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TMI Blog2019 (11) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial question of law: Whether on facts and circumstances of the case, and in law, the tribunal is correct in holding that since under section 32 of the I.T. Act there is no specific provision of exercising of the option within a particular time, therefore to that extent the condition imposed under Rule 5(1A) proviso (ii) is invalid or not? 2. I.T.A. No.100098/2015 pertains to Assessment Year 2009-10, whereas I.T.A. No.100099/2015 pertains to Assessment Year 2010-11. Since common question of law and fact arise for consideration in these appeals, they are heard analogously and are disposed of by this common judgment. 3. Facts giving rise to filing of these appeals, briefly stated, are that the assessee is a company which is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected to allow depreciation as per Appendix I at the higher rates. The Tribunal, inter alia held that, Clause (i) of Section 32(1) of the Act empowers the rule making authority to prescribe the percentage on the actual cost for allowing the depreciation. It was further held that the aforesaid provision does not empower the rule making authority to put any other condition and rule making authority can prescribe time of exercising the option provided such power is entrusted by the provisions of the Act. Accordingly, the Tribunal held that the second proviso to Rule 5(1A) of the Rules is invalid. In the aforesaid factual background the Revenue has filed these appeals. 5. The learned counsel for the Revenue has invited the attention of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 32(1) of the Income Tax Act as well as Rule 5(1A) and Rule 17(1) of the Income Tax Rules, which read as under: Section 11(1) of the Act 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income - (a) x x x x x x (b) x x x x x (c) x x x x x (d) x x x x Explanation 1.- For the purposes of clauses (a) and (b) (1) x x x x x x x (2) x x x x x x x (i) x x x x x x (ii) for any other reason, then - (a) x x x x (b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee as may be prescribed. Rule 5(1A) of the Rules Rule "5(1A). The allowance under clause (i) of sub-section (1) of section 32 of the Act in respect of depreciation of assets acquired on or after 1st day of April, 1997 shall be calculated at the percentage specified in the second column of the Table in Appendix 1A of these rules on the actual cost thereof to the assessee as are used for the purposes of the business of the assessee at any time during the previous year : Provided that the aggregate depreciation allowed in respect of any asset for different assessment years shall not exceed the actual cost of the said asset : Provided further that the undertaking specified in clause (i) of sub-section (1) of section 32 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act or Rules to be invalid or ultra vires. Therefore, the substantial question of law framed by this Court is answered in favour of the Revenue and it is held that the Tribunal was not correct in holding that in the absence of prescription of any time limit under Section 32 of the Act, the condition mentioned in the second proviso to Rule 5(1A) of the Rules to exercise the option with regard to depreciation at the time of filing of the return under Section 139(1) of the Act is invalid, is not correct. 11. In the result, the impugned orders passed by the Tribunal insofar as it pertains to the finding that the second proviso to Rule 5(1A) of the Rules are ultra-vires is hereby set aside. Though the substantial question of law has been an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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