Depreciation Allowance even if not claimed in the mandatory return of income: ITAT

Depreciation Allowance even if not claimed in the mandatory return of income: ITAT

The assessee for the AY 2016-17 e-filed his return of income on 14.10.2016 declaring nil income after adjusting brought forward losses of Rs. 7,37,804. In the course of the assessment, the Assessing Officer noticed that assessee has reported a net income of Rs. 7,37,004 and the same was set off against unabsorbed depreciation of the AY 2015-16.

The Assessing Officer noticed that the assessee had not claimed depreciation in respect of the project M/s Him Fresh Produce Company through depreciation was claimed in the AY 2015-16 on the said project. The Assessing Officer proposed to reduce the carry forward of WDV of the assets of M/s Him Fresh Produce Company since there was no reply from the assessee. However, since no depreciation has been claimed by the assessee in the original return of income benefit of revised WDV is not given to the assessee. So, the depreciation on the project Him Fresh Produce Company was not allowed for the current assessment year ie 2016-17.

On appeal the Ld. CIT(A) directed the AO to compute the depreciation and allow the same to be carried forward as per provisions of the Act. Aggrieved the Revenue filed an appeal.

The tribunal resolved on Ibi Kellogg India Pvt. Ltd. vs. ITOwhich held that the correct course of action should be to allow depreciation after computing the same on the block of assets as per provisions of the Act and in case the depreciation exceeds the business income then as per section 72 of IT Act

The tribunal agreed with the view of CIT(A) that the Assessing Officer should allow the depreciation to be carried forward for set off in succeeding assessment years. Therefore, the tribunal found no infirmity in the order of the Ld. CIT(A) in directing the AO to compute the depreciation and allow the same to be carried forward as per the provisions of the Act. Grounds raised by the Revenue are rejected.

Therefore, the appeal of the Revenue was dismissed.

To Read Judgment Download Given PDF Below.

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