High Court affirms Tribunal's rectification for depreciation claim on business premises, clarifying it's correction, not review.

The High Court upheld the Tribunal's decision to rectify a factual error and allow the appellant's claim for depreciation on the entire business premises, clarifying that it was not a substantive review but a correction of an apparent mistake. The Court dismissed the Tax Appeal, affirming the Tribunal's rectification application and granting depreciation to the appellant for the entire business premises, emphasizing that the correction was within the scope of rectification and did not constitute a substantive review of the earlier order.

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Issues:
1. Jurisdiction of the Appellate Tribunal under section 254(2) of the Act to review earlier orders passed on merits.

Analysis:
The High Court of Gujarat addressed the issue of jurisdiction of the Appellate Tribunal under section 254(2) of the Act to review earlier orders passed on merits. The case involved a dispute regarding the disallowance of depreciation claimed on factory premises for the Assessment Year 2002-2003. The Assessing Officer disallowed a portion of the depreciation claimed as the building was leased out to a subsidiary company. The CIT [A] deleted the disallowance, stating that the building was used exclusively for the appellant's business purposes. The Revenue appealed to the Tribunal, which initially reversed the CIT [A]'s decision, stating that the building was not used for the appellant's business. However, upon a rectification application filed by the appellant, the Tribunal corrected its mistake, acknowledging that the building was indeed used for the appellant's business purposes due to business compulsion and commercial expediency.

The High Court observed that the Tribunal had committed a factual error in considering the appellant as a subsidiary company initially. Upon rectification, the Tribunal corrected the error and allowed the appellant's claim for depreciation on the entire business premises. The Court noted that the Tribunal's correction was not a substantive review but a rectification of a factual error apparent on the face of the record. The Court dismissed the Tax Appeal, affirming the Tribunal's decision to allow the rectification application and grant depreciation to the appellant for the entire business premises. The judgment clarified that the Tribunal's action was within the scope of rectification and did not amount to a substantive review of the earlier order.

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