2024 (5) TMI 390 - AT - Income Tax

Rectification application filed u/s 154 - Mismatch in the amount of depreciation - Assessee ha been allowed lesser depreciation for which it was entitled - HELD THAT - The assessee before the revenue authority and before us contended that deprecation in books of account is of ₹ 6,23,97,846/- only which was added back while computing business income as per the Act. This amount can be verified from audited financial statement of the assessee available on record, where the profit and loss account and fixed asset schedule is available. We have also perused the ITR of the assessee filed in form ITR-6 and note that in Profit and loss account reported in ITR-6 in schedule Part A- P L the assessee shown depreciation amount at ₹ 6,65,43,786/-only. Hence, there is mismatch in the amount of depreciation as per books reported at 2 different places which not been verified by the authority. Therefore, in our considered view that there is mismatch in the amount of depreciation which needs to be looked into and same needs to be rectified after verification. Additional depreciation - We find that the assessee before the revenue authority and before us stated that in the immediate previous assessment year, it acquired plant Machinery which was eligible for additional depreciation. However, the plant machinery in previous assessment year was put to use for less than 180 days therefore the assessee claimed only 50% of such additional claim in the immediate previous year and remaining 50% claimed in the year under consideration. The claim made in previous assessment year for 50% amount has been allowed therefore remaining 50% should also be allowed in the year under consideration. The lower authority without verifying the veracity of assessee s claim rejected the rectification application 154 of the Act. In our considered opinion, the claim of the assessee needs to be verified as it appears to us there is a mistake in the order of the information generated under section 143(1) of the Act and needs to be rectified under the provisions of section 154 of the Act. Additional claim made by the assessee for the gratuity on payment basis - can the assessee make fresh claim in application filed under section 154? - We find support and guidance from the judgement of Promod R Aggarwal 2023 (10) TMI 1142 - BOMBAY HIGH COURT - the claim made by the assessee in the application filed under section 154 of the Act is required to be looked into by the AO on merit as per the provisions of law. Hence, the grounds of appeal of the assessee are allowed for the statistical purposes.

Summary

Issues Involved:
The judgment involves the rejection of a rectification application filed by the Assessee under section 154 of the Income Tax Act, 1961, related to the Assessment Year 2015-2016.

Mismatch in Depreciation Amount:
The Assessee, a limited company engaged in manufacturing, faced a discrepancy in the depreciation amount claimed in the books of accounts and the return of income. The Assessing Officer (AO) added back an amount resulting in an understatement of income. The Assessee filed a rectification application under section 154, which was rejected by the AO and upheld by the Commissioner of Income Tax (Appeals) without proper verification. The Tribunal found a mismatch in the reported depreciation amounts, requiring rectification after verification.

Claim of Additional Depreciation:
The Assessee claimed additional depreciation in the income tax return, which was not allowed in the processed return under section 143(1) of the Act. The Assessee argued that the claim was legitimate as it was related to plant & machinery put to use for less than 180 days in the previous assessment year. The Tribunal noted a mistake in the information generated under section 143(1) and directed verification and rectification under section 154.

Additional Deduction of Gratuity Amount:
The Assessee made a fresh claim for deduction of gratuity amount on a payment basis, which was omitted in the original return of income. The AO rejected the claim citing the need for a revised return as per legal precedents. However, the Tribunal referred to a Bombay High Court judgment allowing fresh claims in rectification applications under section 154. The Tribunal directed the AO to consider the claim on merit as per the provisions of law, emphasizing the rights of the Assessee to raise such claims before the appropriate forum.

Conclusion:
The Tribunal allowed the Assessee's appeal for statistical purposes, directing the AO to verify and rectify the discrepancies in the depreciation amounts and consider the fresh claim for gratuity deduction. The judgment emphasized the need for proper verification and consideration of legitimate claims raised by the Assessee in rectification applications under section 154 of the Act.