Even if a claim is not made before AO, it can be made before appellate authorities

It is not in dispute that in the instant case, return under section 139(1) was filed belatedly. Hence, the assessee is not entitled to file a revised return under section 139(5) of the Act going by the ratio laid down by the Hon’ble Apex Court in the case of Kumar Jagadish Chandra Sinha cited supra. However, the depreciation allowance under Explanation 5 of section 32 of the Act is mandatory allowable if the said asset is used for the purpose of business of the assessee. In other words, whether the assessee makes a claim of depreciation or not in his return of income, the Assessing Officer is duty bound to grant depreciation allowance by virtue of Explanation 5 to section 32(1) of the Act (Inserted by Finance Act, 2001 w.e.f. 1/4/2002).

In view of Explanation 5 to section 32(1), the Assessing Officer was duty bound to grant depreciation allowance, whether the same is claimed by the assessee or not, provided the conditions mentioned under section 32 are satisfied. The controversy could be examined from another angle. No doubt, the revised return cannot be taken cognizance of since the original return was filed belatedly. However, an additional claim could be made before the appellate authority and the appellate authority is duty bound to consider the same. There are number of judgements which clearly establish that the assessee is entitled to raise additional grounds, not merely in terms of legal submissions but in respect of new claim not made in the return filed.

In the instant case, the CIT(A) has not examined the issue in correct perspective taking into consideration the Explanation 5 to section 32(1) of the Act and the Board’s Circular mentioned supra. The CIT(A) is empowered to consider additional claim made before him, though not made in the return filed. Therefore, in the interest of justice and equity, the case is restored to the file of the CIT(A) to consider the issue afresh and decide as to whether the asset on which depreciation is claimed is a business asset and if so, to allow the claim of the assessee in accordance with law. It is ordered accordingly.

INCOME TAX APPELLATE TRIBUNAL, BANGALORE
ITA No. 1025/Bang/2011

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