SIDH MANAGEMENT CORPORATE SERVICES LIMITED,DELHI vs. THE INCOME TAX OFFICER, CR BUILDING, DELHI

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ITA 8266/DEL/2025Status: DisposedITAT Delhi05 August 2026AY 2012-1315 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that depreciation is a statutory allowance and cannot be denied due to a procedural omission like non-filing of Schedule DPM, especially when the claim was substantiated in Schedule BP and rectified. The rejection of rectification applications was deemed unsustainable.

What were the facts?

The assessee inadvertently omitted to fill Schedule DPM (Depreciation on Plant and Machinery) in its original return, though depreciation was claimed in Schedule BP. Rectification applications were filed but rejected by the CPC.

What were the issues?

Whether depreciation can be disallowed solely due to the non-filing of a specific schedule when the claim is otherwise substantiated and the omission is inadvertent.

Which sections of the Income-tax Act were involved?

Section 32,Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI

For Appellant: Shri Mohit Choudhary, CA, Shri Harish Choudhary, Advocate, Ms. Mitika Choudhary, Advocate
For Respondent: Ms. Harpreet Kaur Hansra, Sr. DR
Hearing: 23.06.2026Pronounced: 05.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.8266/DEL/2025 (Assessment Year: 2012-13) SIDH Management Corporate Services Ltd., vs. ITO, Ward 23 (3), E-253, Saraswati Kunj Apartment, Delhi. 15, I.P. Extension, Patparganj, Delhi – 110 092. (PAN :AABCE5943L) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Mohit Choudhary, CA Shri Harish Choudhary, Advocate Ms. Mitika Choudhary, Advocate REVENUE BY : Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing : 23.06.2026 Date of Pronouncement : 05.08.2026 O R D E R PER S.RIFAURRAHMAN,AM: 1. This appeal filed by the assessee is directed against the order of ld. Addl./JCIT (Appeals), Mysore [for short ‘ld. CIT (A)] dated 17.11.2025 for the Assessment Year 2012-13 raising following grounds of appeal :-

“1. That on the facts and circumstances of the appellant's case, the learned Commissioner of Income Tax (Appeals) erred in law in upholding the addition of Rs,2,62,860/- on account of disallowance of depreciation as per Income Tax Act. 1961, which is completely technical in nature as error has not been generated while generating

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xml file for uploading the return of income, by rejecting the detailed submission of the appellant and without considering the fact that option to revise the return of income has been lapsed and appellant had filed rectification under section 154 of the Income Tax Act. 1961.

2.

That the impugned appeal order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.”

2.

At the time of hearing, ld. AR of the assessee brought to our notice relevant facts and submitted his submissions as under. Brief facts of the case are, the assessee is a company incorporated under the provisions of Companies Act, 1956 having its registered office at E - 253, Saraswati Kunj Apartments 25, I.P. Extension, Patparganj, Delhi – 110 092 has e- filed its return of income for the Assessment Year 2012-13 on 14.10.2023 declaring total income of Rs.1,93,510/- under the head ‘Profits and gains from business or profession’ which has been processed on 15.11.2023 in which total income has been assessed at Rs.4,56,370/- against the returned income of Rs.1,93,510/-, thereby making addition of Rs.2,62,860/- on account of disallowance of depreciation as per Companies Act, 1956 and accordingly, demand has been raised amounting to Rs.1,12,200/-. Ld. AR submitted that it is pertinent to note that the assessee filed rectification applications under Section 154 of the Income Tax Act, 1961 on the following dates:

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 20.01.2014 (Rectification Ref. No. 865255521200114)  15.01.2019 (Rectification Ref. No. 409005641150119)  28.10.2020 (Rectification Ref. No. 681384561281020)

3.

