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2022 (1) TMI 825 - AT - Income TaxDisallowance of depreciation - adjustments in the intimation under section 143(1) - Whether adjustments in the intimation under section 143(1) ? - HELD THAT - In the case on hand, the disallowance of depreciation was made in the intimation processed under section 143(1) of the Act which is not a kind of adjustment as discussed above. The issue of depreciation being debatable cannot be subject matter of disallowance in the intimation under section 143(1) of the Act. In holding so we draw support and guidance from the judgment of CIT vs. Mahesh kumar Rathod 2006 (11) TMI 177 - GUJARAT HIGH COURT . Also all the details of the assets viz a viz depreciation were duly furnished in the income tax return. The major part of the depreciation claimed by the assessee in the year under consideration was pertaining to the opening written down value which cannot be disturbed in the year under consideration. CIT (A) in the immediate preceding A.Y. and immediate subsequent A.Y i.e. A.Y. 2016-17 and A.Y. 2018-19 has also allowed the depreciation claimed by the assessee with respect to the assets which were shown for the assessment year under consideration. Decided in favour of assessee.
Issues:
- Disallowance of depreciation amounting to ?40,77,012/- confirmed by CIT (A). Analysis: Issue 1: Disallowance of Depreciation The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of depreciation claimed by the Assessee amounting to ?40,77,012. The Assessee contended that all details regarding the assets and depreciation claimed were provided in the income tax return and profit and loss account. The Assessee argued that the disallowance made in the intimation under section 143(1) of the Act was not justified, citing a judgment of the Hon'ble Gujarat High Court. The CIT (A) set aside the issue to the Assessing Officer for verification. However, the Assessing Officer, in response to the CIT (A)'s direction, confirmed the disallowance. The CIT (A) dismissed the Assessee's appeal, stating that the CIT (A) had no power to direct verification by the AO. The Assessee, in the subsequent appeal, argued that the disallowance was not supported by any documents and that the depreciation claimed was in line with previous years. The AR highlighted that the major part of the depreciation was related to the opening written down value, which should not be disturbed. The AR also presented orders from previous years where similar depreciation claims were allowed. The Tribunal, after considering the arguments, held that the disallowance of depreciation in the intimation under section 143(1) was not justifiable for debatable issues. Relying on precedents and considering the facts, the Tribunal directed the AO to delete the addition made, allowing the Assessee's appeal. This detailed analysis of the judgment highlights the procedural and substantive aspects of the case, the arguments presented by the Assessee and the Revenue, and the Tribunal's decision based on legal principles and precedents.
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