1992 (8) TMI 37 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are:
1. Interpretation of whether the revised return should replace the original return for assessment purposes.
2. Determination of whether a claim for depreciation in the original return can be ignored if not made in the revised return.
3. Analysis of whether the claim for depreciation is mandatory or optional for the assessee.

Issue 1:
The Tribunal referred questions of law under section 256(2) of the Income-tax Act, 1961, regarding the treatment of revised returns in assessment. The Appellate Tribunal concluded that the revised return should entirely replace the original return for assessment purposes.

Issue 2:
The case involved the question of whether the claim for depreciation in the original return can be disregarded if not reiterated in the subsequently filed revised return. The Appellate Tribunal held that the Income-tax Officer was not justified in allowing the depreciation claim based on the original return.

Issue 3:
The issue of whether the claim for depreciation is a discretionary choice for the assessee was examined. The Tribunal relied on legal precedents and instructions from the Central Board of Direct Taxes to assert that the assessing authority is not obligated to allow depreciation if the assessee withdraws the claim.

The Court considered the arguments presented by both parties. The petitioner's counsel emphasized the mandatory nature of allowing depreciation under section 32 of the Act, while the assessee's counsel highlighted the requirement of furnishing particulars under section 34(1) as a condition precedent for claiming deductions.

The Court referred to conflicting decisions by various High Courts on the matter. It was noted that the Bombay High Court and the High Court of Punjab and Haryana interpreted the provisions of section 32 read with section 34, emphasizing the necessity of the assessee making a claim for deductions to be allowed.

Regarding the effect of a revised return, the Court cited a decision by the Gujarat High Court, which held that a revised return substitutes the original return, rendering the original claim for depreciation irrelevant for assessment purposes.

In conclusion, the Court answered all questions in the affirmative and in favor of the assessee, affirming that the revised return should replace the original return and that the claim for depreciation must be explicitly made by the assessee to be considered for allowance.