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2014 (10) TMI 791 - HC - Income TaxClaim of depreciation @ 80% on installation of windmill Satisfaction of requirement of second proviso to Rule 5(1A) of the Income Tax Rules or not Held that - Following the decision in CIT V. Vijaya Hirasa Kalamkar (HUF) 1992 (9) TMI 4 - BOMBAY High Court - if the assessee exercised the option in terms of second proviso to Rule 5(1A) of the Income Tax Rules at the time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to of exercise of option is required - Since the returns are filed in accordance with Section 139(1) of the Income Tax Act and the form prescribed therein make a provision for exercising an option in respect of the claim of depreciation, no separate procedure is required Decided against revenue.
Issues:
Claim of depreciation on windmill installation contrary to Rule 5(1A) Appendix 1A of Income Tax Rules. Analysis: The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal regarding the claim of depreciation by the assessee on windmill installation. The substantial questions of law raised in the appeal included issues related to the application of depreciation rules and the entitlement of the assessee to claim depreciation on windmills. The first question raised whether the Tribunal was correct in upholding the order directing the assessing officer to allow depreciation at the rate of 80% under Rule 5(1) without the assessee separately exercising the option as required by the second proviso to Rule 5. The second question focused on whether the assessee satisfied the requirements of the second proviso to Rule 5(1A) and was entitled to depreciation on windmills as per Appendix I. The third and fourth questions dealt with the correctness of granting depreciation at 80% on windmills in light of the relevant provisions of section 32(1)(i) and Rule 5(1A) and the rate of depreciation allowed by the assessing officer. The fifth question raised whether the assessee was entitled to a higher rate of depreciation despite not separately exercising the option and filing the return within the due date. The issue in the case revolved around the interpretation and application of Rule 5(1A) Appendix 1A of the Income Tax Rules concerning the claim of depreciation on windmill installation. The Revenue contended that the assessee's claim was not in compliance with the rules. However, the learned Standing counsel for the Revenue referred to a previous decision of the Court which clarified the procedure for exercising the option in terms of the second proviso to Rule 5(1A) at the time of filing the return of income. The Court, following the decision of the Bombay High Court, held that no separate letter or request was required for exercising the option if the returns were filed in accordance with the prescribed form under Section 139(1) of the Income Tax Act. The Court agreed with the Tribunal's reasoning and ruled in favor of the assessee based on the interpretation of the relevant provisions. In light of the decision and interpretation provided by the Court, the substantial questions of law raised in the appeal were answered in favor of the assessee and against the Revenue. Consequently, the appeal was dismissed, and no costs were awarded. The judgment emphasized the importance of following the prescribed procedures for claiming depreciation under the Income Tax Rules and clarified that separate intimation or request for exercising the option may not be necessary if done in accordance with the prescribed form at the time of filing the return of income.
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