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TMI Blog2004 (10) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 154 - We are of the view that assessee was legally entitled to claim depreciation in the rectification proceedings u/s 154. But the contention of the department is that such claim cannot be allowed in view of Supreme Court judgment in the case of Mahendra Mills [ 2000 (3) TMI 3 - SUPREME COURT] . In that case, the assessee did not claim depreciation for assessment year 1974-75 in the return but the Income-tax Officer allowed the same. The contention of assessee that right to claim depreciation was optional was rejected by Assessing Officer. The CIT(A) allowed the appeal of assessee and the Tribunal affirmed the order of CIT(A). In the present case, the assessee had always been claiming the depreciation in the past as well as subsequent year. It is only by mistake that it forgot to claim the same. It's past and subsequent conduct shows that it had always intended to claim the depreciation. The computation of income appearing at page 17 shows that in the beginning, it took the profits before depreciation but in the end, it forgot to claim the same. Further, it has been claimed that in the subsequent year, the depreciation was allowed on the written down value which was determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t December, 1991 declaring total income of Rs. 7,39,63,395. The original assessment under section 143(3) was made on 12th October, 1993 accepting the returned income of the assessee. Subsequently, notice under section 148 was issued on 21st September, 1994. In the course of such re-assessment proceedings, the assessee noticed that it forgot to claim depreciation in respect of assets owned by it and accordingly, made an application under section 154 on 18-11-1996, which was filed in the office of Assessing Officer on 22-11-1996. The contents of the said application are being reproduced as under: The income-tax case for the assessment year 1991-92 of our company is at present pending for assessment under section 147 of the Income-tax Act, 1961. During the proceedings of the case, it has come to our notice that depreciation as per Income-tax Act amounting to Rs. 11,45,168.00 inadvertently could not be claimed in the income-tax return for the assessment year under reference. This is a clear-cut case of clerical error well covered by section 154. In our income-tax computation, starting with profit as per Profit and Loss account before depreciation, a clerical mistake occurred by not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tertained by Assessing Officer in re-assessment proceedings in view of the judgment of Supreme Court in the case of Sun Engg. Works (P.) Ltd. Lastly, it was held that since the original assessment did not exist after the issue of notice under section 148, the question of rectification did not arise. Accordingly, the appeal of the assessee was dismissed. Aggrieved by the same, the assessee is in appeal before the Tribunal. 4. The learned counsel for assessee has vehemently assailed the order of CIT(A) by raising various submissions. Firstly, it was contended that assessee was not seeking any relief in the course of re-assessment proceedings under section 147 but was seeking rectification of the original order dated12-10-1993. Therefore, the lower authorities were not justified in rejecting the application of assessee under section 154 on the basis of judgment of Supreme Court in the case of Sun Engg. Works (P.) Ltd. It was urged by him that both the proceedings under sections 154 and 147 were different, separate and independent proceedings and therefore, his claim could not be rejected by applying the aforesaid judgment of Supreme Court. Secondly, it was submitted that depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot rectify such assessment under section 154. This reasoning, in our opinion, is totally erroneous and contrary to the legal position laid down by the Apex Courtin the case of Sun Engg. Works (P.) Ltd. on which reliance was also placed by the Assessing Officer. Their Lordships at page 321 observed It is only the under assessment which is set aside and not the entire assessment when re-assessment proceedings are initiated . In view of such legal position, the Commissioner (Appeals) erred in law in holding that original assessment order became non-existent on initiation of reassessment proceedings. For the similar reasons, the CIT(A) was not justified in affirming the order of Assessing Officer that no relief could be allowed in re-assessment proceedings. The rectification application made by assessee was against original assessment proceedings and there was no request to allow any relief in re-assessment proceedings. Both the authorities had proceeded on the wrong footing that relief was sought in reassessment proceedings. We have already extracted the contents of the said application, which clearly shows that application was made against the original assessment dated12-10-1993. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer is not sufficient. Precise factual material and clear data must be contained in the record sufficient to enable the Income-tax Officer to consider whether the relief should be granted under section 84. In the absence of such material, no fault can be found with the Income-tax Officer for not making an order under section 84 favouring the assessee. 8. In view of above observations, we are of the view that assessee was legally entitled to claim depreciation in the rectification proceedings under section 154. But the contention of the department is that such claim cannot be allowed in view of Supreme Court judgment in the case of Mahendra Mills. In that case, the assessee did not claim depreciation for assessment year 1974-75 in the return but the Income-tax Officer allowed the same. The contention of assessee that right to claim depreciation was optional was rejected by Assessing Officer. The CIT(A) allowed the appeal of assessee and the Tribunal affirmed the order of CIT(A). The following question was referred to the Hon'ble High Court: - Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andatory duty on the officer to allow the depreciation in the absence of assessee's claim. Both these judgments were delivered by Bench of two Judges and the judgment in the former case was not brought to the notice of Their Lordships in the latter case. At this stage, it would be appropriate to refer to the judgment of the Apex Court delivered by Bench of three judges in the case of Sun Engg. Works (P.) Ltd. wherein it was held that judgment of a Court has to be understood in the context in which it was considered. The relevant observations of Their Lordships are quoted below: It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a latter case, courts must carefully try to ascertain the true principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of section 32 as then existed which provided allowance and depreciation subject to furnishing of prescribed particulars. It is in this context, decision was rendered that if assessee did not avail the deduction by not furnishing the particulars then ITO was not bound to allow the same. So, it was a case where assessee deliberately did not avail the deduction. 9.3 In view of above discussions, we are of the view that the latter decision would be inapplicable where question regarding jurisdiction under section 154 is raised. In the present case, we are concerned with the issue of jurisdiction under section 154 which has been considered by Apex Courtin the former case. Jurisdiction under section 154 can be assumed if there is mistake apparent from record. It is immaterial as to whose mistake it is. If on the basis of material on record, assessee is entitled to relief then it would constitute mistake apparent from record and consequently, such relief cannot be denied merely because the assessee omitted to claim by mistake. This is the ratio which has been laid down by the Hon'ble Supreme Court in the former case. Hence, the present case would be governed by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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