Depreciation Disallowed Without Verifying Application of Income: ITAT Restores Rs. 26.84 Lakh Addition Matter

The ITAT (Income Tax Appellate Tribunal) restored an addition of ₹26.84 lakh to the assessee's income, which was disallowed as depreciation, because the assessing officer (AO) had disallowed it without verifying the application of income. The ITAT criticized the AO's action of disallowing the depreciation claim without properly examining whether the income generated from the asset was indeed applied for the purposes claimed by the assessee. The tribunal held that such a disallowance, made without due verification, was not justified. Consequently, the ITAT remanded the matter back to the assessing officer for a fresh verification of the application of income related to the depreciable asset before making a decision on the depreciation claim. This ruling emphasizes the need for thorough investigation by tax authorities before disallowing legitimate claims.