Reducing depreciation rate not debatable issue to invoke section 154 for rectification. Error discovered from records constitute apparent error
ABCAUS Case Law Citation:
ABCAUS 2620 (2018) (11) ITAT
Important Case Laws Cited/relied upon:
CIT vs. Dr. K.R. Jayachandran (212 ITR 637)
CIT vs. dr. B. Venkata Rao (2000) ITR 8C (SC)
The appellant assessee was had challenged the order of the CIT(A) in concluding that allowance of reduced rate of depreciation is not a debatable issue to invoke section 154 of the Income tax Act, 1961 (the Act).
The assessee was a manufacturer and had claimed depreciation on trucks owned by him at higher rate of 30% instead of 15%.
However, the Assessing Officer (AO) passed a rectification order u/s 154 of the Act and added back the excess claim of depreciation in respect of trucks and windmill. In respect of the trucks, the AO allowed 15% of depreciation as against 30% claimed by the assessee.
On appeal, the CIT(A) observed that the excess claim of depreciation claimed by the assessee was a part of record and the action of the Assessing Officer to disallow the same fall within the purview of section 154 of the Act.
According to the CIT(A), though the assessee relied on the decision of the Supreme Court, the vehicle used by the assessee was to ply his own goods and the AO was right in withdrawing the excess claim on the vehicle.
Therefore, the CIT(A) confirmed the action of the Assessing Officer. Aggrieved, the assessee was before the Tribunal.
The assessee submitted that the issue dealt by the AO in his proceedings u/s 154 of the Act was a debatable issue and cannot be considered so as to disallow the claim of depreciation at 30% on trucks owned by the assessee and granting depreciation at 15%.
The Tribunal observed that there was no record attached to the return of income to show that the claim of higher depreciation on trucks was to be allowed at 30% claimed by the assessee instead of 15%.
Also, the profit and loss accounts or other documents attached to the return of income did not show that the assessee had used the trucks for giving it on hire. The assessee had not shown hire charges in its books of account.
Hence, the Tribunal opined that it was apparent mistake committed by the Assessing Officer while framing the assessment order u/s 143(3) of the Act and allowed depreciation at 30% as claimed by the assessee instead of deductible depreciation at 15%.
The Tribunal was of the view that the apparent error had arisen from the records of the case and it was not discovered from other sources. Hence, the error discovered as a result of perusal of the records would constitute apparent error which conferred jurisdiction on the concerned Assessing Officer to rectify the earlier order.
The Tribunal noted that the evidence which was considered by the Assessing Officer to rectify the error was not extraneous to the record but it was intimately connected with the records. Hence, exercising jurisdiction u/s. 154 of the Act by the Assessing Officer was justified.
The Tribunal accordingly dismissed appeal of the assessee.