Depreciation under IT Act Section 32 not allowable if No Business Activity

Arrow Manpower Services (P) Ltd. Vs ACIT (ITAT Delhi)

Introduction: In a significant ruling by ITAT Delhi, the Arrow Manpower Services (P) Ltd. came face to face with ACIT. The pivotal issue revolved around the claim of depreciation u/s 32 of the Income Tax Act and the necessity of carrying out business activities.

Analysis:

1. Backdrop of the Case: Arrow Manpower Services (P) Ltd. appealed against the order of the Commissioner of Income-tax (Appeals)-31, New Delhi. This stemmed from an order passed u/s 143(3) of the Income-tax Act, 1961.

2. Key Grounds of Appeal: The assessee raised multiple grounds, the prominent ones being:

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