1987 (1) TMI 158 - AT - Income Tax

Summary

Issues:
Dispute over deletion of value of over-head tanks in assessment year 1979-80 based on depreciation rate, application of WT Rules, and correctness of AAC's deletion decision.

Analysis:
In the case, the dispute revolved around the deletion of Rs. 4,97,548 concerning the value of over-head tanks owned by the assessee for the assessment year 1979-80. The WTO had initially reduced the written down value by allowing depreciation at 30%, but later suggested that only 10% depreciation should have been applied. The WTO increased the tank's value as a protective measure due to pending income tax assessment. The AAC reopened assessment proceedings under section 148 based on the depreciation rate issue, leading to the disputed deletion.

The AAC found the total value of the over-head tanks to be Rs. 24,87,739, with the assessee claiming 30% depreciation, as per the completed assessment. However, due to the reopening of assessment proceedings, the WTO adopted a higher value anticipating a revised assessment. The AAC, after considering the rules under WT Rules, concluded that the addition of Rs. 4,97,548 was incorrectly made without sufficient evidence to justify the increase in value on the valuation date.

Upon review, the ITAT Delhi-B determined that the value of the over-head tanks should be based on the written down value as of the relevant date. Referring to the WT Rules, the ITAT clarified that the written down value for depreciable assets must align with the IT Act's definition. The ITAT emphasized that the value should be the final amount determined in the income tax proceedings for the relevant year, adjusting for any changes in depreciation rate. As the WTO did not provide grounds for applying a specific sub-rule, the ITAT directed the WTO to consider the written down value from the final income tax assessment, overturning the AAC's deletion decision.

In conclusion, the ITAT allowed the appeal for statistical purposes, instructing the WTO to adopt the finally determined written down value for the over-head tanks based on the income tax assessment outcome for the relevant year, thereby resolving the dispute over the tank's valuation.