TaxTMI 
TaxTMI 
2018 (3) TMI 376
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....f the revenue is as to whether the ld CITA was justified in allowing the depreciation in respect of Dhule Power Unit claimed by the assessee u/s 154 of the Act, in the facts and circumstances of the case. The interconnected issue which is raised in the cross objection of the assessee is that, whether the assessee would be entitled to claim the allowability of losses in the proceedings u/s 154 of the Act for the Asst Years 2006-07 to 2008-09 which were originally offered to tax by the assessee in the returns of income and assessments completed accordingly, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee company filed its return of income for the Asst Years 2006-07 to 2008-09 wherein no claim of depreciation was made in respect of its Dhule Power Plant. The assessments for the Asst Years 2006-07 to 2008-09 were completed u/s 143(3) of the Act without allowing the depreciation in respect of its Dhule Power Plant. During the course of assessment proceedings for the Asst Year 2009-10 , the ld AO observed that the assessee is engaged in the generation and supply of electricity from its plants situated at Sangli and Dhule districts of M....
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....ere not added by the assessee in the revised computation of income filed alongwith the rectification petition dated 1.9.2011. 4. The ld AO rejected the rectification petitions contending that an order on which assessment had already been completed could be modified subject to the limitation that the modified income cannot go below the returned income. Aggrieved , by the said rectification orders all dated 2.8.2012 for the Asst Years 2006-07 , 2007-08 and 2008- 09 , the assessee filed appeals before the ld CITA. 5. The ld CITA gave a categorical finding that the assessee had not claimed any depreciation in the Asst Years 2006-07 , 2007-08 and 2008-09 in its original return of income in respect of its Dhule Power Plant. The details of depreciation claimed in the return and allowed in the assessments are as under:- Asst Year Depn Claimed Depn Allowed Remarks 2006-07 4,16,55,269 4,16,55,269 Assessed u/s 143(3) dated 23.6.08 2007-08 4,41,70,408 4,41,70,408 Assessed u/s 143(3) dated 20.7.09 2008-09 1,92,43,316 1,92,43,316 Assessed u/s 143(3) dated 1.6.10 The aforesaid depreciation figures admittedly did not contain the de....
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....arly yet another mistake pointed out by the assessee regarding the wrong disallowance of book loss of Dhule Unit made by the assessee in its return of income for the Asst Years 2006-07 to 2008-09 . This was also not considered by the ld AO while disposing off the rectification petitions of the assessee for the Asst Years 2006-07 to 2008-09. The assessee stated that separate books of accounts were maintained by the assessee for its Dhule unit and the Sangli unit and hence it is very much possible for deducing the correct profits / losses of Dhule unit. The losses of Dhule unit added back in the computation of income by the assessee for the Asst Years 2006-07 to 2008-09 are as under:- Asst Year Amount of Loss Remarks 2006-07 11,01,498/- Loss of Dhule Unit after charging depreciation of Rs. 12,34,742/- as per Companies Act. In consequence Of such adjustment, the overall book depreciation of Rs. 5,26,37,199/- has been reduced by the book depn Of Dhule unit in the said sum of Rs. 12,34,742/- and Thus the resulting figure of Rs. 5,14,02,457/- has been Added to the net profit as per P&L account. 2007-08 1,43,57,429/- Loss of Dhule Unit after charging depreciatio....
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....e Asst Year 2009-10, had been duly considered and relief granted by the ld AO in the assessment order framed u/s 143(3) of the Act dated 1.8.2011. 5.1. The assessee further submitted that the income assessed u/s 143(3) of the Act can be modified even if the same has gone below the returned income. In support of this proposition, it placed reliance on the following decisions:- a) CIT vs Bakelite Hylam Ltd reported in 237 ITR 392 (AP) b) Gujarat Gas Co. Ltd vs JCIT reported in 245 ITR 84 (Guj) c) Milton Laminates Ltd vs CIT reported in 37 taxmann.com 249 (Guj) 6. The ld CITA in this regard observed :- "I have carefully gone through the submissions of AR of the appellant along with the judgments relied upon by him. I have also perused the rectification order u/s. 154. On perusal of the various judgments relied on by the appellant, I find force in the submission of the appellant that the income assessed u/s 143(3) can be modified even if the same has gone below the returned income. This view is supported by as many as three decisions of two High Courts. The AO has not cited any contrary decision. Therefore, the reason stated in the rectificatio....
