2006 (4) TMI 589

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....d grains. The assessee had constructed a plinth which was used to store food grains of Haryana Food Supply department. The assessee had filed return declaring an income at Rs. 77,580 under the head "income from business". The Assessing Officer had processed the return of income under section 143(1). Subsequently, the Assessing Officer had issued a notice under section 143(2)(i ) on 30-5-2003 for the purposes of limited scrutiny. As per the notice issued to the assessee, copy of which is placed on record, the assessee was required to explain the claim of depreciation of Rs. 64,7007. The Assessing Officer was of the view that the assessee was not entitled to depreciation in respect of the plinth used for the storage of food grains of Haryana ....

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.... 5. After hearing both the parties, I am inclined to agree with the contention advanced on behalf of the assessee that the Assessing Officer has been given the option of issuing notice for limited scrutiny or for substantial scrutiny. In this case, it is not disputed that the Assessing Officer had issued notice under section 143(2)(i) for the purpose of limited scrutiny in respect of the claim of depreciation of Rs. 64,700. The jurisdiction of the Assessing Officer in such cases where notices are issued for limited scrutiny is confined to the claims he has set out in the notice for verification. This position of law is further elaborated by the CBDT in its circular No. 8/2002 dated 27-8-2002. In para No. 59.1 to 59.3 the Board has expressed....

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....ting himself to the claims he had set out to verify. If he feels that the case requires further scrutiny on other issues, he will be free to issue a notice initiating comprehensive scrutiny of the return, as is being done presently. 5.3 These amendments will take effect from 1-6-2002." 6. In this case, when the Assessing Officer made the assessment he not only disallowed the claim of depreciation to the tune of Rs. 64,700 but also made further disallowance on account of depreciation on furniture etc. On appeal, the Commissioner of Income-tax (Appeals) has allowed the claim of the assessee on account of depreciation but has challenged the head under which the income from letting out of the storage space was assessable to tax. The Commissi....

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.... The Assessing Officer as well as the Commissioner of Income-tax (Appeals) have referred to the decision of the Punjab Haryana High Court in the case of Aditya Co., Dabwali [CWP No. 15512 15516 of 2004] where the income has been held to be assessable under the head 'income from other sources' and consequently depreciation under section 57(ii) permissible. So however, I consider it appropriate to remit the issue relating to allowance of depreciation of Rs. 64,700 to the file of the Assessing Officer for the purpose of fresh decision in accordance with law. Copy of the decision of the Punjab Haryana High Court is not available as the citation given by the Commissioner of Income-tax (Appeals) is found to be incorrect. It will be appropriate if....