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Issues Involved:
1. Validity of rectification of intimation/orders under section 143(1) by invoking section 154. 2. Whether depreciation can be thrust upon the assessee when it is not claimed, impacting the deduction under section 80-IB. Detailed Analysis: 1. Validity of Rectification of Intimation/Orders under Section 143(1) by Invoking Section 154: The main issue in these appeals was whether the Commissioner of Income-tax (Appeals) [CIT(A)] was correct in upholding the rectification of intimation/orders by the Assessing Officer under section 143(1) by invoking section 154 of the Income-tax Act. The assessee's industrial undertaking, located in a backward area of Daman, claimed a deduction under section 80-IB without deducting depreciation, although allowable but not claimed. The Assessing Officer later formed the opinion that the claim under section 80-IB without deducting depreciation was incorrect and invoked section 154 to rectify this, reducing the net profit and consequently the deduction under section 80-IB. The CIT(A) upheld this rectification, stating that not considering the claim of depreciation was a "mistake apparent from the records," referencing Supreme Court and High Court decisions. Upon review, it was determined that under section 143(1), the Assessing Officer's role is limited to determining tax or interest due based on the return filed, without varying or disturbing the figures of income declared by the assessee. The legislative history of section 143(1) shows that the Assessing Officer is not authorized to alter the returned income. Thus, any adjustment made under section 154 that alters the returned income would be beyond the powers granted under section 143(1). 2. Whether Depreciation Can Be Thrust Upon the Assessee When It Is Not Claimed: The CIT(A) concluded that it is no longer optional for the appellant to avail or not to avail the benefit of section 32 (depreciation) to enlarge profit for a higher claim of deduction under section 80-IA/80-IB. This conclusion was based on Supreme Court and High Court decisions, which indicated that the assessee is not permitted to circumvent the claim of depreciation to get a higher deduction under section 80-IB. However, the Tribunal observed that the Assessing Officer's power under section 143(1) is restricted to processing returns based on the declared income without making any adjustments for depreciation not claimed by the assessee. The Tribunal noted that what cannot be done directly under section 143(1) cannot be done indirectly through section 154. The principle that "what cannot be done per directum is not permissible to be done per obliquum" was emphasized, meaning that an action prohibited directly by law cannot be achieved indirectly. The Tribunal referenced several judicial precedents supporting this principle, including decisions from the Allahabad High Court, Delhi High Court, and the Supreme Court, which consistently held that an authority cannot evade the law by indirect means. In conclusion, the Tribunal held that the Assessing Officer could not exercise powers under section 154 to amend an intimation under section 143(1) regarding a matter he cannot process under section 143(1) itself. Therefore, the orders of the CIT(A) and the Assessing Officer were vacated, and the appeals of the assessee were allowed. The Tribunal did not need to address other issues relating to the debatable nature of the adjustments raised in these appeals.
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