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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether rectification under section 154 of the Income-tax Act, 1961 could be used to re-compute and disallow additional depreciation on opening written down value, and whether the assessee was entitled to additional depreciation in the subsequent year.
Analysis: The assessment had originally been completed under section 143(3) accepting the depreciation and additional depreciation claims. The rectification was initiated on a Revenue audit objection and required a detailed re-examination of the depreciation computation. Such a course was held to be outside the limited scope of section 154, which is confined to mistakes apparent from the record and does not permit a roving or debatable inquiry. The issue was also treated as debatable, which further negatived the use of rectification. On the merits of the depreciation claim, the assessee had claimed additional depreciation on the opening written down value of the eligible block in the subsequent year after having foregone it in earlier years.
Conclusion: Rectification under section 154 was not sustainable, and the assessee's claim to additional depreciation on the opening written down value was upheld.
Final Conclusion: The Revenue's appeal was rejected, and the deletion of the disallowance was maintained.
Ratio Decidendi: Section 154 cannot be invoked to undertake a detailed re-computation on a debatable issue; it is confined to mistakes apparent from the record.
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