TMI Blog2015 (10) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... is not consistent with regard to assessee’s claim of depreciation - Be that as it may, as depreciation claimed by assessee is in terms with the statutory provisions, AO was not justified in interfering with the same. Assessee having exercised its option in terms of second proviso to Rule 5(1A), AO is duty bound to allow assessee’s claim of depreciation– thus, the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 1850/Hyd/2011 - - - Dated:- 4-9-2015 - SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For The Revenue : Shri S.K. Gupta For The Assessee : Shri Vikram Vijayaraghavan ORDER PER P.M. JAGTAP, A.M.: This appeal is preferred by revenue directed against the order of ld. CIT(A), Guntur, dated 29/06/2011 for the AY 2003-04, whereby he deleted the addition made by the AO restricting the claim of assessee for depreciation at 80% on energy saving devices to 8.24%. 2. Assessee, in the present case, is a company engaged in the business of generation of power. The return of income for the year under consideration was originally filed by it on 27/11/2003 declaring loss of ₹ 17,67,12,569 and book profit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Rule 5(1) and Appendix 1, which is not only reflected in the accounts but also in the return filed by assessee u/s 139(1) of the Act. Therefore, the only issue which arises for consideration is whether the depreciation claimed under rule 5 and Appendix 1 in the return of income filed can be said to be in compliance to the second proviso to Rule 5(1A). While, AO has disallowed assessee s claim by observing that assessee has not exercised any option, assessee on the other hand has strongly refuted such allegation of AO by stating that the claim made in the accounts as well as in the return of income filed by assessee will itself amount to exercising option in terms of second proviso to Rule 5(1A) as there is no prescribed mode or method available under the statute for exercising such option. 9. Before deciding this core issue, it is necessary to look into the relevant statutory provision. Section 32(1)(i) of the Act provides for allowance of depreciation on assets of an undertaking engaged in generation or generation and distribution of power. Rule 5(1A) provides for allowance of depreciation on assets as specified u/s 32(1)(i) at the percentage specified in Appendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 5(1A) is only to facilitate the AO in discharging of its obligation as per Expln. 5 to sub-s. (1) of s. 32 of IT Act so that the depreciation shall be allowed as per the option of the assessee and not on the discretion of the AO. The AO is otherwise under obligation to allow the depreciation but because the depreciation specified under two different Appendices 1 and 1A and the choice is given to the assessee in respect of the assets specified under cl. (i) of sub-s. (1) of s. 139 [sic-s. 32] of the Act, therefore the provisions contained in the Rules cannot override the provisions contained in the statute and the requirement of option under proviso to r. 5(1A) cannot be held in the nature that on failure of the same would be so fatal that the very object of the provision for providing higher rate of depreciation is defeated. When there is no specific form or method prescribed for exercising the said option then the claim made in the return of income as well as reflected from the books of account and audit report filed along with return of income is more than the exercise of the option as required under second proviso to r. 5(1A). In our view, the requirement of second pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he word 'before' in s. 3 of the Maharashtra (Vidarbha Region) Agricultural Debtors' Relief Act, 1969, as 'upto'. From the above-mentioned decisions, it is clear that the word 'before' would have to be construed as upto or not after. The Hon'ble Bombay High Court has specifically referred to provisions of s. 139 of the Act while explaining the expression of the word 'before'. Therefore we hold that the option exercised by the assessees on due date by way of making claims of depreciation in the return of income along with audit report and books of account wherein the assessees have adopted the rate as claimed is within time-limit prescribed under second proviso to r. 5(1A) of IT Rules. Even otherwise as held by the Bombay High Court in the case of CIT vs. Shivanand Electronics (supra) the provision can be understood with reference to the intent of legislature and not upon the language in which the intent is clothed. If the object of enactment will be defeated by holding it as directory it should be construed as mandatory. Whereas if by holding it mandatory, serious general inconvenience will be created to innocent persons without very mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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