TaxTMI 
TaxTMI 
2012 (10) TMI 560
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.... was issued and after due process the assessment was completed disallowing the assessee's claim of depreciation of Rs 18,21,309/-. During the course of the assessment proceedings the AO has observed that the assessee company has claimed depreciation @ 80% on opening value and the value added respectively as specified in the second column of the table in Appendix I to the Income Tax Rules. According to Rule 5(1A) of the I.T. Rules, depreciation on the assets of an undertaking engaged in the generation or generation & distribution of power was to be computed at the percentage specified in second column of the Table in Appendix IA of the Income Tax Rules. But the proviso under Rule 5(IA) permits the assessee to claim higher rate of depreciatio....
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....sions of sub-section (1) of section 32 along with the Explanation 5, it is clear that "the Assessing Officer is duty-bound and under obligation to allow the deduction of depreciation as per the provisions of sub-section (1) of section 32." Since two rates of depreciation are prescribed as per Appendix I as well as Appendix IA to rule 5 of 1962 Rules in respect of assets of the undertaking engaged for generation and distribution of power, thus, to make it clear that to facilitate the Assessing Officer has to see which of the rates provided under two different Appendices of depreciation shall be allowed, second proviso to rule 5(1A) requires the assessee to exercise its option that depreciation be allowed as per Appendix I. Though the proviso....
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....the same cannot have a serious consequence of total denial of the claim of the assessee. There is no doubt that when there is no prescribed procedure or mode of exercising option prescribed in the Rule, then the option exercised by the assessee by way of making a claim in the return of income along with the audit report is definitely more than the requirement of the second proviso. Even otherwise the question of exercising the option in the return of income was not seriously agitated by the revenue. As per the order of the lower authorities, the depreciation claimed had been rejected on the ground that option had not been exercised before the due date. Therefore, the second question whether the filing of the return on due date was exercisin....