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Facts
The Revenue appealed an order allowing depreciation and additional depreciation claims to the assessee, arguing the CIT(A) erred. The assessee had filed a cross-objection seeking allowance of depreciation claims rejected by the Assessing Officer.
Held
The Tribunal held that the Revenue's appeal was not maintainable due to a low tax effect, falling below the threshold prescribed by CBDT circulars. The cross-objection of the assessee was allowed, permitting claims for depreciation and additional depreciation.
Key Issues
Whether the Revenue's appeal is maintainable due to low tax effect and whether the assessee's claims for depreciation and additional depreciation should be allowed.
Sections Cited
32(1)(ii)
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Income Tax Appellate Tribunal, “K(SMC
Before: SHRI PAWAN SINGH & SHRI GIRISH AGRAWAL
Assessment Year: 2016-17 Deputy Commissioner of M M Plastoware India Private Income Tax, Circle-1, Thane Limited Gala No. 10-15, Arihant Darshan, Vs. 90 Feet Road, Bhayander West, Thane – 101101. (PAN: AAHCM2568D) (Appellant) (Respondent) C.O. No. 120/MUM/2025 Assessment Year: 2016-17 M M Plastoware India Private Deputy Commissioner of Income Limited Tax, Circle-1, Thane Gala No. 10-15, Arihant Darshan, 90 Feet Road, Vs. Bhayander West, Thane – 101101. (PAN: AAHCM2568D) (Appellant) (Respondent) Present for: Assessee : Shri Lalit Munoyat, CA Revenue : Shri Bhagirath Ramawat, Sr. DR Date of Hearing : 22.12.2025 Date of Pronouncement : 10.03.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 This appeal filed by the Revenue and cross objection filed by the assessee against the order of ADDL/JCIT (A)-3 Bengaluru, vide order nos. ITBA/APL/S/250/2024-25/1070018243(1), dated 29.10.2024, passed against the assessment order by ACIT, Circle 2, Thane, u/s. 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 22.11.2018, for Assessment Year 2016-17.
Grounds taken by revenue are reproduced as under: “1. On the facts and in circumstances of the case, while deciding Ground of Appeal
Nos. 4, 5 & 6, the CIT(A) vide Para 4.3 directed to allow the depreciation of Rs.2,16,31,266/, without appreciating the fact that the total depreciation of Rs.2,16,31,266/- includes the unclaimed depreciation of Rs.11,72,128/including an amount of Rs.11,72,128/- which stands dismissed by the CIT(A) in Para No.4.2.1 while deciding Ground Nos.1&3 in the impugned order, thereby bringing the order of the CIT(A) within the ambit of perversity.
2. On the facts and in circumstances of the case, while deciding the Ground of Appeal No.2 for allowing unclaimed additional depreciation u/s.32(1)(ila) of 20% on the new asset acquired during FY 2015-16, the CIT(A) erred in Para No.4.2.4 by allowing the appeal of the assessee without discussing the facts and figures on the issue under consideration, thereby rendering the appellate order of the CIT(A) as perverse.
3. The order of the Ld.CIT(A) may be vacated and that of the Assessing Officer may be restored.” C.O. No. 120/MUM/2025; Assessment Year: 2016-17 2.1. Grounds taken by assessee are reproduced as under: “1. Whether on facts and in law, the Assessing Officer erred in rejecting the Cross Objector's claim for correction of depreciation to the extent of Rs. 11,72,128/- during the assessment proceedings u/s. 143(3) of the Income-tax Act, 1961, solely on the ground that such claim was not made in the original return of income and that no revised return had been filed, and whether the learned CIT(A) rightly granted relief on this issue? 2. Whether the rejection of the Cross Objector's claim for correction of depreciation, despite the same being a rectification of an inadvertent computational error apparent from the depreciation. schedules and books of accounts on record, is sustainable in law, particularly when the correction is necessary to compute the correct taxable income and ensure continuity and correctness of depreciation over the years?
