2025 (4) TMI 128 - AT - Income Tax

Intimation u/s 143(1) - claim of depreciation was wrongly allowed by the CPC Bangaluru while processing u/s 143(1) - application for rectification was made u/s 154 but same came to be rejected on the ground that it is not a mistake apparent from the records - addition u/s 43B on account of bonus payable which was also duly paid by the assessee before the due date of filing of income tax return HELD THAT - We hold that the Ld. CIT(A) ought to taken the correct figure of depreciation which was Rs. 89, 96, 72, 987/- and ought to have granted relief as this is the correct figure as per TAR. The figure of Rs. 1, 03, 13, 420/- is incorrectly stated in ITR through inadvertence. CIT(A) ought to have carefully perused the TAR and ought to have given relief by not doing so Ld. CIT(A) has erred in law and we set aside the impugned order of Ld. CIT(A) on issue of depreciation only. Payment of bonus is considered CIT(A) ought to have dealt with the issue but has failed to do so. No speaking order is passed on this issue. Therefore we remand this issue of payment of bonus back to the file of Ld. CIT(A) with a direction to deal with this issue according to law and pass a speaking order. Appeal of the assessee is partly allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The Tribunal considered two core legal issues in this appeal:

(i) Whether the Centralized Processing Centre (CPC) was justified in not allowing the correct claim of depreciation of Rs. 89,96,72,987/- as disclosed in the Tax Audit Report (TAR) and instead allowing Rs. 1,03,13,420/- as claimed in the Income Tax Return (ITR).

(ii) Whether the Ld. CIT(A) erred in not adjudicating the issue regarding the addition of Rs. 7,03,125/- on account of bonus payable, which was deposited before the due date of filing the return of income.

ISSUE-WISE DETAILED ANALYSIS

Issue (i): Depreciation Claim

- Relevant Legal Framework and Precedents: The issue revolves around the correct computation of depreciation as per the Income Tax Act, 1961. Section 139(5) of the Act allows for the filing of a revised return if the taxpayer discovers any omission or wrong statement in the original return. The Tribunal referenced the duty of the Assessing Officer (AO) to compute the correct income, even if the correct claim is not made by the assessee, as emphasized in the case of CIT Vs. Heidrick and Struggles Inc. and supported by CBDT Circular No. 14 of 1955.

- Court's Interpretation and Reasoning: The Tribunal noted that the CPC processed the return based on the figures provided in the ITR. However, the Tribunal emphasized that the correct figure of depreciation, as per the TAR, was Rs. 89,96,72,987/-, and this should have been considered by the Ld. CIT(A).

- Key Evidence and Findings: The TAR, which forms part of the record, clearly stated the correct depreciation figure. The Tribunal found that the incorrect figure in the ITR was due to inadvertence.

- Application of Law to Facts: The Tribunal applied the principle that the Revenue authorities are responsible for computing the correct taxable income, which includes allowing legitimate claims as per the TAR.

- Treatment of Competing Arguments: The Ld. DR argued that the assessee should have filed a revised return to correct the depreciation figure. However, the Tribunal found that the duty to compute the correct income overrides procedural lapses in the ITR.

- Conclusions: The Tribunal concluded that the Ld. CIT(A) erred in not granting relief based on the correct depreciation figure in the TAR. The impugned order was set aside on this issue.

Issue (ii): Bonus Payable

- Relevant Legal Framework and Precedents: Section 43B of the Income Tax Act, 1961, allows for the deduction of certain expenses, including bonus payable, only if they are paid before the due date of filing the return of income.

- Court's Interpretation and Reasoning: The Tribunal noted that the Ld. CIT(A) failed to address the issue of the bonus payable in the impugned order.

- Key Evidence and Findings: There was a lack of a speaking order from the Ld. CIT(A) on this issue, necessitating a remand for proper adjudication.

- Application of Law to Facts: The Tribunal found that the issue needed to be addressed in accordance with Section 43B, which allows for deduction if the payment is made before the due date.

- Treatment of Competing Arguments: The Ld. AR pointed out the omission by the Ld. CIT(A) in addressing this issue, and the Tribunal agreed that it required a decision.

- Conclusions: The Tribunal remanded the issue back to the Ld. CIT(A) for a detailed examination and a speaking order on the bonus payable.

SIGNIFICANT HOLDINGS

- The Tribunal held that the Ld. CIT(A) should have considered the correct depreciation figure as per the TAR and granted the appropriate relief. The Tribunal emphasized the duty of the Revenue authorities to compute the correct income, citing the principle from CIT Vs. Heidrick and Struggles Inc.: "it is the duty of AO to grant relief to the assessee even if not claimed."

- The Tribunal set aside the impugned order on the issue of depreciation and remanded the issue of bonus payable back to the Ld. CIT(A) for a proper adjudication.

- The appeal of the assessee was partly allowed, with specific directions for the Ld. CIT(A) to address the issues according to law.