Rectification of excess depreciation upheld where claimed medical equipment did not match prescribed life-saving items

Higher depreciation at 40% on claimed life-saving medical equipment was found unavailable because the operation theatre, air pipeline system, anaesthesia trolley system and stabilizer did not fall within the specific items listed in the depreciation table under the Income-tax Rules. The erroneous allowance was treated as a mistake apparent from the record, so rectification under section 154 was valid. The cited precedent was distinguished on the basis that the equipment there matched the prescribed items, whereas the present items did not. The restriction of depreciation to 15% was therefore upheld.

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Issues: Whether rectification under section 154 was valid for withdrawing excess depreciation claimed on items said to be life-saving medical equipment and for sustaining restriction of depreciation from 40% to 15%.

Analysis: The depreciation claim at 40% was examined against the list of life-saving medical equipment specified in the depreciation table under the Income-tax Rules. The items on which higher depreciation was claimed, namely operation theatre, air pipeline system, anaesthesia trolley system and stabilizer, were found not to fall within the specified category. On that basis, the allowance of higher depreciation was treated as a mistake apparent from record and amenable to rectification under section 154. The cited precedent was distinguished because the equipment there was identical to the prescribed items, whereas no such similarity existed here.

Conclusion: Rectification under section 154 was held to be valid and the restriction of depreciation to 15% was upheld, against the assessee.

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