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 3. Whether the reliance placed by the Assessing Officer on the decision of the Hon'ble Supreme Court in Goetze (India) Lid. v. CIT (2006) 284 ITR 323 (SC) is misplaced, considering that the said decision only bars entertaining fresh claims not made in the return, and does not apply to correction or recomputation of an existing claim during the assessment proceedings? 4. Whether the action of the Assessing Officer in refusing to entertain the correction of depreciation claim is contrary to the binding judicial precedents of the :- 4.1. Hon'ble Supreme Court in NTPC Lid. v. CIT (1998) 229 ITR 383 (SC), wherein the Supreme Court held that under Section 254 of the Income-tax Act, the powers of the Income-tax Appellate Tribunal (ITAT) are broad and plenary, enabling it to examine any question of law arising from the facts already on record, even if such a question was not raised before the lower authorities or included in the original grounds of appeal. 4.2. The Hon'ble Bombay High Court in CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom), wherein it was held whether an assessee can make an additional claim of deduction through a letter during assessment proceedings without filing a revised return, and whether the appellate authorities have jurisdiction to entertain such claims and other decisions, which categorically hold that correction of errors or recomputation of existing claims, duly supported by records, must be entertained to arrive at the correct taxable income?”
3. At the outset, appeal by the Revenue is to be tested on the touchstone of tax effect as prescribed by Central Board of Direct Taxes (CBDT) in its circular prescribing that no appeal shall be filed before the Income Tax Appellate Tribunal where the tax effect is below Rs. 60 lakhs except in certain specified categories. The relevant circulars issued by CBDT in this regard are Circular No. 05/2024 dated 15.03.2024 as amended by Circular No.09/2024 dated 17.09.2024. These circulars are binding on the revenue authorities. In the appeal memo in Form No. 36, Revenue has mentioned Rs.2,16,31,266/- as the amount disputed in appeal and the tax effect mentioned is Rs.64,89,379/-. It is pointed out by the ld. Counsel of the assessee that this is an erroneous mention by the Revenue since this figure represents the total depreciation allowable as per the order of ld. CIT(A) and not the quantum actually disputed. In this regard, correct computation is furnished by the assessee which is tabulated below:
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 S. N. Depreciation Rs.
Depreciation allowed by the AO 20,459,138 2. Depreciation allowed by the CIT(A) in 11,72,128 addition to the depreciation allowed by the AO 3. Total allowed by the CIT(A)- Normal 2,16,31,266 4. Additional Depreciation allowed by the CIT(A) 97,23,986 5. Total depreciation allowable as per CIT(A) 3,13,55,252 Order 6. Depreciation actually allowed by the 2,04,59,138 Assessing Officer: 7. Difference in dispute (5-6) (Actual) 1,08,96,114 8. Difference in dispute as claimed by the 2,16,31,266 Revenue 3.1. It is thus pointed out that the actual difference of Rs.1,08,96,114/- is under dispute and the tax effect on this comes to approximately Rs.13,33,588/- and not Rs.64,89,379/- as mentioned in Form 36.
In reference to the above tabulation, we referred to the order of ld. Assessing Officer, wherein in Para 3, it is mentioned that assessee had made claim before the ld. Assessing Officer in the course of assessment proceedings to take the correct claim of depreciation which has been erroneously taken at Rs.2,04,59,138/- whereas the actual depreciation is Rs.2,16,31,266/-. Thus, because of this error, depreciation to the extent of Rs.11,72,128/- (Rs.2,16,31,266/- less Rs. 2,04,59,138/-) remained to be claimed in the return filed by the assessee. Apart from this, assessee also requested to allow additional depreciation of 20% on the new assets acquired during the year under consideration which also remained to be claimed in the return of income filed by the assessee. Both these claims were made by the assessee in the course of assessment proceedings which remained to be claimed in the return of income filed.
