ITAT Ahmedabad Allows Additional Depreciation Because Claim Was Bonafide Oversight

Heena Parthiv Thakkar Vs ADIT ( ITAT Ahmedabad)

The case of Heena Parthiv Thakkar vs. ADIT before the Income Tax Appellate Tribunal (ITAT) Ahmedabad centered on a dispute over depreciation and additional depreciation claims for the Assessment Year 2020-21. The core issue was the disallowance of a portion of regular depreciation by the Assessing Officer (AO) during the processing of the assessee’s return and the subsequent denial of a claim for additional depreciation made for the first time during the appellate proceedings.

The assessee, Heena Parthiv Thakkar, filed a return of income declaring a total income of Rs. 4,67,560. This return was processed under Section 143(1) of the Income-tax Act, 1961, and the income was adjusted to Rs. 14,21,930. The significant variation was due to the disallowance of Rs. 9,54,375, which the AO identified as excess depreciation. The assessee had claimed a depreciation rate of 15% on new plant and machinery that had been put to use for less than 180 days during the financial year. According to the Income Tax Act, when an asset is used for less than 180 days in the year of acquisition, the depreciation allowance is limited to 50% of the prescribed rate. In this instance, the prescribed rate was 15%, so the allowable depreciation was only 7.5%, not the 15% claimed by the assessee. The AO, therefore, disallowed the excess 7.5% of the claimed amount.