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Facts
The assessee claimed higher depreciation on certain medical equipment and an elevator, which was allowed in the assessment. The Assessing Officer (AO) initiated proceedings under section 154 to rectify this, considering it a mistake apparent from the record, as the equipment did not qualify for the higher depreciation rate as per the rules. The assessee's appeal to the CIT(A) was dismissed.
Held
The Tribunal held that the items on which the assessee claimed higher depreciation did not fall under the category of life-saving medical equipment specified in the Income Tax Rules. Therefore, the AO was justified in rectifying the mistake apparent from the record under section 154. The assessee's reliance on a previous High Court decision was not applicable due to differing facts.
Key Issues
Whether the AO was justified in invoking Section 154 to rectify the depreciation claim on medical equipment and elevator, when the items were not explicitly listed as eligible for higher depreciation under the rules. Whether the CIT(A) erred in confirming the rectification order.
Sections Cited
154, 143(3), 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order dated 12.01.2026 passed by Addl/JCIT(Appeal) – 1 Chennai [hereinafter referred to as ‘Addl. CIT(A)’] for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s. 154 of the Income Tax Act (hereinafter referred as “the Act”).
The brief facts of the case are that the assessee had filed his return of income for A.Y. 2017-18 on 21.09.2018 declaring total income of Rs.40,49,531/-. The assessment was completed u/s. 143(3) of the Act on 27.12.2019 at total income of Rs. 51,53,550/-. Subsequently, the AO had
ITA No.338/Ahd/2026 Yogendra Bansidhar Bhatt Vs. ITO, AY- 2017-18 2
noticed that the assessee had claimed wrong depreciation in respect of elevator and life-saving medical equipments under the head ‘plant and machinery’ which was allowed in the assessment. Therefore, a proceeding u/s. 154 of the Act was initiated to rectify the mistake apparent from the error. The AO had passed an order u/s. 154 r.w.s 143(3) of the Act on 09.01.2023 withdrawing the excess depreciation claimed by the assessee.
Aggrieved with the rectification order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned Addl. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming invocation of power u/s 154 on disputed question of law and facts. 2 On the facts and circumstances of the case as well as on the subject, the Ld. CIT(A) has erred in confirming the disallowance of 50% of the agricultural income amounting to Rs. 6,08,260/- without appreciating that the assessee had furnished 7/12 extracts and certificate of Mamlatdar, and that agricultural activities were consistently carried out over the years. 3 On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in upholding the addition of Rs. 6,63,075/- by restricting depreciation on plant and machinery to 15% instead of 40%, ignoring that the assets such as modular operation theatre, oxygen pipeline system, and anaesthesia trolley system are life-saving medical equipment eligible for higher depreciation. 4. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in sustaining the initiation of penalty proceedings u/s 270A of the Act.
ITA No.338/Ahd/2026 Yogendra Bansidhar Bhatt Vs. ITO, AY- 2017-18 3 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 5. Shri Hardik Vora, the Ld. AR of the assessee submitted that the depreciation claim on the life-saving equipment was a debatable issue and, therefore, the AO was not correct in passing the rectification order u/s. 154 of the Act. In this regard, he relied upon the decision of Hon’ble Madras High Court in the case of Vasantha Subramanian Hospitals (P) Ltd. [98 taxmann.com 292 (Madras)].
Per Contra Shri Abhijit, the Ld. Sr. DR, submitted that life-saving medical equipments, which are eligible for depreciation at the rate of 40%, are enumerated in Part – III of Machinery and Plants of the depreciation table under the Income Tax Rules. The items on which higher depreciation was claimed by the assessee did not fall in the list of equipment as mentioned therein. Therefore, there was no debate about wrong claim of depreciation by the assessee. Accordingly, the AO had rightly passed the order u/s. 154 of the Act rectifying the mistake apparent from record. The Ld. Sr. DR further submitted that the assessee had in fact admitted excess claim of depreciation on elevator and the rectification on this issue was not contested by him.
We have considered the rival submissions. The ground no-1 taken by the assessee pertains to invocation of provision of section 154 of the Act. It is found that the assessee had claimed depreciation at the rate of 40% on following items which were categorised as life-saving medical equipment:
i. Operation Theatre
ITA No.338/Ahd/2026 Yogendra Bansidhar Bhatt Vs. ITO, AY- 2017-18 4 ii. Air Pipeline System iii. Anaesthesia Trolley System iv. Stabilizer The life-saving medical equipment on which depreciation at the rate of 40% is allowable, is specified at serial (xia) of Part III Machinery and Plant of depreciation table under Income Tax Rules, which are as under:
ITA No.338/Ahd/2026 Yogendra Bansidhar Bhatt Vs. ITO, AY- 2017-18 5 8. It is evident from the comparison of the two lists that the items/equipments on which the assessee had claimed higher depreciation @ 40% did not fall into the category of life-saving medical equipment as specified in the depreciation table under the Rules. Therefore, the AO had rightly held that there was a mistake apparent from record in allowing higher depreciation to the assessee. We do not find any merit in the objection as raised by the assessee. In the case of Vasantha Subramanian Hospitals (P) Ltd. (supra), relied upon by the assessee, the equipments on which higher depreciation was claimed by the assessee were found to be identical to the machinery mentioned in Rules specifying higher rate of depreciation. In the present case, however, we do not find any such similarity and the equipments on which the assessee had claimed higher depreciation are not even remotely identical to the life- saving equipments eligible for higher depreciation. Therefore, the assessee cannot derive any benefit from the decision as relied upon, as the facts are found to be distinctly different. Accordingly, the ground No. 1 as taken by the assessee, is dismissed.
Ground No. 2 taken by the assessee was not pressed by the Ld. AR. Hence, the same is dismissed.
The ground No. 3 pertains to restricting the depreciation on plant and machinery to 15% instead of 40% claimed by the assessee. As already discussed earlier the equipments on which the assessee had claimed higher depreciation of 40% are not found covered within the life- saving medical equipment specified at serial (xia) of Part III Machinery and Plant of depreciation table under Income Tax Rules. Therefore, the
ITA No.338/Ahd/2026 Yogendra Bansidhar Bhatt Vs. ITO, AY- 2017-18 6
AO had rightly reduced depreciation thereon at the rate of 15%, as the mistake was apparent from the record. Accordingly, the ground taken by the assessee is dismissed.
The other grounds taken by the assessee are only consequential and general in nature, hence dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 21/04/2026 at Ahmedabad.
Sd/- Sd/- (SAJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 21st April, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद