Tribunal dismisses Revenue's appeal on rectification order cancellation for assessment year 2006-07

The Tribunal dismissed the Revenue's appeal against the cancellation of a rectification order for the assessment year 2006-07. The Tribunal found that the depreciation was not claimed by the appellant, in line with the Mahendra Mills Ltd. case. It held that the retrospective application was not applicable, citing relevant case law. The Tribunal upheld the decision to cancel the order under Section 154, as the AO's decision was not justified. The Revenue's appeal was ultimately dismissed.

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Issues involved: Appeal against order of ld.CIT(A) cancelling rectification order u/s 154/143(3) for assessment year 2006-07.

Revenue's case: AO completed assessment u/s 143(3) with NIL income, later noticed unclaimed depreciation. AO relied on Jaipuria Chinaclay Mines case for current year's depreciation set off. Appellant argued depreciation not claimed, citing Mahendra Mills Ltd. case. AO allowed depreciation, leading to appeal.

Appellant's case: Appellant argued depreciation not claimed, as per Mahendra Mills Ltd. case. AO did not consider submissions, leading to cancellation request. Tribunal found AO's decision not justified, as depreciation not claimed and retrospective application not applicable.

Tribunal's decision: Tribunal noted disputable nature of issue, citing Sree Senhavalli Textile Mills and Kerala Electric Lamp Works Ltd. cases. Explanation 5 of Section 32(1) not retrospective, Mahendra Mills Ltd. case applicable. Tribunal upheld ld.CIT(A)'s decision to cancel order u/s 154. Revenue's appeal dismissed.

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