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.... that rectification is not permissible if the question is debatable. According to the Supreme Court, the point which was not examined on fact or on law cannot be dealt with as a mistake apparent on record. In the case before us, the point regarding the method of valuation had already been examined by the Assessing Officer in the assessment year 1986-87 and he had also examined the closing stock for that year. However, while passing order for the assessment years 1987-88 and 1988- 89, the Officer ignored his own finding made for the assessment year 1986-87 by not following the well-settled law of accountancy that the closing stock of an assessment year should be the opening stock of the next assessment year and thus, there was a glaring mistake apparent on the record. The said decision thus supports the Appellant before us. 19. Thus, the decisions cited by Mr. Bhowmick do not help his client in any way. 20. We, therefore, set aside the order passed by the Tribunal below and send the matter back to the Assessing Officer for reassessing the return of the assessee for the assessment years 1987-88 and 1988-89 by treating closing stock of the previous assessment years r....
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.... I find that in the original computation for the above-mentioned year, the appellant has neither added back depreciation on Dhule Unit as per the Companies Act nor claimed any depreciation on Dhule Unit as per the Income Tax Act. However, in the revised computation filed alongwith rectification petition u/s. 154, the appellant added back depreciation on Dhule Unit to the tune of Rs. 12,34,742/- as per the Companies Act and simultaneously claimed depreciation on Dhule Unit to the tune of Rs. 2,49,22,905/- as deduction as per the Income Tax Act. Therefore, in view of the above, I direct the AO to allow the net claim of the appellant in respect of depreciation on Dhule Unit to the tune of Rs. 2,36,88,163/- (2,49,22,905/- - 12,34,742/-). (ii) AY.: 2007 - 2008 I find that in the original computation for the above-mentioned year, the appellant has neither added back depreciation on Dhule Unit as per the Companies Act nor claimed depreciation on Dhule Unit as per the Income Tax Act. However, in the revised computation filed alongwith rectification petition u/s. 154, the appellant has added back depreciation on Dhule Unit to the tune of Rs. ....
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.... the depreciation amounting to Rs. 62,82,156/- in respect of Dhule Power Unit claimed by the assessee u/s 154 of the Income Tax Act, 1961, although there was no such mistake apparent from record. 2. That the appellant reserves right to amend, alter or add to any grounds of appeal before or at the time of hearing of appeal. 8. With regard to the claim of allowability of book loss of Asst Years 2006-07 to 2008-09 u/s 154 of the Act, that were disallowed voluntarily by the assessee in the returns of income , the ld CITA observed as under:- "I have carefully gone through the submissions of AR of the appellant. I have also perused the relevant material available on record. I find that in the original computation of income, the appellant added back loss in Dhule Unit of Rs. 11,01,498/-, Rs. 1,43,57,429/- and Rs. 86,53,629/- for the A.Ys.2006-07, 2007-08 and 2008-09 respectively. However, in the revised computation filed along with rectification petition u/s 154, the appellant did not add back the above-mentioned loss contending that the said losses were wrongly added back in the original computation. In my view, the issue relating to allowability of loss on Dhule uni....
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....ter or delete all or any of the ground of appeal. C.O No. 45/Kol/2016 for the assessment year 2008-09 1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in allowing depreciation in respect of Dhule Unit. 2. For that on the facts an in the circumstances of the case, the Ld. CIT(A) ought to have allowed loss in Dhule Unit suffered by the assessee to the tune of Rs. 86,53,629/- 3. For that the Ld. CIT(A) ought to have considered that the action of the assessee in adding back the loss in Dhule Unit in the original computation is purely mistake apparent from record and as such, the said mistake should have been rectified. 4. That the appellant craves leave to add, alter or delete all or any of the ground of appeal. 10. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. It is well settled that the depreciation is to be granted to the assessee mandatorily irrespective of claim made by the assessee in the return of income. It is not in dispute that the assessee had not....