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2008 (3) TMI 357 - AT - Income TaxDisallowance of depreciation - Claim For Higher Depreciation - beyond the period stipulated u/s 139(5) - company engaged in leasing business - difference of Opinion between the two learned Members - Third Member Order - whether the CIT(A) ought to have first decided the question of entertainability of the assessee's higher claim of depreciation by a letter and not by a revised return, before deciding the merits of the claim - claim @ 20 per cent made in the return was due to inadvertence and that the same was being revised to 40 per cent. - HELD THAT:- The learned JM who wrote the leading order held that since the CIT(A) did not specifically address the question as to whether the higher claim of depreciation could be validly made by a letter, the matter has to be restored to his file with a direction to specifically address this question and pass a speaking order in accordance with law after giving sufficient opportunity to the assessee. So far as the merits are concerned the learned JM agreed that it is covered in favour of the assessee by the judgment of the Hon'ble Delhi High Court in the case of CIT v. Bansal Credits Ltd. [2002 (11) TMI 76 - DELHI HIGH COURT] where it was held that where an assessee has leased out the commercial vehicles and the lessee has put them to use in the business of hiring them out, higher depreciation of 40 per cent is allowable to the assessee. Nevertheless, the matter was restored to the CIT(A) with the directions mentioned above. Order Ld AM - The learned AM however held that the question whether the assessee can make a claim by means of a letter filed in the course of the assessment proceedings without filing a revised return was not decided by the CIT(A) because the AO had himself taken a decision on the claim on merits and the CIT(A) was therefore not bound to address the question of validity of the assessee's claim. He, therefore, disagreed with the learned JM on this point. On merits, he found that the order of the CIT(A} for the AY 1996-97 on which the CIT(A) had relied had been set aside on further appeal to the Tribunal and the matter has been restored to the AO to verify the actual user of the leased vehicles by the lessee and adjudicate the issue afresh in the light of the judgment of the Hon'ble Delhi High Court cited above. Accordingly, he restored the matter to the AO with the same directions. Third Member Order - In Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME COURT] held that the assessee can make a claim for deduction, which has not been claimed in the return, only by filing a revised return within the time allowed. In the same decision, it was made clear that the power of the Tribunal to admit an additional ground under s. 254 is not affected by its decision. It was however clarified that the case was concerned with only the power of the assessing authority and not the appellate authority. Under s. 250(5), the CIT(A) has the power to allow the appellant to go into any ground of appeal not specified in the grounds of appeal if he satisfied that the omission of the ground from the form of appeal was not wilful and unreasonable. Dealing with such a power, the Bombay High Court in CIT v. Prabhu Steel Industries (P) Ltd.[1987 (1) TMI 17 - BOMBAY HIGH COURT], held that where a claim for special deduction was made by the assessee not in his return but in the course of the assessment proceedings and the ITO failed to consider the same, it was open to the AAC to entertain the claim. In CIT v. Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME COURT] held that the powers of the CIT(A) sitting in appeal over an assessment were plenary and conterminous with those of the AO and that he can do what the ITO can do and also direct him to do what he has failed to do. In the light of the law laid down in this judgment by the Supreme Court, it was open to the CIT(A) to consider the assessee's claim on merits by virtue of his co-extensive power over the assessment proceedings and also by virtue of s. 250(5). That apart, the judgment of the Supreme Court in Goetze is distinguishable on facts because in that case the claim was made for the first time in the letter filed by the assessee in the course of the assessment proceedings whereas in the present case the claim of depreciation on the trucks @ 20 per cent was already made in the return of income and it was merely enlarged to 40 per cent on the footing that the assessee was running the trucks on hire. It cannot be said to be an entirely new claim made for the first time in the letter filed by the assessee in the course of the assessment proceedings. The CIT(A) therefore committed no error in dealing with the assessee's appeal on merits. Moreover, the AO himself has examined the claim on merits though he earlier held that the claim was not entertainable and the letter was non est. A decision having been given by him on merits it was open to the CIT(A) to deal with the merits. I, therefore, agree with the learned AM that the CIT(A) was not precluded from dealing with the assessee's claim for higher depreciation on merits. Coming to the merits of the assessee's claim, the learned AM has observed that for the AY 1996-97, the Tribunal has restored the matter to the AO for verification of the assessee's claim in the light of the judgment of the Hon'ble Delhi High Court in Bansal Credits. I agree with the course adopted by the learned AM. In the result, I agree with the order passed by the learned AM. The matter will now be placed before the regular Bench for passing appropriate orders.
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