made a claim or not because it is fair that when the Indian Income-tax Act is applied the assessee should be brought at par with the assessees who had suffered taxation under the Act. We are unable to give such an artificial meaning to the expression 'all depreciation actually allowedunder any laws or rules', and we agree with the High Court that the expression 'actually allowed' is unambiguous and connotes the idea that the allowance was actually given effect to. If it was intended to include any allowance which are not actually allowed then the Central Government would have added a deeming provision as the Legislature did in the Explanation to section 10(5) of the Act.\" [Emphasis supplied) (p. 160) The judgment in Dharampur Leather Co. Ltd.'s case (supra) having been passed on the same day by the Supreme Court in the Straw Products Ltd.'s case (supra) affirms the view in the Straw Products Ltd.'s case (supra) that the words actually allowed does not include notional allowance. In the Nandlal Bhandari Mills Ltd.'s case (supra) the Supreme Court (per Subha Rao & Sikri, JJ.), held as under:- that in fixing the depreciation allowance for the years in which the respondent was assessed as a non- resident under the Indian Income- tax Act, the tocome- the amount towards depreciation allowatile tax Officer had actually allowed only a portion of in assessing its. world ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 10 income. The mere fact that in the malter of calculation the total amount of deperciation was first deducted from the world income and thereafter a proportion was struck did not amount to an actual allowance e of the entire depreciation in ascertaining the taxable income that accrurd in British India. Therefore, the depreciation deducted in arriving at the taxable income alme could be taken into account and not the depreciation taken into account for arriving at the world income\" (p. 173) In CIT. Mahendra Mills 20001-243 ITR 56 the Supreme Court after reviewing various decisions including those of its own overruled the views of various High Courts which held that actually allowed would Include notionally allowed and approved the views of other High Courts which held that actually allowed means only actually allowed and not notionally allowed. The head note portion succinctly brings out the ratio of the case and the same reads as under \"The language of the provisions of sections 32 and 34 of the Income-tax Act, 1961, is specific and admits of no ambiguity. Section 32 allows depreciation as deduction subject to the provision Section 34 provides that deduction under section 32 shall be allowed only if the prescribed particulars have been furnished, Rule 5AA of the Income-tax of section 34. Rules, 1962, since deleted, provided for the particulars required for the purpose of deduction under section 32. Even in the absence of rule SAA. the return of Income in the form prescribed itself requires particulars to be fumished if the assessee claims depreciation. These particulars are required to be furnished in great detail. There is a circular of the Board dated August 31, 1965, which provides that depreciation could not be allowed where the required particulars have not been furnished by the assessee and no claim for the depreciation has been made in the return. The Income-tax Officer in such a case is required to compute the income without allowing depreciation allowance. The circular of the Board dated April 11, 1955, imposes merely a duty on the officers of the department to assist the taxpayers claiming and securing relief. The officer is in every reasonable way, particularly, in the matter of required to do no more than to advise the assessee. It does not place any mandatory duty on the officer to allow depreciation if the assessee does not want to claim. The provision for claim of depreciation is certainly for the benefit of the assessee. If he does not wish to avail of that benefit for some reason, the benefit cannot be forced upon him. It is for the assessee to see if the claim of depreciation is to his advantage. Income under the head \"profits and gains of business or profession\" is chargeable to income-tax under section 28 and income under section 29 is to be computed in accordance with the provisions contained in sections 30 to 43A. The argument that since section 32 provides for depreciation it has to be allowed in computing the income of the assessee cannot in all circumstances be accepted in view of the bar ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 11 contained in section 34. If section 34 is not satisfied and the particulars are not furnished by the assessee his claim for depreciation under section 32 cannot be allowed. Section 29 is thus to be read with reference to other provisions of the Act. It is not in itself a complete code. If the revised return is a valid return and the assessee has withdrawn the claim of depreciation it cannot be granted relying on the original return when the assessment is based on the revised return. Allowance of depreciation is calculated on the written down value of the assets, which written down value would be the actual cost of acquisition less the oggregate of all deductions 'actually allowed to the assessee for the past years. 