1979 (7) TMI 43 - HC - Income Tax

Court allows depreciation claim based on information provided during assessment

The High Court upheld the decision of the Appellate Tribunal and Income Tax Officer to allow depreciation even though the particulars were not initially ... Accounting Year, Income When Accrues Issues involved: The issue involves whether the Appellate Tribunal was justified in allowing depreciation even though the particulars were not furnished in the appropriate part of the return of income but were furnished in the course of the assessment proceedings.Summary:The assessee, a registered firm, did not claim any depreciation allowance in the return for the assessment year 1970-71. The Income Tax Officer (ITO) requested specific reasons for not claiming depreciation, and the assessee furnished the particulars under protest. The ITO allowed depreciation and taxed the remaining income. The Appellate Assistant Commissioner (AAC) upheld the allowance, stating that once information was provided, the depreciation could be granted. The Tribunal also supported the ITO's decision. The High Court analyzed the relevant provisions, emphasizing that the ITO can grant depreciation even if prescribed particulars were not initially furnished by the assessee.In a similar case, the Allahabad High Court held that the ITO has the jurisdiction to allow depreciation if relevant particulars are provided during assessment proceedings, even if not included in the return. The High Court rejected the argument that the ITO cannot grant depreciation in such cases. Referring to a previous decision, the High Court clarified that the requirement for furnishing particulars is not limited to the return filing stage. The High Court concluded that the ITO was justified in allowing depreciation based on the information provided during assessment.The High Court distinguished an earlier decision where the deduction was disallowed due to failure to provide necessary particulars. In the present case, the assessee's submission under protest was considered valid for granting depreciation. The High Court ruled in favor of the revenue, emphasizing that the assessee's furnishing of particulars during assessment proceedings, even under protest, meets the requirements of the law. The decision was made in accordance with the provisions of the Income Tax Act, allowing the depreciation deduction.