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2010 (2) TMI 805 - AT - Income TaxAllowance of depreciation which was withdrawn claim in the revised return of income. - Held that - if the assessee chooses not to furnish particulars, it is not mandatory for ITO to impose the benefit. If the assessee withdrew claim of depreciation in revised return, ITO cannot allow depreciation adverting to particulars furnished in original return prior 01.04.2002. decided in favour of Assessee.
Issues Involved:
1. Validity of the revised return filed by the assessee. 2. Depreciation claim and its allowance by the Assessing Officer (AO). 3. Classification of interest income. Issue-wise Detailed Analysis: 1. Validity of the Revised Return: The revenue challenged the order of the CIT(Appeals), which accepted the revised return filed by the assessee on 30.3.2001. The AO had rejected this revised return, arguing that it did not meet the criteria under section 139(5) of the Income Tax Act, which allows for a revised return only in cases of unintentional omissions or bona fide mistakes. The AO contended that the revised return was a tax planning device rather than a correction of an unintentional omission or mistake. However, the CIT(Appeals) accepted the revised return, noting that the amendment to section 32(5) w.e.f. 1.4.2002 made depreciation claims mandatory, thus supporting the assessee's position that prior to this amendment, claiming depreciation was optional. 2. Depreciation Claim: The primary issue was whether the AO was correct in allowing depreciation that was not claimed in the revised return. The AO relied on the original return filed on 30.12.1999, which included depreciation claims. The CIT(Appeals) and various judicial precedents, including the Supreme Court's decision in CIT vs. Mahendra Mills (243 ITR 56), supported the view that prior to the amendment in 2002, claiming depreciation was discretionary. The CIT(Appeals) held that the amendment to section 32 w.e.f. 1.4.2002 is prospective and does not apply to the assessment year 1999-2000. Thus, the CIT(Appeals) ruled in favor of the assessee, stating that the AO should not have allowed depreciation based on the original return when the revised return did not claim it. 3. Classification of Interest Income: The revenue also contested the CIT(Appeals)'s acceptance of the revised classification of interest income. In the revised return, the assessee classified interest income of Rs. 18,62,545 under "Income from other sources" instead of Rs. 1,61,68,218 declared in the original return. Additionally, the assessee deducted interest of Rs. 1,25,61,464 on margin money placed with banks from pre-operative expenses. The CIT(Appeals) noted that the assessee did not press these issues during the appellate stage, as indicated in the written submissions dated 18.2.2009. Consequently, these issues were not addressed further, and the CIT(Appeals) upheld the revised classification. Conclusion: The Tribunal upheld the CIT(Appeals)'s decision, dismissing the revenue's appeal. The Tribunal agreed that the revised return filed by the assessee was valid and that the AO should not have allowed depreciation based on the original return. Additionally, the Tribunal found no grounds to interfere with the CIT(Appeals)'s decision regarding the classification of interest income, as the assessee did not press these issues during the appeal. Thus, the appeal by the revenue was dismissed.
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