TMI Blog2004 (10) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 deducting the depreciation as per the Income-tax Act. It is, therefore, humbly requested to kindly amend the original order passed under section 143(3) on29-10-1993and allow us the depreciation while making the other adjustments, if any, under section 147." (Note: The original order was passed on 12-10-1993, which was received by assessee on 29-10-1993) The reassessment order under section 147 as well as the order under section 154 were passed by the Assessing Officer on the same date i.e.28-11-1996. In the rectification order under section 154, it was observed by the Assessing Officer that the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 was also allowed in subsequent year on the written down value which was arrived at on the footing that depreciation had been allowed in the year under consideration. According to him, the assessee by sheer mistake forgot to make a claim of depreciation as is apparent from the computation sheet. He invited our attention to the computation sheet to point out that computation of income started with the figure of Net Profit and Loss A/c before depreciation but in the end forget to claim the same. According to him, all facts relevant for claiming depreciation are on record. He drew our attention to the list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. 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. Accordingly, we vacate such findings of CIT(A) and hold that application under section 154 against the original assessment order could be considered on merits by Assessing Officer. 7. The next question for our consideration is whether assessee could claim depreciation under section 32 by making application for rectification under section 154 of the Act on the ground that it forgot to claim the same. This question came up for consideration before the Hon'ble Supreme Court in the case of Anchor Pressings (P.) Ltd. In that case, the assessee was engaged in the business of the manufacture and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 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-tax Officer could not grant depreciation allowance to the assessee under the Income-tax Act, 1961, when the same was not claimed by the assessee?" The High Court answered the question in favour of the assessee. On appeal to the Supreme Court, it was held that in the absence of any claim by assessee, the same could not be forced upon the assessee. Their Lordships at Page 78 of the Report observed as under: "The language of the provisions of sections 32 34 of the Income-tax Act, 1961, is specific and admits of no ambiguity. Section 32 allows depreciation as deduction subject to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 laid down by the decision." Keeping in mind the above observations, let us try to understand whether in reality there is any conflict between the two judgments referred to by the parties. After going through both the judgments minutely, we are of the view that both the judgments hold the different fields and cannot be said to be in real conflict with each other. In the former case, the court was concerned with the question whether there was any mistake apparent from record under section 154 in denying relief to assessee under section 84 where assessee omits to claim the same. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the issue of jurisdiction under section 154 which has been considered byApex 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 ratio laid down by the former case, i.e., Anchor Pressings (P.) Ltd. 10. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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