1983 (10) TMI 140 - AT - Income Tax

Debatable Issue Depreciation On Motor Vehicles Income Tax Mistake Apparent From Record Rectification Proceedings Transport Business

Summary

Issues: Assessment of depreciation at 30% instead of 40% on motor vehicles for the assessment year 1980-81; Interpretation of the applicability of Income-tax (Fifth Amendment) Rules, 1980 for rectification purposes.

Analysis:
The appeal in question pertains to the assessment year 1980-81 and revolves around the issue of whether the depreciation on motor vehicles used for transport business should be rectified from 30% to 40%. The initial assessment provided for 30% depreciation based on the rules in force at the time. However, subsequent to the assessment, the Income-tax (Fifth Amendment) Rules, 1980, which allowed for 40% depreciation, came into effect on 24-7-1980. The assessee sought rectification based on the amended rules, but the assessing officer contended that the amended rule was not applicable for the assessment year in question (1980-81). The Commissioner (Appeals) held that while in regular assessment appeals, the amended rules applied even for 1980-81, in rectification matters, the issue was debatable, and hence, the enhanced depreciation rate could not be granted through rectification.

The core contention raised by the departmental representative was that the amended rule was not applicable for the assessment year 1980-81. However, the Tribunal disagreed with this argument, concurring with the Commissioner (Appeals) to a limited extent. The Tribunal emphasized that the applicability of the law as on 1-4-1980 to the assessment year 1980-81 was not absolute but subject to exceptions. It was highlighted that when a provision expressly states the date from which it is effective, that date must be adhered to. In this case, since the Income-tax (Fifth Amendment) Rules, 1980, explicitly stated that it would come into force immediately on 24-7-1980, the Tribunal concluded that the amended rules applied to assessments completed after that date, including the one under consideration.

The Tribunal further delved into the aspect of debatability of the issue. It was underscored that the intention of the rule-making body was clear from the express provision that the amended rules would be effective from 24-7-1980. The Tribunal opined that there was no room for debate or doubt regarding the applicability of the amended rules for income-tax authorities, as the intention was unambiguous. Therefore, the Tribunal held that the statutory authorities should rectify the assessment in line with the provisions of the Income-tax (Fifth Amendment) Rules, 1980, without resorting to technical arguments or pretensions of debate. Consequently, the appeal was allowed, and the assessment was directed to be rectified to allow for 40% depreciation on the motor vehicles as per the amended rules.