AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 744
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.... claim made by the GEB as the same was found to be incurred by the assessee during the course of business?" [C] "Whether the Appellate Tribunal was justified in directing the Assessing Officer not to charge interest under Section 234D of the IT Act for A.Y 2002-2003?" 1.1 The proposed substantial question of law [B] was rejected by the Coordinate Bench of this Court. The same is as under: "[B] Whether the Appellate Tribunal was justified in directing the Assessing Officer to allow claim made by the GEB as the same was found to be incurred by the assessee during the course of business?" 1.2 In Tax Appeal No. 1972 of 2009, by the order of the even date, the tax appeal was admitted for the following substantial question of law: "Whether the Appellate Tribunal is right in law and on facts in holding that the revised return was a valid return.?" 1.3 Thus, the substantial question of law [A] in Tax Appeal No. 1973 of 2009 will encompass the sole substantial question of law in Tax Appeal No. 1972 of 2009. BRIEF FACTS 2. The respondent is a Company promoted by Central and State PSUs and is engaged in the business of generation and distribution of p....
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....owance of Rs.6 lakhs under Section 14A of the Act. 2.5 Both i.e. the revenue and the assessee challenged the order of CIT(Appeals). The revenue filed appeal being ITA No. 1221 of 2006 on the acceptance of the revised return while the assessee filed appeal being ITA No. 1271 of 2006 challenging the additions/disallowance on merits. The Income Tax Appellate Tribunal (for short "the Tribunal") dismissed the revenue's appeal confirming the order of accepting revised return of income, whereas the Tribunal partly allowed the assessee's appeal by accepting change in method of depreciation, accepted reduction in income of Rs. 2.99 crores, and claim of expenditure of Rs.14 lakhs and remanded the issue on Section 14A of the Act to the assessee and had also held that interest under Section 234D of the Act is not chargeable for the Assessment Year 2002-03. 3. Being aggrieved by the judgement and order passed by the Tribunal, the revenue has filed the captioned appeals being Tax Appeal Nos.1972 and 1973 of 2009. SUBMISSIONS ON BEHALF OF REVENUE 4. Learned Senior Standing Counsels Ms. Maithili Mehta and Mr. Karan Sanghani for the appellant - revenue, have submitted that the Appellate....
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.... 4.4 It is submitted that in a similarly worded Section 10B(8) of the Act, the Supreme Court, while examining the effect of a revised return filed under Section 139(5) of the Act read with Section 139(1) of the Act, has categorically held that by filing the revised return of income, the assessee cannot be permitted to substitute the return of income filed under Section 139(1) of the Act and any benefit which is to be claimed which requires furnishing of a declaration or an option at the time of filing of the original return, before the due date, the same is impermissible by filing the revised return under Section 139(5) of the Act after the due date. 4.5 It is submitted that in the present case, the assessee, initially had opted for SLM in its original return of income dated 31.10.2002 which was the due date under Rule 5(1A) of the Rules and the revised return which was filed on 31.03.2003 under Section 139(5) of the Act, the due date would be extended to 31.03.2004 and hence, the methodology of SLM which was initially adopted by the assessee before the due date of 31.10.2002 cannot be extended to 31.03.2004. It is submitted that there was no discovery of any omission by the a....
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....he Tribunal, by observing the effect of the revised return and the omission of the assessee, has held the revised return as valid which has been confirmed by the Coordinate Bench that there cannot be two returns one under Section 139(1) of the Act and another under Section 139(5) of the Act. 5.3 Mr. Soparkar, learned advocate for the respondent - assessee, has submitted that under the settled legal fiction governing Section 139(5) of the Act, a revised return does not create a new filing event. It relates back to and substitutes the original return, taking effect from the date of the original filing. It is submitted that second proviso to Rule 5(1A) of the Rules prescribes a condition of eligibility, not a condition of irrevocability. It says that the assessee "may be allowed depreciation under Rule 5(1) / Appendix-I if such option is exercised before the due date." The condition "before the due date" goes to who is eligible to exercise the option, i.e. only those who have filed timely return. It does not say that the choice made in the timely return is permanent and cannot be changed by a valid revised return under Section 139(5) of the Act. 5.4 It is further submitted that ....