He submitted that all of the above rectification applications were rejected by CPC, Bengaluru, and no relief in respect of depreciation was granted. He further submitted that assessee had filed physical application with the jurisdictional assessing officer on 05.12.2019 whose copy of the letter has been placed on record, however, the Assessing Officer did not bother to consider the rectification application till date. 4. He submitted that while filing the original return of income for Assessment Year 2012-13, Schedule DPM (Depreciation on Plant and Machinery) was inadvertently omitted. However, Schedule BP (Details of Business Income) was properly filled, specifically Row No. 12(ii) of Point A, which clearly reflected the depreciation allowable under Section 32(1)(i) of the Income Tax Act, 1961 (for short ‘the Act’). He submitted a relevant screenshot of this entry which is reproduced below for reference :-

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5.

Further, he submitted that subsequently, in the rectification applications Further, he submitted that subsequently, in the rectification applications Further, he submitted that subsequently, in the rectification applications filed under Section 154, the appellant filed under Section 154, the appellant duly filled Schedule DPM duly filled Schedule DPM with all requisite details and annexures, thereby correcting the inadvertent requisite details and annexures, thereby correcting the inadvertent requisite details and annexures, thereby correcting the inadvertent omission. However, despite submitting complete and accurate data during omission. However, despite submitting complete and accurate data during omission. However, despite submitting complete and accurate data during rectification, the CPC passed orders dated rectification, the CPC passed orders dated 24.07.2020 and 02.11.2020, rejecting the rectification applicat rejecting the rectification applications on the ground that rectification on the ground that rectification could not be carried out. For the sake of brevity, could not be carried out. For the sake of brevity, Schedule DPM and Schedule DPM and Schedule DEP is reproduced below : Schedule DEP is reproduced below :-

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6.

Further he submitted that however, even after filing the complete details Further he submitted that however, even after filing the complete details Further he submitted that however, even after filing the complete details in the relevant schedule, in the relevant schedule, rectification order has been passed wherein rectification order has been passed wherein rectification application has been rejected vide order dated 24.07.2020 rectification application has been rejected vide order dated 24.07.2020 rectification application has been rejected vide order dated 24.07.2020 and 02.11.2020 by stating that rectification cannot be made and hence and 02.11.2020 by stating that rectification cannot be made and hence and 02.11.2020 by stating that rectification cannot be made and hence application is rejected. Rectification order extract is attached below application is rejected. Rectification order extract is attached below application is rejected. Rectification order extract is attached below for perusal: -

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7.

Ld. AR further submitted that the CBDT Circular No. 14 (XL Ld. AR further submitted that the CBDT Circular No. 14 (XL Ld. AR further submitted that the CBDT Circular No. 14 (XL-35) of 1955, dated 11-4-1955, reinforces this obligation in unequivocal terms, 1955, reinforces this obligation in unequivocal terms, 1955, reinforces this obligation in unequivocal terms, stating that the department must not take advantage of ignorance of any stating that the department must not take advantage of ignorance of any stating that the department must not take advantage of ignorance of any assessee as to his rights an assessee as to his rights and it is one of the duties of the department to d it is one of the duties of the department to assist a taxpayer in every reasonable way, particularly in the matter of assist a taxpayer in every reasonable way, particularly in the matter of assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs, by taking initiative in guiding the taxpayer claiming and securing reliefs, by taking initiative in guiding the taxpayer claiming and securing reliefs, by taking initiative in guiding the taxpayer where the proceedings are before them that some relief is du where the proceedings are before them that some relief is du where the proceedings are before them that some relief is due to the taxpayer. 8. He submitted that when one reads Explanation5 to section 32(1) and the He submitted that when one reads Explanation5 to section 32(1) and the He submitted that when one reads Explanation5 to section 32(1) and the above circular issued by the CBDT in the context of Article365 of the above circular issued by the CBDT in the context of Article365 of the above circular issued by the CBDT in the context of Article365 of the Constitution of India, one finds it difficult to uphold the action of the Constitution of India, one finds it difficult to uphold the action of the Constitution of India, one finds it difficult to uphold the action of the authorities below in d authorities below in depriving the assessee of the claim for deduction of epriving the assessee of the claim for deduction of depreciation.

