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Income Tax Appellate Tribunal, DELHI BENCH “H-1 ”: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
Assessee by : Shri R. M. Mehta, Adv Revenue by: Shri Subhash Verma, Sr. DR Date of Hearing 09/10/2017 Date of pronouncement 28/12/2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-IV, New Delhi dated 29.12.2013 for the Assessment Year 2003-04 raising following grounds of appeal:- “1. The ld Commissioner of Income-Tax(A) erred both on facts and in law in confirming the order passed by the Assessing Officer u/s 154 of the Income Tax Act, 1961 (the Act) in violation of the principles of natural justice.
2. The ld Commissioner of Income Tax (A) erred in confirming the order passed by the Assessing Officer u/s 154 of the Act without appreciating that the issue was debatable and capable of two views thereby being outside the purview of section 154.
3. The ld Commissioner of Income Tax (A) proceeded on a wrong premise that the issue had not been examined in the assessment made u/s 143(3) and was therefore, no debatable. This was not even the case of the Assessing Officer.
4. The ld Commissioner of Income-tax(A) further erred in upholding the action of the Assessing Officer in charging interest u/s 234D in the order passed u/s 154.”
2. The brief facts of the case is that assessee is a medical institute and research centre in whose case the assessment u/s 143(3) read with section 147 of the Act was completed on 28.03.2006 at an income of Rs. 356467770/-. The ld Assessing Officer on verification of records found that there is mistake apparent from the records as higher rate of deprecation is allowed on written down value of the assets under the “Electric Installation and Plant and machinery” @25% instead of prescribed rate of 15% resulting into excess allowance of Rs. 2793731/- and similarly, deprecation on UPS etc was allowed @80% instead of 25% resulting into excess deprecation allowance of Rs. 1319988/-. Accordingly, notice u/s 154 of the Income Tax Act was issued on Page | 1 Escorts Heart Institute and Research Centre Ltd, Vs. ACIT, (Assessment Year: 2003-04) 23.03.2010, which was replied by the assessee on 30.03.2010. The assessee sought more time in view of the old records but the ld Assessing Officer did not grant the time and disallowed the above depreciation holding it that there is a mistake apparent from the record. Consequently order u/s 154 of the Act was passed on 31.03.2010. The above order was challenged by the assessee before the ld CIT(A), who rejected the contention of the assessee that there is no mistake apparent from the record. Hence, assessee has preferred appeal before us.
The ld AR submitted as under:- “A. Brief facts 1. The auditors have certified the rate of depreciation 2. The opening WDV in the schedule underwent depreciation at the rates claimed in the preceding Assessment Year and no action has been initiated by the department to withdraw it.
3. The AO allowed depreciation as claimed in an order passed u/s 143(3)/ 147 of the Act. B. Submission 1. In the assessment made u/s 143(3) of the Act it is presumed that the AO has applied his mind to every aspect of the matter 2. Review of an order cannot be done in the guise of an action u/s 154 of the Act.
3. Something which has to be discovered by elaborate arguments or investigation of facts cannot constitute a mistake apparent from the record.
Debatable issues where two views are possible are outside the purview of proceedingts u/s 154. C. Judgement relied upon 1. 256 ITR 1 (FB) (Delhi) paras 23 and 15) affirmed in 320 ITR 561 (HON'BLE SUPREME COURT ) 2. CIT Vs. Vac Met Corporation (P) Ltd (1981) 127 ITR 676 (Guj) 3. Cit Vs. Tirupattur Co-op Sugar Mills Ltd 246 ITR 227 (Mad) 4. Cit Vs. Shiv Narain karmendra narain 280 ITR 355 (all) 5. Cit Vs. MMTC ltd 246 ITR 725 (delhi) 6. ACIt Vs. Indian Farmer Fertilizer Co-op Ltd 51 SOT 112 (URO) (DELHI) 7. DCIT Vs. M/s. Insilco Ltd in dated 05.08.2011 (ITAT Delhi).”
4. The ld Departmental Representative vehemently submitted that the ld AO has correctly rectified the order as wrong depreciation rates were applied. He relied on the decision of Hon'ble Karnataka High Court in case of CIT Vs ITC Hotels Ltd 25 Taxmann.com 116.
The ld Authorised Representative vehemently submitted that rectification is not possible if the question is debatable and further, the point which is not examined on fact or in law cannot be dealt with as the mistake apparent on record. He relied on the decision of the Hon'ble Supreme Court in case of Cit Vs. Hero Cycles Ltd 228 ITR 463.
We have carefully considered the rival contentions and also perused the order of the ld Assessing Officer. The assessee has claimed depreciation on electrical installation @25% , whereas according to the AO the depreciation should be allowed @15%. Furthermore, depreciation on Page | 2