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....e filing the original return of income. 5.8 It is submitted that in the present case, the assessee while filing the original return had claimed depreciation within the due date and hence the valid revised return under Section 139(5) of the Act permits the assessee to adopt a different methodology as it will support the original return under Section 139(1) of the Act. Thus, it is urged that the tax appeals may be dismissed. ANALYSIS AND CONCLUSION: 6. We have heard the learned advocates appearing for the respective parties at length. The case of the respective parties i.e. the revenue and the assessee hinges on the following aspects: i) The interpretation of the judgement of the Supreme Court in the case of Wipro Ltd. (supra); ii) The effect of filing the revised return under Section 139(5) of the Act and; iii) The change of methodology i.e. from SLM (Rule 5(1A)-Appendix IA to WDV under Rule 5 and Appendix-I of the Rules while filling the revised return. ASPECT OF VALIDITY OF REVISED RETURN 6.1 We may not reiterate the facts. The appeals emanate from the judgement of the Tribunal holding against the revenue. We may, first, answer the common ....
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.... to be an error on the part of the assessee which prompted him to file the revised return. 6.4 The assessee had filed its original return under Section 139(1) of the Act on 31.10.2002 by claiming depreciation at SLM method under Rule 5 and Appendix-IA of the Rules. Thereafter, on 31.03.2003, the assessee filed the revised return on three aspects which are recorded and not denied by the revenue. Three claims which were filed in the revised return are as under: "i) Unconfirmed sale of power to be reduced from the receipts of Rs. 2,85,37,374/- ii) Claim of additional expenditure in respect of power consumed of Rs. 14,00,291/-. iii) Depreciation on the basis of Written Down Value rates at Rs. 33,93,64,837/- as against depreciation claimed on Straight Line Method." 6.5 The Assessing Officer rejected the revised return by holding that the same was not valid as there was no omission or wrong statement found in the original return. The Assessing Officer has mainly discussed the claim relating to depreciation on the basis of WDV method, which the assessee has opted. The CIT (Appeals) accepted the revision of return, but did not accept the change in method of....
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....t be deliberately used. The statute enables the assessee to file the revised return only if he or she discovers the omission or the wrong statement which were missing in the original return by way of any bona fide reasons and it should not be deliberate or concocted. The giving provision of Section 139 (5) of the Act will only come to the rescue of an assessee who has acted bona fidely and due to such omission or wrong statement in his original return he had failed himself to avail any advantage or claim. 6.9 Thus, the provisions of Section 139(5) of the Act cannot be invoked by an assessee if he has deliberately or with a mala fide intention has left an omission or made a wrong statement in his original return. In the present case, the facts which are established from the assessment order and also findings from the CIT (Appeals) and the Tribunal, prove that in the original Assessment Order, the assessee had incurred expenses in the course of business, but was unable to claim since despite having consumed the power in the course of carrying on the business from GEB, the expenses were not accounted only for the reason that the bills were not received prior to the completion of fi....
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.... sub-section (5) of section 115BAE:] Provided further that, for the purposes of section 115BAA, if the following conditions are satisfied, namely:- (i) option under sub-section (5) thereof is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020; (ii) there is a depreciation allowance, in respect of a block of asset, from any earlier assessment year or allowance of unabsorbed depreciation deemed so under section 72A, which is attributable to the provisions in clause (iia) of sub-section (1) of section 32; and (iii) such depreciation or allowance for unabsorbed depreciation is not allowed to be set off under clause (ii) or clause (iii) of sub-section (2) thereof, the written down value of the block of asset as on the 1st day of April, 2019 shall be increased by such depreciation or allowance for unabsorbed depreciation not allowed to be set off: Provided also that, [for the purposes of section 115BAC [as it stood immediately before its amendment by the Finance Act, 2023] and section 115BAD, if the following conditions are satisfied, namely:- (i) the option under sub-section....
