TMI Blog2000 (11) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... at the order made by the Income-tax Officer under section 154 allowing thereunder the depreciation due in respect of the truck is not an order to rectify a mistake apparent from the records and is, therefore, unsustainable? Assessment year 1976-77 : 2. Whether, on the facts and in the circumstances of the case, the Tribunal has misdirected itself in law in holding that the assessee had not furnished the particulars as required under section 34 of the Income-tax Act, 1961, for the allowance of depreciation in respect of the truck ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the Income-tax Officer is not justified in allowing the depreciation in respect of the truck ?" T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by section 154 of the Act, the order of rectification was illegal. The Appellate Assistant Commissioner accepted the latter contention of the assessee and held that the order of the Income-tax Officer was illegal because it had the effect of increasing the liability of the assessee in the next assessment year, viz., assessment year 1976-77, and hence it could not have been passed without issuing any notice to the assessee of his intention to do so and allowing the assessee a reasonable opportunity of being heard. The Appellate Assistant Commissioner, therefore, set aside the order of rectification of the Income-tax Officer under section 154 of the Act. The Revenue appealed to the Tribunal. The Tribunal was of the view that the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner. The Appellate Assistant Commissioner accepted the contention of the assessee that no depreciation can be allowed unless the assessee claims the same. He, therefore, cancelled the order of the Income-tax Officer in so far as the grant of depreciation was concerned. The Revenue appealed to the Tribunal. The Tribunal was of the opinion that in view of the conflict of opinion on this issue between different High Courts, the Income-tax Officer could not have rectified the order under section 154 of the Act. On the merits of the decision of the Income-tax Officer to grant depreciation suo motu, the Tribunal held that the assessee having not furnished the requisite particulars for the purpose of depreciation and having not cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave granted it by rectifying the assessment. The second ground was that the rectification had the effect of increasing the liability of the assessee in the next assessment year. The same could not have been done without giving notice to the assessee of its intention to do so and allowing the assessee a reasonable opportunity of being heard. The third ground of challenge was that there being a divergence of opinion between different High Courts on the point whether the Assessing Officer could grant depreciation allowance when the same was not claimed by the assessee, the Income-tax Officer could not have rectified the assessment and granted depreciation because there was no mistake apparent from the record contemplated by section 154 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by the Supreme Court by its judgment dated March 15, 2000, in CIT v. Mahendra Mills [2000] 243 ITR 56. In that case, the Supreme Court held that the provision of section 32 of the Act to claim depreciation being for the benefit of the assessee, if the assessee does not wish to avail of that benefit for some reason, the benefit cannot be forced upon him. In view of the above, we are of the clear opinion that on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the order of the Income-tax Officer under section 154 of the Act is not an order to rectify a mistake apparent from the record and hence it is not sustainable. Question No. 1 is, therefore, answered in the affirmative, i.e., in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is concerned, though at the material time there was a divergence of opinion between the High Courts whether the Assessing Officer can grant depreciation allowance when it was not claimed by the assessee, that controversy is now settled by the decision of the Supreme Court in CIT v. Mahendra Mills [2000] 243 ITR 56. The Supreme Court in that case considered the decisions of the High Courts of Allahabad and Madras which took the view that the Income-tax Officer could grant depreciation allowance even if it was not claimed by the assessee. The Supreme Court also considered the decisions of the Bombay, Gujarat, Punjab and Haryana, Karnataka, Andhra Pradesh, Calcutta and Kerala High Courts wherein a contrary view had been taken. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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