The main legal point established in the judgment is that the rate of depreciation should be determined based on the integral nature of the equipment and that subsidies received as capital receipts should not be adjusted against the block of assets.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J.

1. This appeal concerns Assessment Year (AY) 2009-10. Via the above- captioned appeal, the appellant/revenue has assailed the common order dated 22.07.2020 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"] in ITA no. 2020/DEL/2014.

1.1. This order has been passed in the cross-appeals preferred by the appellant/revenue and the respondent/assessee which emerged out of the order dated 20.01.2014 passed by the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"].

1.2. Being dissatisfied by the impugned order passed by the Tribunal, the appellant/revenue has preferred the instant appeal, wherein, it has proposed the following questions for our consideration:

"..(i) Whether in the facts and circumstances of the case and law, Hon'ble ITAT is correct in deleting the addition of Rs.61,01,74,000/- made by AO, on account of disallowance of license fee?

(ii) Whether in the facts and circumstances of the case and law, Hon'ble ITAT is correct in reducing the disallowance u/s 14A of the Act to Rs.8,34,934/- from Rs.39,25,411/- made by the Assessing Office in accordance with Rule 8D and according to CBDT Circular 5/2014 dated 11/02/2014?

(iii) Whether in the facts and circumstances of the case and law, Hon'ble ITAT is correct in allowing higher depreciation @60% as against depreciation @15% allowed by the AO overlooking the functional test proving and establishing perversity in the order passed by them both on facts and in law, especially when the case of BSES Rajdhani Powers has been overruled by Hon'ble Madras High Court in the case of Dinamalar Vs ITO Ward 1(1) Madurai [(2016) 74 taxmann. com 14 (Madras)?

(iv) Whether in the facts and circumstances of the case and law, Hon'ble ITAT is correct in confirming the order of CIT(A) deleting the addition of Rs.33,90,330/- made by AO on account of disallowance of depreciation on energy saving & pollution control devices, which were not put to use by the assessee, during the year under consideration?

(v) Whether in the facts and circumstances of the case and law, Hon'ble ITAT is correct in confirming the order of CIT(A) directing that the amount of Rs.25,00,000/- received from Govt of Goa, as subsidy, be treated as capital in nature and to reduce the same from [the] block of assets on a proportionate basis, especially when a classificatory amendment has been made w.e.f. AY 2016-17?.."

2. Mr Abhishek Maratha, who appears on behalf of the appellant/revenue, does not dispute the fact that insofar as the proposed question no. (i) is concerned, it is covered by the decision dated 11.05.2011 of the coordinate bench of this court rendered in ITA 662/2005. Via this decision, appellant/revenue's appeal was dismissed.

2.1. Likewise, insofar as proposed question nos. (ii) and (iv) are concerned, they are covered by our decision dated 17.05.2023 rendered in ITA 281/2023. Via the aforesaid judgement, we concluded that no substantial question of law arose for consideration and thus, sustained the view taken by the Tribunal.

2.2. Therefore, what we are required to express our view on, insofar as this appeal is concerned, are the question nos. (iii) and (v), as proposed by the appellant/revenue.

3. Thus, before we proceed further, the following broad facts are required to be noticed to render a decision in this appeal:

3.1. In the AY in issue, the respondent/assessee had filed a Return of Income [in short, "ROI"], wherein, it declared its total income as Rs.728,92,72,770/-. The ROI was processed, initially, under Section 143(1) of the Income Tax Act 1961 [in short, "Act"].

3.2. The respondent/assessee was subjected to scrutiny assessment which resulted in the assessed income being pegged at Rs.798,95,13,887/- on account of the following additions being made:

(i) Rs.61,01,74,000/- towards disallowance of licence fee.

(ii) Rs.39,25,411/- on account of disallowance under Section 14A of the Act.

(iii) Rs.8,01,12,224/- on acc