Rectification of depreciation rate for rigs and compressors upheld where the corrected assessment matched the applicable law.

Rectification under section 154 was used to correct an assessment that had applied the wrong depreciation rate to rigs and compressors. The corrected depreciation rate was consistent with the law applicable to the assessee's business, and the later judicial declaration of the proper rate confirmed that the rectified assessment reflected substantive law. The Tribunal's view that the rectification should be cancelled was therefore not sustainable, and the issue was resolved in favour of the Revenue and against the assessee.

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Issues: Whether the Tribunal was right in upholding the cancellation of rectification made under section 154 of the Income-tax Act, 1961, in respect of the depreciation rate allowable on rigs and compressors.

Analysis: The depreciation ultimately allowed on the rigs and compressors was in accordance with the law applicable to the assessee's business. The rectification under section 154 corrected an assessment that had not applied the proper depreciation rate, and the later judicial declaration of the correct rate confirmed that the rectified assessment conformed to substantive law.

Conclusion: The Tribunal was not right in sustaining the cancellation of rectification, and the question was answered in favour of the Revenue and against the assessee.

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