1985 (2) TMI 116 - AT - Income Tax

Assessment Order, Assessment Year, Original Assessment, Rectification Of Mistakes, Unabsorbed Depreciation, Unabsorbed Development Rebate

Summary

Issues:
1. Rectification of assessment order under section 154 of the Income-tax Act, 1961 regarding the priority between unabsorbed depreciation and unabsorbed development rebate.
2. Whether the order passed by the ITO disclosed any mistake apparent from the record.
3. Priority between unabsorbed depreciation and unabsorbed development rebate.
4. Entertaining additional grounds in the appeal.

Detailed Analysis:

1. The appeal before the Appellate Tribunal arose from an order passed by the Income Tax Officer (ITO) under section 154 of the Income-tax Act, 1961. The dispute revolved around the priority between unabsorbed depreciation and unabsorbed development rebate for the assessment year 1975-76. The original assessment by the ITO considered and deducted unabsorbed depreciation of the earlier assessment year 1972-73 before the unabsorbed development rebate of the year 1971-72. Subsequently, the ITO passed rectification orders altering the priority, leading to a series of revisions. The Appellate Tribunal had to determine the correctness of the revised assessment order in light of the provisions of the Income-tax Act.

2. The representative for the assessee argued that the order passed by the ITO did not reveal any mistake apparent from the record. Referring to a decision by the Gujarat High Court, the representative contended that the issue of priority between unabsorbed depreciation and unabsorbed development rebate was complex and debatable, as evidenced by the High Court's detailed consideration of the matter. The departmental representative, on the other hand, supported the Commissioner (Appeals) decision, emphasizing that interpretational challenges of the Act did not necessarily indicate a debatable question of law.

3. The Appellate Tribunal, after considering the contentions of both parties, concluded that there was no merit in the assessee's appeal. It was determined that as per the provisions of the Income-tax Act, unabsorbed depreciation must be given priority over unabsorbed development rebate for set off. The Tribunal highlighted the statutory framework under section 32(2) of the Act, emphasizing the necessity of adding unabsorbed depreciation to the current year's depreciation before considering the set off of development rebate. The Tribunal also referenced relevant case law to support the precedence of unabsorbed depreciation in such scenarios.

4. An additional ground raised by the assessee regarding the merits of the priority between unabsorbed depreciation and unabsorbed development rebate was dismissed by the Tribunal. The Tribunal held that the original assessment order, which formed the basis of the grievance, had been accepted by the assessee and was not subject to any ongoing appeal. Therefore, the additional ground could not be entertained as it did not directly relate to the rectification under section 154 being challenged in the appeal.

In conclusion, the Appellate Tribunal dismissed the appeal, upholding the revised assessment order that prioritized unabsorbed depreciation over unabsorbed development rebate based on the statutory provisions and legal precedents cited during the proceedings.