2012 (3) TMI 344

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....option to claim depreciation in accordance with the second proviso to rule 5(1A) before the due date of filing the return of income and, therefore, it was eligible for such claim as per Appendix IA prescribed in under rule 5(1A), only. The short facts apropos are that the assessee had claimed depreciation on the windmill machinery installed by it after September 30, 2004 at 50 percent of the rate of 80 percent mentioned in Appendix I of the Rules. The claim was restricted by the assessee to 50 percent since the machinery was put to use for less than 182 days. The assessee was required to explain how this claim was admissible. Reply of the assessee was that it had an option to claim higher rate of depreciation prescribed in Appendix I. Th....

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.... of the co-ordinate Bench of the Tribunal in the case of K.K.S. K. Leather Processors P. Ltd. v. ITO [2011] 9 ITR (Trib) 758 (Chennai). The Commissioner of Income-tax (Appeals) was appreciative of this contention. According to him, the decision in the case of K. K. S. K. Leather Processors P. Ltd., squarely supported the case of the assessee. Now, before us, the learned Departmental representative assailing the order of the Commissioner of Income-tax (Appeals) submitted that without the option being exercised, the assessee could not have claimed higher depreciation. Hence, depreciation was allowable under the straight line method only. We have heard the contentions of the learned Departmental representative and have perused the orders....

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....s I and IA to rule 5 of the Rules and the choice is provided to the assessee in respect of the assets under section 139(1) of the Act, the Assessing Officer is not under an obligation to allow depreciation. Therefore, the provision under the rules cannot override the provisions in the statute and the requirement of option under proviso to rule 5(1A) cannot be held to be such that failure to exercise the option would defeat the very object of the provision for providing higher rate of depreciation. When there is no specific form or method prescribed for exercising the option the claim made in the return of income as well as reflected from the books of account and audit report filed with the return of income is more than the exercise of the o....