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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the Order dated
31.03.2016 of Commissioner of Income Tax (Appeals)-3, Chennai, in ITA
No.89/2014-15/CIT-3 for the AY 2009-10.
ITA No.2285/Mds/2016 :- 2 -:
2.0 All the grounds of the appeal are related to the depreciation claim
u/s.32(1) of Income Tax Act (in short ‘the Act’). The assessee filed return
of income declaring ₹NIL income on 28.11.2011 and the Assessment Order
was passed u/s.143(3) of the Act on 25.12.2011. Subsequently, the
assessment was re-opened u/s.147 and the re-assessment Order was
passed u/s.143(3) r/w Sec.147 of the Act on 30.06.2014 on total income
of ₹23,47,441/-. During the reassessment proceedings and in the revised
return filed in response to the notice u/s147, the assessee made the
claim for depreciation of ₹5,67,28,395/- against the depreciation claimed
in original return ₹2,80,23,675/-. The Assessing Officer (hereinafter
referred to as ‘AO’) has not allowed the additional claim of depreciation
and completed the assessment and there was no discussion on this issue
in the Assessment Order. The First Appellate Authority has also rejected
the claim of the assessee and dismissed the assessee’s appeal. The
relevant part of the Learned Commissioner of Income Tax(Appeal)’s
(hereinafter referred to as ‘Ld.CIT(A)’) Order is extracted as under:
Another ground of appeal taken by the appellant pertain to additional depreciation stated to have been claimed during the reassessment proceedings which has been not allowed by the AO. Before me, Ld.AR has submitted following facts: 1. Appellant company had acquired industrial chain business of LG Balakrishnan and Brothers Ltd. on 24.06.2008. 2. It had filed original return of income u/s.139(1) for AY 2009-10 claiming depreciation amounting to ₹2,80,23,675/- as assets purchased were put to use less than 180 days. 3. The said depreciation was allowed by the AO in the original assessment order passed u/s.143(3) of the IT Act on 29.12.2011. 4. Tax Audit Report in form 3CD for AY 2009-10 the total depreciation was shown at ₹5,67,28,395/- after treating the assets purchased from LG Balakrishnan and Brothers Ltd. were put to use more than 180 days.
ITA No.2285/Mds/2016 :- 3 -:
It is stated that Appellant had inadvertently uploaded the Income Tax return which was based on draft workings. 6. During the reassessment proceedings, it is stated, Appellant has realized the above mistakes and sought a relief from the AO who had denied the appellant’s claim. Before me, Appellant has taken four grounds of appeal on the same issue. I have perused grounds of appeal, assessment order and details filed during the appellate proceedings. The main argument of the Ld.AR is based on audit report filed in Form No.3CD. Ld.AR has filed statement of depreciation commutated as per the provisions of the IT Act. I have perused auditor’s report on which Appellant has placed reliance. I have noticed that Auditor has given a qualified note which is as under: “b) With respect to additions during the year, dates put to use are as certified by the management”. The qualified statement of the Auditor clearly shows that he had followed the Certificate given by the management with respect to additions to the assets, dates of put to use etc. but no independent verification or examination of additions of the assets and dates on which the said assets were put to use has been done by the Auditor. The facts indicate that it’s a routine Auditor’s Report for which not much of value is attached. In the light, of the above facts I have considered submissions of the Ld.AR and found them devoid of merits. The same management which has given a Certificate to the Auditor with regard to additions to the assets dates of put to use etc. has filed return of income u/s.139(1) claiming depreciation amounting to ₹2,8023,675/- instead of ₹5,67,28,:395/-. In my considered opinion, it is not an inadvertent mistake as claimed by the Ld.AR but a well thought out decision of the management to claim depreciation only ₹2,8023,675/-, since, facts pertaining to the assets put to use were only known to them. The case laws cited by the Ld.AR are not applicable to the facts of the Appellants case as the depreciation claimed by the management was allowed by the AO in the original Assessment Order. In the subsequent year, Appellant has claimed depreciation on this assets being put to use more than 180 days and claimed full depreciation on the written down value of the open in balance of the assets under discussion, which was duly allowed by the AO. In view of the above discussion, I find that Appellant’s claim of additional depreciation sought to be claimed during reassessment proceedings is devoid of merits. Therefore, I hold that AO has rightly not entertained such afterthought claim. The grounds of appeal taken on this issue are dismissed.
