2010 (1) TMI 970

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....ciation only at 7.69 per cent. on wind mill by the Assessing Officer due to the reason the assessee has not exercised the option in time as per rule 5(1A) of the Income-tax Rules. During the assessment, the Assessing Officer found that the assessee has not filed his return of income in time for the assessment year 2005-06 wherein the assessee claimed depreciation at 80 per cent. on wind mill. In the said order, the depreciation was restricted to 7.69 per cent. Accordingly, the Assessing Officer has restricted the depreciation on wind mill at 7.69 per cent. for this assessment year. On appeal, the Commissioner of Income-tax (Appeals) has confirmed the disallowance of depreciation made by the Assessing Officer on the ground that the Assess....

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....tion (1) of section 32. Since two rates of depreciation are prescribed as per Appendix I and Appendix IA to the Income-tax Rules in respect of assets of the undertaking engaged for generation and distribution of power. Thus, to make it clear and facilitate the Assessing Officer as to which of the rates provided under two different appendixes of depreciation shall be applicable, the second proviso to rule 5(1A) requires the assessee to exercise its option that the depreciation be allowed as per Appendix I. Therefore, the option exercised as per rule 5(1A) is only to facilitate the Assessing Officer in discharging his obligation as per Explanation 5 to sub-section (1) of section 32 of the Income-tax Act, so that the depreciation shall be allo....