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2020 (3) TMI 1031 - HC - Income TaxAdditions rate of Depreciation on wind mill - claiming depreciation in the ITR can be treated as exercising of option before the due date as prescribed in the second proviso to Rule 5(1A) of the Income Tax Rules - HELD THAT - CIT (A) had rightly decided the issue because in the case of the assessee the claim was made in the return of income as well as reflected in the audit report filed along with the return of income, therefore it would amount to exercise of the option as required under Second proviso to Rule-5(1A) and accordingly depreciation @ 80% on the windmill of the assessee has to be allowed. Further the Hon'ble Jurisdictional High Court in the case of CIT Vs. ABT Ltd. 2014 (10) TMI 788 - MADRAS HIGH COURT has held as under - If the assessee exercised the option in terms of the second proviso to rule 5(1A) of the Income-tax Rules, 1962, at the time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to exercise of option is required. Since the returns were filed in accordance with section 139(1) of the Income-tax Act, 1961, and the form prescribed therein makes a provision for exercising an option in respect of the claim of depreciation, no separate procedure is required. In these circumstances we do not find any reason to interfere with the order of the Ld. CIT (A) Since the returns are filed in accordance with Section 139(1) of the Income Tax Act and the form prescribed therein make a provision for exercising an option in respect of the claim of depreciation, no separate procedure is required, as contended by the Department. See M/S. KIKANI EXPORTS P. LTD. 2015 (2) TMI 680 - MADRAS HIGH COURT - Decided in favour of the assessee and against the Revenue.
Issues Involved:
1. Interpretation of Section 139(1) of the Income Tax Act regarding claiming depreciation. 2. Validity of going into merits of a case when the reopening of assessment is challenged. Issue 1: Interpretation of Section 139(1) of the Income Tax Act regarding claiming depreciation: The judgment involved a case where the controversy was whether the return of income filed by the assessee under Section 139(1) of the Income Tax Act claiming depreciation could be considered as the exercising of an option before the due date as prescribed in the second proviso to Rule 5(1A) of the Income Tax Rules. The Tribunal found that the claim made by the assessee in the return of income, along with the audit report, amounted to the exercise of the option as required under the Rule. The Tribunal referred to previous decisions by the High Court, including one involving ABT Ltd., which stated that if the assessee exercised the option at the time of filing the return of income, no separate intimation was required. The judgment also cited a decision involving Kikani Exports (P) Ltd., where it was held that no separate procedure was needed for exercising the option. The Court, following these precedents, answered the questions in favor of the assessee and against the Revenue. Issue 2: Validity of going into merits of a case when the reopening of assessment is challenged: The second issue in the judgment pertained to whether the Appellate Tribunal and CIT(A) were correct in delving into the merits of the case when the legality of the reopening of the assessment was questioned. The Tribunal, in its order, had found that the Ld. CIT (A) rightly decided the issue by following previous decisions and upheld the claim for depreciation. The judgment cited the decision in the case of CIT Vs. ABT Ltd., where it was held that if the assessee exercised the option at the time of filing the return of income, no separate procedure was required. The Court, based on the previous rulings, confirmed the order of the Ld. CIT (A) and disposed of the appeal in favor of the assessee, stating that the second question did not require an answer due to the outcome of the first question being in favor of the assessee. In conclusion, the judgment by the High Court of Madras addressed the interpretation of Section 139(1) of the Income Tax Act regarding claiming depreciation and the validity of considering merits of a case when challenging the reopening of assessment. The Court relied on previous decisions and upheld the assessee's claim for depreciation, emphasizing that no separate intimation or procedure was required if the option was exercised at the time of filing the return of income.
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