3.0 Appearing for the assessee, Learned Authorized Representative
(hereinafter referred to as ‘Ld.AR’) argued that while uploading the return,
the assessee inadvertently claimed the depreciation of ₹.2,80,23,675/-
against the eligible depreciation of ₹5,67,28,395/- by mistake. The
assessee submitted that the assets were put to for use more than 180
days and the assessee is eligible for 100% depreciation and claimed 50%
depreciation inadvertently. Therefore, he requested one more opportunity
to prove the case and requested to remit the matter back to the file of AO.
ITA No.2285/Mds/2016 :- 4 -:
Alternatively, the assessee requested for depreciation on written down
value as on 01.04.2009 for the AY 2010-11 onwards. On the other hand,
Learned Departmental Representative (hereinafter referred to as ‘Ld.DR’)
vehemently objected for the remitting the matter back to the AO. The
Ld.DR stated that the AO has allowed the depreciation as claimed by the
assessee. Therefore, there is no case for remitting back to the AO.
4.0 We heard the rival submissions and perused the material placed on
record.
The assessee submitted the Paper Book and in Paper Book as per
Page No.24 of Audit Report the total eligible depreciation was reported at ₹5,67,28,395/-. The depreciation on assets put to use for more than 180 days was ₹5,38,15,038/- and the depreciation claimed on assets used for less than 180 days was ₹29,30,357/-, thus it appears that the assessee is eligible for depreciation of ₹5,67,28,395/-. The Ld.CIT(A) rejected the
claim of the assessee on the reason that the AO has allowed the
depreciation as claimed by the assessee in the original assessment for the
AY 2009-10. In the subsequent year i.e. 2010-11, the assessee has
claimed the full depreciation on the written down value of the opening
balance of the assets, which was also allowed by the AO. As per the
provisions of the Income Tax Act, the Assessing Officer should allow the
correct amount of depreciation as provided in the depreciation schedule as
per the Explanation-V to Sec.32 of Income Tax Act. The Provisions of
ITA No.2285/Mds/2016 :- 5 -:
Sec.32 applies irrespective of whether the assessee has claimed
depreciation or not. For ready reference, we reproduce Explanation-5 of
Sec.32 here under:
[Explanation 5.—For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income]
5.0 Both the AO & the Ld.CIT(A) are not correct in rejecting the claim of
the assessee. It is the duty of the AO to verify the correctness of the
claim made by the assessee and to allow the correct amount of
depreciation in the assessment whether the assessee makes the claim or
not? Therefore, in the interest of the justice, we are of the considered
opinion that the issue should be remit back to the file of the AO and the
AO is directed to verify, whether the assets are put to use more than 180
days or not and allow the correct amount of depreciation as per Sec.32
and the Income Tax Rules. Accordingly, the orders of the lower authorities are set-aside and the issue is remitted back to the file of the
AO. In case, the assessee has claimed the depreciation on written down
value of opening balance for the subsequent years, the necessary
adjustments may be carried out. The AO should give an opportunity to the
assessee.
ITA No.2285/Mds/2016 :- 6 -:
6.0 In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 22nd February, 2017, at Chennai.
Sd/- Sd/- (एन.आर.एस. गणेशन) (�ड.एस. सु�दर �संह) (N.R.S. GANESAN) (D.S.SUNDER SINGH) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER
चे�नई/Chennai, �दनांक/Dated: 22nd February, 2017. tln
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 6. गाड� फाईल/GF