Non claiming of depriciation is it mistake apparent of recor

Tax queries 600 views 2 replies

Harshil

Article

37 Points Joined December 2009

Dear friends,

What are your opinion regarding this and quote any case laws for this if related. It is a bit mid size question but very intresting so you may go through.

Assessee is filing return from many years. He regularly claims depriciaton on Asset A and Asset B. But in one year due to software problem Asset B did not got selected in schedule and he did not claimed depriciation on it. It was not showned in return. But the Tax audit clearly stated the correct depriciation figure. 143(1) and even 143(3) was over. But it was still not detected by assessee and even AO that deprication of Asset B is not claimed in return. After some days going through the AO's order client noticed the mistake. But time for revise return was elapsed. So what is the solution now? on what basis can assessee claim depriciaton? can 154 (mistake apparent from record) be invoked and can AO change and allow the depriciaition? Depriciation is compulsary to claim so is this ground valid? any case study of simmilar nature? does commissioner have power to recompute including the deprictiation? Please reply to this as soon as possible.

Thanks in advance.

Replies (2)

PRITAM JAIN, CA , CS

Practising CA CS

398 Points Joined September 2007

Hi Harshil Its not a Mid size question It is a big size question.....

There may be Two possibility i assume,

1) Assée has not taken dep on Asset B but profit in computation is after considering Dep. on both Asset A and B...

In this case I find an apparent mistake, since sec 154 is clear that if some expenditure is claimed but the corresponding details is not provided in schedule in ITR then assée can file rectification u/s. 154.....within a time limit of 4 years....

2) If Dep. on asset B is not even considered while computing income from business then in that case you have to file a revised return (ofcourse not possible due to lapse of period) since there is a change in profit which is not apparent mistake as per sec 154....

3) Dep. on Asset B is deemed to be allowed under the Income Tax Act as per Explanation 5 of section 32(1) irrespective of the above cases...and in subsequent year wdv will be after considering dep. on asset B

Happy to Share.....

Regards

Harshil

Article

37 Points Joined December 2009

you interpreted right pritam in ur point 1. and as such we are working on the same. but some judgements say without revising return you cannot claim any benifits ya deductions or allowance. As such depri is mandatory to be claimed and if not claimed then too its levied. so let us c what results we getting.... and thanks for your replie.