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 The omission of Schedule DPM was a genuine, inadvertent, and human error during return filing, which was subsequently rectified in the rectification applications.  The depreciation claimed under Section 32 of the Income Tax Act, 1961, was clearly disclosed in Schedule BP and forms an integral part of the return.  The mere procedural lapse of not originally populating Schedule DPM should not result in denial of a legitimate claim under law, especially when the depreciation was already accounted for and supported by calculations in Schedule BP.  Depreciation under Section 32 is a statutory allowance, and once the conditions under that section are satisfied and adequate details are furnished (as done subsequently), disallowance solely due to non-filing of a supporting schedule cannot be justified. The relevant provisions of the Act read as follows: "Depreciation. 32. (1) In respect of depreciation of-- (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trademarks, licences, franchises or any otherbusinessor commercial rights of similar nature, being intangible assets acquired onor after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall beallowed-- (i) ....

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(ii) in the case of any block of assets, such percentage on the written down valuethereof as may be prescribed: Provided that ..... Explanation 5.--For the removal of doubts, it is hereby declared that the provisions ofthis sub-section shall apply whether or not the assessee has claimed the deduction inrespect of depreciation in computing his total income; (iia) in the case of any newmachinery or plant (other than ships and aircraft), which has been acquired andinstalled after the 31st day of March, 2005, by an assessee engaged in the business ofmanufacture or production of any article or thing or in the business of generation orgeneration and distribution of power, a further sum equal to twenty per cent of theactual cost of such machinery or plant shall be allowed as deduction under clause (ii) : ............"

 The Courts have consistently held that procedural technicalities should not override substantive rights, and that rectification under Section 154 is permissible when there is a mistake apparent from the record, as in this case.  Denial of depreciation, despite all details being subsequently submitted, results in unjust enrichment of the revenue and causes undue hardship to the appellant. 9. Ld. AR of the assessee placed reliance on the following case laws:-  Vedanta Limited (Successor To Cairn ... vs PrincipalCommissioner Of Income ... on 19 March, 2018 [ High Court of Delhi at New Delhi]

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“6. This court is of opinion that the plain text of the explanation leaves no room for admitting theinterpretive gloss that the assessee wishes to place over it. There can be a multitude ofcircumstances where, but for the provision, the incentive, available to all those for whom the benefitof additional depreciation was intended, could have been deprived of it. Undoubtedly, the amount of the assessee's claim for Section 80IB deduction increased, when it sought to withdraw the additionaldepreciation claim. However, that single circumstance should not influence this court to ignore theplain intendment of the statute, since Parliament clearly stated that the provisions of "thissub-section" would apply, "whether or not the assessee has claimed the deduction in respect ofdepreciation in computing his total income".This court cannot re-write the statute, as is sought to beurged. For thesereasons, the Court is of the opinion that no question of law arises on this aspect.”

 [2024] 158 taxmann.com 12 (Hyderabad - Trib.)/[2024] 205 ITD 217 (Hyderabad -Trib.)[26-12-2023]IN THE ITAT HYDERABAD BENCH 'A'S&P Capital IQ (India) (P.) Ltd.v.Assistant Commissioner of Income-Tax “15. Explanation 5 to Section 32(1) of the Act clearly lays down that the provisions of such sub-section shallapply whether or not the assessee has claimed the deduction in respect of the depreciation in computing thetotal income. It, therefore, goes without saying that irrespective of the fact of assessee claiming or not, thedepreciation shall be allowed while computing the total income of the assessee. Then it becomes theobligation on the part of the Revenue to allow depreciation on goodwill even if it is not claimed by the assessee. At the same time, the CBDT Circular No. 14 (XL - 35) of 1955, date 11/04/1955, reinforces thisobligation in unequivocal terms, stating that the department must not take advantage of ignorance of any assessee as to his rights and it is one of the duties of the department to assist a taxpayer in every reasonableway, particularly in the matter of claiming and securing reliefs, by taking initiative in guiding the taxpayerwhere the proceedings are before them indicate that some relief is due to the taxpayer. When we readExplanation 5 to Section 32(1) of the Act and the above circular issued by the CBDT in the context of Article365 of the Constitution of India, we find it difficult to

