2022 (3) TMI 1524 - AT - Income Tax

Rectification of mistake - deduction u/s 42 disallowed by the AO - AO grant depreciation on the asset being Oil well and Oil field equipment at the rate of 10% - HELD THAT - We rectify the para 26.1 of the order of the ITAT as detailed we direct the AO to allow depreciation at the rate of 60% on the oil well and oil field equipment as plant machinery as provided Entry II(8)(xii) as Appendix I to the Income Tax Rules 1962. Additional depreciation u/s 32(1)(iia) which has not been adjudicated by the ITAT inadvertently - Admittedly the assessee has requested for allowing the additional depreciation on the Oil field and oil field equipment but the ITAT has omitted to adjudicate the additional depreciation claimed u/s 32(1)(iia) of the Act inadvertently which is a mistake apparent from record within the meaning of the provisions of section 254(2) of the Act. Thus the registry is directed to fix the case for a fresh hearing on 26/04/2022 for the limited purpose as discussed above.

Summary

Issues:
1. Rectification of error in allowing depreciation at a certain rate.
2. Adjudication of additional depreciation claim under section 32(1)(iia) of the Act.

Analysis:
1. The assessee filed a Miscellaneous Application seeking rectification of an error in the ITAT order related to the allowance of depreciation. The AO disallowed the deduction claimed under section 42 of the Act but granted depreciation on Oil well and Oil field equipment at 10%. The ITAT, relying on the assessee's own case for AY 2005-06, allowed depreciation at a rate of 60%. However, the ITAT mistakenly directed the deletion of an addition made by the AO, which was not actually made. Consequently, the ITAT rectified the error and directed the AO to allow depreciation at 60% as per the relevant provisions.

2. The second issue pertained to the assessee's claim for additional depreciation under section 32(1)(iia) of the Act, which the ITAT inadvertently omitted to adjudicate. The assessee requested a fresh hearing on this specific issue. The ITAT acknowledged the mistake and directed the registry to schedule a new hearing for the limited purpose of considering the additional depreciation claim. The grievance of the assessee was allowed, and the case was fixed for a fresh hearing without the need to formally notify the parties.

In conclusion, the ITAT rectified the error in allowing depreciation at a certain rate and granted a fresh hearing for the adjudication of the additional depreciation claim under section 32(1)(iia) of the Act. The assessee's Miscellaneous Application was allowed, and the necessary corrections were made in the order.