Appellate Tribunal grants enhanced depreciation, directs reassessment

The Appellate Tribunal allowed the appeal of the assessee, directing the Assessing Officer to reevaluate the depreciation claim based on the correct opening balance of WDV, ultimately leading to the allowance of the claim for enhanced depreciation. The Tribunal found that the error in claiming depreciation was clear and did not require a lengthy process of reasoning, overturning the decisions of the Assessing Officer and the Ld. CIT(A).

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Issues: Delay in filing appeal, Claim of depreciation under section 154 of the Income Tax Act, 1961, Rejection of rectification application by Assessing Officer, Appeal before the Ld. CIT(A) and Appellate Tribunal.

Delay in Filing Appeal:
The appeal was filed with a delay of 74 days due to the COVID-19 pandemic, which was condoned by the Appellate Tribunal after considering the circumstances and the affidavit filed by the assessee company.

Claim of Depreciation under Section 154:
The assessee filed a rectification application under section 154, seeking to correct the depreciation claim for Assessment Year 2016-17. The claim was based on the assertion that the opening balance of WDV of fixed assets was wrongly taken as per the Companies Act instead of the Income Tax Act, resulting in an enhanced claim of depreciation of Rs. 48,88,526 instead of Rs. 41,44,887. The AO rejected the application, stating that the mistake could have been rectified by filing a revised return under section 139(5).

Rejection of Rectification Application by Assessing Officer:
The Assessing Officer rejected the rectification application under section 154, emphasizing that the claim did not fall within the ambit of the provision as the mistake was made while filing the original return under section 139(1) and could have been rectified through a revised return under section 139(5).

Appeal Before the Ld. CIT(A) and Appellate Tribunal:
The assessee appealed to the Ld. CIT(A), arguing that the mistake in claiming depreciation was apparent from the record and did not require a long process of reasoning. The Ld. CIT(A) upheld the AO's decision, citing the restriction on the power of the AO to entertain claims other than through a revised return. However, the Appellate Tribunal found that the error in claiming depreciation was clear and directed the AO to consider the correct opening balance of WDV for computing taxable income, ultimately allowing the appeal of the assessee.

Separate Judgement by Appellate Tribunal:
The Appellate Tribunal, after considering the factual matrix and the claim of depreciation, directed the Assessing Officer to reevaluate the depreciation claim based on the correct opening balance of WDV, leading to the allowance of the assessee's appeal.

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