ITO v. Sri Balaji Sago & Starch Products

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The Tax Publishers2012 TaxPub(DT) 2110 (Chen-Trib) : (2012) 046 (II) ITCL 0143 : (2012) 053 SOT 0015 INCOME TAX ACT, 1961 --Depreciation--Rate Windmill--Assessee had installed windmill in the later half of the year immediate to preceding year under consideration. He claimed depreciation on WDV basis by applying rate of 15 per cent and the quantum deduction claimed was half the amount, as the asset was put to use for a period of less than 180 days. Following the earlier course of action for last year, he claimed the depreciation for current assessment year as well on WDV basis at 15 per cent later on, on a finding that rate of 15 per cent was not the correct rate prescribed in rules, he, filed a letter to AO to rectify the rate of depreciation and apply the prescribed rate of 80 per cent. AO rejected the subsequent claim made by assessee on the ground that assessee had not in fact, exercised its option to claim either on WDV or straight-line method and so also had not applied the correct rate of depreciation. Further, AO was of the view that he had no jurisdiction to consider a claim in the course of assessment in absence of any revised return filed by assessee. Held: In the immediately perceding assessment year, the claim of depreciation was for the first year, the depreciation was claimed on original cost even though at a wrong rate. In the impugned assessment year, the depreciation was claimed again at wrong rate but on WDV method. Therefore, it was very clear that assessee had exercised its option for choosing the method of providing for depreciation as prescribed in the statute. Since assessee had not claimed any fresh claim of depreciation but was asking AO to adopt the correct rate which was in fact, only a prayer to rectify a mistake apparent on record therefore, AO was directed to grant the assessee depreciation at the rate of 80 per cent on WDV method. Income Tax Act, 1961, Section 32 IN THE ITAT CHENNAI D BENCH O.K. NARAYANAN, V.P. & VIKAS AWASTHY, J.M. ITO v. Sri Balaji Sago & Starch Products ITA No. 2081 (Mds) of 2010 C.O. No. 20 (Mds) of 2011 A.Y. 2007-08 8 March, 2012 ORDER *O.K. Narayanan, V.P* The Appeal is filed by the Revenue. The cross objection is filed by the assessee. The relevant assessment year is 2007-08. The appeal and the cross objection are directed against the order passed by the Commissioner (Appeals) at Salem on 20-9-2010 and arise out of the assessment completed under section 143(3) of the Income-tax Act, 1961. 2. The assessee had installed a windmill in Maruthur Village of Tharapuram Taluk in the later half of the previous year 2005-06. The first assessment year for claiming depreciation on windmill was assessment year 2006-07. The assessee claimed depreciation on written down value (WDV) basis. The rate applied was 15% and the quantum deduction claimed was half of the amount, as the asset was put to use for a period of less than 180 days. Following the earlier course of action for the assessment year 2006-07, the assessee claimed the depreciation for the impugned assessment year as well on WDV basis. The rate adopted in computing the income reflected in the return was 15%. But later, the assessee found that the rate of 15% claimed by the assessee was not the correct rate prescribed in the rules. The assessee, therefore, filed a letter before the assessing authority to rectify the rate of depreciation and apply the prescribed rate of 80%. The assessing officer rejected the subsequent claim made by the assessee in the course of assessment on the ground that the assessee had not in fact, exercised its option to claim depreciation either on WDV method or on straight-line method and so also has not applied the correct rate of depreciation provided in the rules. The prayer for rectification in adopting the correct rate of depreciation was not acted upon by the assessing authority. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2110 (Chen-Trib) : (2012) 046 (II) ITCL 0143 : (2012) 053 SOT 0015

INCOME TAX ACT, 1961

--Depreciation--Rate Windmill--Assessee had installed windmill in the later half of the year immediate to preceding year under consideration. He claimed depreciation on WDV basis by applying rate of 15 per cent and the quantum deduction claimed was half the amount, as the asset was put to use for a period of less than 180 days. Following the earlier course of action for last year, he claimed the depreciation for current assessment year as well on WDV basis at 15 per cent later on, on a finding that rate of 15 per cent was not the correct rate prescribed in rules, he, filed a letter to AO to rectify the rate of depreciation and apply the prescribed rate of 80 per cent. AO rejected the subsequent claim made by assessee on the ground that assessee had not in fact, exercised its option to claim either on WDV or straight-line method and so also had not applied the correct rate of depreciation. Further, AO was of the view that he had no jurisdiction to consider a claim in the course of assessment in absence of any revised return filed by assessee. Held: In the immediately perceding assessment year, the claim of depreciation was for the first year, the depreciation was claimed on original cost even though at a wrong rate. In the impugned assessment year, the depreciation was claimed again at wrong rate but on WDV method. Therefore, it was very clear that assessee had exercised its option for choosing the method of providing for depreciation as prescribed in the statute. Since assessee had not claimed any fresh claim of depreciation but was asking AO to adopt the correct rate which was in fact, only a prayer to rectify a mistake apparent on record therefore, AO was directed to grant the assessee depreciation at the rate of 80 per cent on WDV method.

Income Tax Act, 1961, Section 32

IN THE ITAT CHENNAI D BENCH

O.K. NARAYANAN, V.P. & VIKAS AWASTHY, J.M.

ITO v. Sri Balaji Sago & Starch Products

ITA No. 2081 (Mds) of 2010 C.O. No. 20 (Mds) of 2011

A.Y. 2007-08

8 March, 2012

ORDER

O.K. Narayanan, V.P

The Appeal is filed by the Revenue. The cross objection is filed by the assessee. The relevant assessment year is 2007-08. The appeal and the cross objection are directed against the order passed by the Commissioner (Appeals) at Salem on 20-9-2010 and arise out of the assessment completed under section 143(3) of the Income-tax Act, 1961.

2. The assessee had installed a windmill in Maruthur Village of Tharapuram Taluk in the later half of the previous year 2005-06. The first assessment year for claiming depreciation on windmill was assessment year 2006-07. The assessee claimed depreciation on written down value (WDV) basis. The rate applied was 15% and the quantum deduction claimed was half of the amount, as the asset was put to use for a period of less than 180 days. Following the earlier course of action for the assessment year 2006-07, the assessee claimed the depreciation for the impugned assessment year as well on WDV basis. The rate adopted in computing the income reflected in the return was 15%. But later, the assessee found that the rate of 15% claimed by the assessee was not the correct rate prescribed in the rules. The assessee, therefore, filed a letter before the assessing authority to rectify the rate of depreciation and apply the prescribed rate of 80%. The assessing officer rejected the subsequent claim made by the assessee in the course of assessment on the ground that the assessee had not in fact, exercised its option to claim depreciation either on WDV method or on straight-line method and so also has not applied the correct rate of depreciation provided in the rules. The prayer for rectification in adopting the correct rate of depreciation was not acted upon by the assessing authority.