'Actually allowed' does not mean 'notionally allowed. If the assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to him. A thing is 'allowed' when it is claimed. A subtle distinction is there when we examine the language used in section 16 and sections 34 and 37 of the Act. It is rightly said that a privilege cannot be to a disadvantage and an option cannot become an obligation. The Assessing Officer cannot grant depreciation allowance when the same is not claimed by the assessee.\" [Emphasis supplied] (p. 56) 5. The counsel for the revenue has strongly relied upon the judgment of the Supreme Court in Saharanpur Electric Supply Co. Ltd. v. CIT 19921 194 ITR 294. We fail to understand as to how the said judgment would apply at all to the facts of the present case. In the said judgment, the Supreme Court has only held that if actual cost is wrongly assessed earlier, then, in the subsequent assessment years the actual cost can be recomputed and the mistake can be corrected. However, the facts of the present case clearly are different because in the earlier assessment years there did not arise any question of calculation of the actual cost because no depreciation was claimed for the earlier years. We, therefore, also fail to understand as to how the assessee is taking advantage of his own wrong as contended by the revenue. In fact, what is wrong which the assessee has done of which he is seeking to take advantage is not understood because, once it is held that depreciation is a privilege and can only be on the basis of actually allowed and not notionally allowed, there does not remain any issue of any wrong by the assessee. There is no wrong and as held by the Supreme Court in the Mahendra Mills' case (supra), it is only a privilege which the assessee may choose to exercise or not. No doubt, statutorily a Legislature can require the actual cost to be computed in a particular way but when that is not so, why should the assessee be deprived the benefit of depreciation with respect to computation of his income when depreciation has not been claimed by the assessee in the earlier years. 6. We, therefore, answer the question of law framed in that we hold that ITAT was correct in law in allowing depreciation to the assessee ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 12 on the actual cost of the germplasm seeds and the actual cost incurred by the assessee much before becoming an assessee can still be treated as an actual cost to the assessee when depreciation has to be claimed. With these observations, the appeals are dismissed.” 9. In view of the above observations and respectfully following the judicial precedents relied upon herein above, we have no hesitation to hold that the assessee would be duly entitled for depreciation on the fixed asset in AY 2012-13 being the first year of claim. Accordingly, the grounds raised by the assessee are allowed for AY 2012-13. ITA No. 7966/Del/2018 - AY 2013-14 10. The grounds raised for AY 2013-14 are exactly identical to those raised in AY 2012-13 and hence, the decision rendered by us in AY 2012- 12 shall apply mutatis mutandis for AY 2013-14 also, except with variance in figures. ITA No. 1534/Del/2022 - AY 2014-15 11. Ground Nos. 1 and 4 raised by the assessee are general in nature and does not require any specific adjudication. 12. Ground No. 2 raised by the assessee is identical to grounds raised for AY 2012-13. Hence, the decision rendered by us in AY 2012-13 hereinabove, shall apply mutatis mutandis for Ground No. 2 of AY 2014-15 also, except with variance in figures. 13. Ground No. 3 raised is challenging the disallowance u/s 14A of the Act. 14. We have heard the rival submissions and perused the material available on record. It is not in dispute that there was no exempt income ITA No. 1534/Del/2022 ITA Nos. 7965 & 7966/Del/2018 Prasidh Fincap Ltd Page | 13 received by the assessee during the year under consideration. Hence, there cannot be any applicability of provisions of Section 14A of the Act warranting any disallowance thereon. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs Era Infrastructure (India) Ltd reported in 141 taxmann.com 289 (Del HC). Respectfully, following the same the ground No. 3 raised by the assessee is allowed. 15. In the result, all the appeals of the assessee are allowed. Order pronounced in the open court on 22/10/2024. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22/10/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "