9911796707
TMI Blog1980 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Appellate Tribunal was right in holding that the provisions of section 154 would apply to the assessee's case? 3. Whether the Appellate Tribunal was right in holding that section 154 was not applicable without the Appellate Tribunal deciding the correct rate of depreciation that should be granted on the machinery used for manufacture of aerated water ? " The assessee is a manufacturer of aerated water under the trade name "Kali Mark". It has a factory at Virudhunagar. In the original assessment made for each of the assessment years 1964-65 to 1969-70, the assessee claimed depreciation at 9% on all the machineries owned by it and the claim was allowed. This was on the basis that the assessee was having "aerated gas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any rectification under s. 154. The ITO appealed to the Tribunal. The Tribunal pointed out in para. 5 of its order that the assessee had claimed, 9% depreciation on the basis that the machinery was "operated by electricity" and that if the machinery was so operated, then the depreciation liable would be 10%. In the view of the Tribunal, though depreciation at 9% had been allowed for several years, and the assessee acquiesced in the allowance of depreciation at the same rate, this did not mean that the assessee had given up its claim that the machinery which it had was electrical machinery. The machinery in an aerating gas factory could, it was pointed out, well be electrical machinery, in which event depreciation to be allowed should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order passed under section 154 holding that the machinery was entitled to depreciation at 7% only cannot be sustained since there is no mistake apparent from the record which would warrant such a conclusion. We, therefore, uphold the order of the Appellate Assistant Commissioner and dismiss the appeal of the department. " It is this order of the Tribunal, which has given rise to the questions extracted already. Section 154 contemplates the ITO, among other authorities, taking action with a view to rectifying any mistake apparent from the record. So long as the mistake is apparent from the record, the ITO would have jurisdiction to invoke s. 154. Therefore, the starting point of an enquiry, in a case arising under s. 154 would be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have looked into the records and examined whether the 7% rate or the 10% rate would be applicable to the assessee. By not determining this question, the Tribunal acted erroneously, and has failed to exercise its jurisdiction. In the Tribunal's view, the assessee could ask for depreciation at 10%. If so, there was a clear error in the order of the ITO, in so far as he granted 9% as allowance. The assessee would then be eligible for refund and no technicality need have stood in the way of the assessee getting the benefit. The Tribunal will now go into the question as to what would be the proper rate of depreciation applicable to the assessee and adjudicate on the order under s. 154 accordingly. The result is, the second and third que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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