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uphold the action of the authorities below in depriving the assessee of the claim for deduction of depreciation on goodwill. 16. For the reasons set forth in the foregoing paragraphs, we are of the considered opinion that disallowanceof the claim for deduction of depreciation on goodwill by the authorities below cannot be sustained and thesame is liable to be deleted. We hold and order so. Grounds of appeal are accordingly allowed. 17. In the result, appeal of the assessee is allowed.”

 CIT v. Mahalaxmi Sugar Mills Co. Ltd. [1986] 160 ITR 920 (SC) "It is well-settled that a claim, if allowable under law, cannot be disallowed merely because a wrong section has been quoted or wrong form has been filed, so long as the necessary facts are on record."  Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC) While the Supreme Court restricted the AO's power to entertain new claims without revised return, it clarified that the appellate authorities are not barred from entertaining such claims if the supporting facts are already on record.  CIT v. Shelly Products [2003] 261 ITR 367 (SC) "Where an assessee’s legal right is denied merely on technical grounds, such denial would be unjustified.  CIT v. Infosys Technologies Ltd. [2012] 341 ITR 293 (Kar.) The Karnataka High Court held that a statutory deduction cannot be denied solely due to a technical or clerical error in the return if the assessee is otherwise eligible.  DCIT v. Prithvi Insurance Brokers (P.) Ltd. [2016] 160 ITD 400 (Mumbai - Trib.)

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Held that depreciation under Section 32 cannot be denied merely due to non-filing or defective filing of Schedule DPM, where sufficient supporting evidence is available on record. Depreciation is a statutory allowance under Section 32 of the Income Tax Act, and once the eligibility conditions are met and details have been provided—even if through rectification—the same cannot be denied merely due to a procedural omission like the non-filing of Schedule DPM. The rejection of the rectification applications under Section 154 is not sustainable in law, as the mistake was apparent and rectifiable, and the depreciation claim was substantiated through Schedule BP and further rectified by furnishing full details. 10. In light of the above, it is respectfully requested that the disallowance of depreciation amountof Rs. 2,62,860/- be deleted, the total income be revised accordingly, and the resultant demand of Rs.1,12,200/- be withdrawn. It is further requested that appropriate relief be granted under the provisions of the Income Tax Act, 1961. 11. On the other hand, ld. DR of the Revenue relied on the orders of the authorities below. 12. Considered the rival submissions and material placed on record. We observed from the record that the assessee inadvertently omitted to fill the schedule DPM but filled the schedule BP properly. The claim of the depreciation as per section 32 was claimed in the schedule BP and the above claim is properly matching to the schedule BP submitted by the assessee while filing the rectification application. However, the same was rejected by the tax authorities with the observation that at the time of

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processing, system do not allowclaim in absence of figures mentioned in schedule DPM. After considering the submissions of both parties, the system may not accept the claim due to absence of figures, but at the time of rectification, the humans are being tasked to rectify the genuine mistake. The officers are not inclined to look at the genuine hardship of the assessee and also it is the duty of the officers to make sure that genuine claims of the assessee should be entertained. In the given case, the claim of the assessee is genuine as per law, the claim of the depreciation is automatic and the same cannot be declined merely transferring the blame to the machine or system. We are aware that the machine is dumb, it carries on its activities as per set coded system. That is the reason, human interface was introduced in the rectification process, even then the officers areintend to work as dumb like the machine. In our considered view, claim of the assessee is genuine as per law, we direct the JAO to allow the claim of depreciation in this case. In the result, grounds raised by the assessee in this regard are allowed. 13. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on this 5th day of August, 2026.

Sd/- sd/- (VIMAL KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 05.08.2026 TS

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