4.1. Ld. Assessing Officer rejected both the claims on the ground that assessee should have filed revised return of income for the year. He placed
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 reliance on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs. CIT [2006] 284 ITR 323 (SC) to deny the request made by the assessee in the course of assessment proceedings. Assessment was thus, completed by accepting the returned income at Rs.43,15,820/-. No addition or disallowance was made in the course of completing the assessment except for denying the two requests made by the assessee. The quantum of two requests made by the assessee comes to Rs.1,08,96,114/- (Normal depreciation of Rs.11,72,128/- and additional depreciation on new assets at the rate of 20% comes to Rs. 97,23,986/-)
Assessee went in appeal before the ld. CIT(A) on these two requests which were denied by the ld. Assessing Officer. These were allowed by the ld. CIT(A) by following the same decision in the case of Goetze India Ltd. whereby it was noted by him that an Assessing Officer is not at liberty to accept any claim made by the assessee during the course of assessment proceedings which has not been claimed by filing a return of income or a revised return of income. However, assessee can take additional grounds of appeal and make a fresh claim before the appellate authorities as Hon'ble Court noted in the said decision that nothing impinges on the power of appellate authority to accept such fresh or additional claim. The relief granted by ld. CIT(A) is in regard to the erroneous filling in of data regarding normal depreciation, whereby an amount of Rs.11,72,128/- remained to be claimed in the original return filed by the assessee and the additional depreciation at the rate of 20% on the new assets acquired during the year which amounts to Rs.97,23,986/- against which Revenue is in appeal before the Tribunal.
5.1. For these two amounts assessee has demonstrated evidently its justifiability for the claim so made. For the first amount of Rs. 11,72,128/-, it was demonstrated by the assessee that there was an error in recording the correct opening WDV to be brought down from the preceding year which resulted into this short claim, fact of which was taken note by ld. CIT(A) in his order.
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 5.2. For the additional depreciation u/s. 32(1)(ii) at the rate of 20% on the new assets acquired during the year, it remained to be claimed in the original return but was substantiated before the ld. CIT(A) by bringing relevant material on record. Thus, it is a case of calculation mistake in carrying forward of opening WDV to the year under consideration and claim of additional depreciation before the appellate authority which has been allowed at the first appellate stage.
We are convinced on the factual position that the amount in dispute by the Revenue is Rs.1,08,96,114/- and not Rs.2,16,31,266/- as mentioned in Form no.36 on which the tax effect has been computed at Rs.64,89,379/-. Thus, we are in agreement with the preliminary objection raised by the assessee on the appeal filed by the Revenue, which is not maintainable on account of low tax effect as prescribed by CBDT in its circular, being less than Rs.60 lakhs. Case of the assessee also does not fall within the specified categories of exceptions and hence the limit prescribed by CBDT in its circular for the maintainability of appeal filed by it squarely applies on the present appeal. Taking into account the correct factual position as brought on record and also considering the CBDT circulars as noted above, appeal filed by the Revenue is not maintainable, owing to the tax effect being below the prescribed threshold and thus, is dismissed in limine on the ground of low tax effect.
6.1. In the cross objection, assessee has raised the grounds to allow the claims of depreciation rejected by the ld. Assessing Officer for want of revised return. Before us, assessee has evidently demonstrated its eligibility of the said claims which we have already discussed while dealing with the appeal of Revenue. We are in agreement with the view taken by the ld. CIT(A) to allow the claim of the assessee in terms of the decision of Goetze India Ltd. (supra) according to which noting impinges on an appellate authority to accept the claim made by an assessee, before it. On the merits of the case, the claim made by the assessee for the depreciation and additional depreciation,
C.O. No. 120/Mum/2025 M M Plastoware India Pvt. Ltd. AY 2016-17 totalling to Rs.1,08,96,114/- is allowed. Accordingly, grounds of cross objection raised by the assessee are allowed.
In the result, appeal of the Revenue is dismissed and cross objection of the assessee is allowed.
Order is pronounced in the open court on 10 March, 2026 Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member
Dated: 10 March, 2026 MP, Sr.P.S.
Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai