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Issues:
1. Rectification of apparent mistake in allowing depreciation at a higher rate. 2. Interpretation of Section 154 of the Income Tax Act, 1961 regarding rectification of mistakes in assessment orders. Detailed Analysis: 1. The appeal before the Appellate Tribunal ITAT Cochin was against the order of the AAC of IT, Ernakulam confirming the ITO's order under Section 154 of the IT Act, 1961, which rectified the taxable income determination for the assessment year 1970-71. The issue arose from the ITO's rectification of excess depreciation allowed on a new factory building by reducing it from Rs. 17,083 to Rs. 4,271. The assessee contended that there was no apparent mistake as depreciation was correctly allowed at 10%, while the department argued that the ITO had mistakenly calculated the depreciation amount. 2. The assessee, a marine products processing and export firm, had claimed depreciation at 5% on the new building's cost. The ITO initially allowed depreciation at 10%, leading to an audit objection for excess allowance. The ITO then issued a notice under Section 154 to rectify the alleged mistake. The AAC upheld the rectification, stating that the ITO had erred in calculating the depreciation amount despite mentioning the correct rate in the assessment order. The Tribunal, however, found the matter debatable as the rate discrepancy was not conclusive and the assessee's claim of 10% depreciation was not considered by the lower authorities. 3. The Tribunal concluded that there was no apparent mistake justifying rectification under Section 154. It noted the ambiguity in the ITO's calculation and the absence of a clear error. Additionally, the Tribunal highlighted that the lower authorities did not address the assessee's claim of 10% depreciation allowance. Consequently, the Tribunal canceled the ITO's order of rectification and allowed the assessee's appeal, emphasizing the lack of clarity in the depreciation calculation as a crucial factor in the decision-making process.
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