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.... depreciation under sub-rule (1) read with Appendix-I, if such option is exercised before the due date for furnishing the return of income under sub-section (1) of section 139 of the Act, (a) for the assessment year 1998-99, in the case of an undertaking which began to generate power prior to 1st day of April, 1997; and (b) for the assessment year relevant to the previous year in which it begins to generate power, in case of any other undertaking: Provided also that any such option once exercised shall be final and shall apply to all the subsequent assessment years." 7.2 Rule 5(1) of the Rules mentions calculation of depreciation at the percentage specified in second column of the Table in Appendix-I of the Rules on the WDV method of block assets. Rule 5(1A) of the Rules refers to calculation of percentage specified in the second column of Table of Appendix 1A of the Rules. The second proviso further provides of exercising an option between Appendix 1A and Appendix I of the Rules. It further specifies that such an option has to be exercised before the due date for furnishing the return of income under Sub-section (1) of section 139 of the Act. Further ....
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...., whereas for other two claims the same would fall under revised return under Section 139(5) of the Act. This can never be the intention of the statute as, the Act does not permit the existence of two returns i.e. one under Section 139(1) of the Act and the other under Section 139(5) of the Act for varied claims. DETERMINATION OF DUE DATE 8. Having held as above, we are called upon to answer the status or the fate of new date which finds place in the provision of Rule 5(1A) of the Rules. Rule 5(1A) of the Rules specifically refers to the due date as prescribed under Section 139(1) of the Act, and not under Section 139(5) of the Act. 9. The due date for option as per Section 139(1) was 31.10.2002. In our considered opinion, if the validity of the revised return filed on 31.03.2003 is upheld, then it replaces the original return under Section 139(1) of the Act, however, the "due date" of option as envisaged under Section 139(1) of the Act though cannot be extended further for the purpose of claiming the depreciation by WDV method on the filing of the revised return, however, the computation on WDV method in claiming the depreciation is always permissible, only in the circums....
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....e Act." The aforesaid judgement has been considered by the Supreme Court in case of Commissioner of Income Tax, Maharashtra vs G.M. Knitting Industries (P) Ltd, (2016) 71 taxmann.com 35 (SC). Thus, for ascertaining the statute as mandatory or directory, the test often adopted is to ascertain whether the object of the Legislature will be defeated or furthered by holding it directory, and in case the object of the enactment is defeated by holding it directory, it should be construed as mandatory whereas if by holding it mandatory, serious general inconvenience will be created to innocent persons without very much furthering the object of the enactment, it should be construed as directory. It is also held that, a balance has to be struck between the inconvenience of rigidly adhering to the requirements and the convenience of sometimes departing from its terms. In the instant case, the assessee claimed depreciation by adopting the SLM on the due date i.e. 31.10.2002 and not thereafter. It is not the case of the revenue that the claim of depreciation is not valid. The statute provides the assessee to opt for change in computation, and such option is to be exercised before the due dat....
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....ption to that which was already exercised while filing the original return under Section 139(1) of the Act. In this regard, we have noticed, and not denied by the revenue is that the Assessing Officer from AY 2009-2010 onwards has granted depreciation as per WDV method, and the assessment orders have become final, hence any change of computation for AY 2002-2003 to AY 2008-09 will lead to incongruous consequences. DISCUSSION ON THE DECISION OF WIPRO LTD (SUPRA) 11. The case of the revenue entirely hinges on the decision of the Supreme Court rendered in the case of Wipro Ltd. (supra). The facts as mentioned in the said judgement would indicate that the assessee which was a 100% Export Oriented Unit (EOU) filed its return claiming exemption under Section 10B of the Act and noted "no loss would be carried forward". However, it later withdrew its claim via declaration on 24.10.2002 i.e. "after the due date" and sought to carry forward losses in the revised return dated 23.12.2002, wherein, exemption under Section 10B of the Act was withdrawn in terms of Section 10B(8) of the Act. The Assessing Officer rejected the claim on the ground of late submission of declaration in writing a....
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.... The Supreme Court in paragraph 11, while distinguishing the case of G.M. Knitting Industries (P) Ltd., (supra) has held that the exemption provision under Section 10B(8) of the Act cannot be compared with claiming an additional depreciation under Section 32 (1)(ii-a) of the Act and the assessee claiming the exemption has to strictly and literally comply with the exemption provisions. The relevant paragraphs No.9 and 11 of the said decision read as under: "9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3) Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under sections 139(1) and cannot transform it into a return under section 139(3) in order to avail the benefit of carrying forward or set ofi of any loss under section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return o....