SIDH Management Corporate Services Ltd. Vs ITO (ITAT Delhi)
Delhi ITAT: Genuine Depreciation Claim Cannot Be Denied Due to Omission in Schedule DPM; Officers Cannot Blame the System
The Delhi ITAT allowed the assessee’s appeal, holding that a genuine claim for depreciation under section 32 cannot be denied merely because the assessee inadvertently failed to fill Schedule DPM while filing the return, particularly when the depreciation claim was otherwise disclosed in the return and the omission was later rectified.
The assessee-company had filed its return claiming depreciation in Schedule BP, but inadvertently omitted to populate Schedule DPM, resulting in the CPC disallowing depreciation of ₹2,62,860 while processing the return. Although the assessee repeatedly filed rectification applications under section 154 and furnished the complete depreciation schedules, the CPC rejected them on the ground that the system did not permit rectification where Schedule DPM had not originally been filled.
The Tribunal noted that the depreciation claim was clearly reflected in Schedule BP, and during the rectification proceedings the assessee had furnished all the necessary particulars in Schedule DPM and Schedule DEP. The omission was therefore a genuine and inadvertent procedural error, not an attempt to make an impermissible claim.
Referring to Explanation 5 to section 32(1), CBDT Circular No. 14 (XL-35) of 1955 and various judicial precedents, the ITAT reiterated that depreciation is a statutory allowance and that the Department has a duty to ensure that lawful reliefs are granted instead of taking advantage of procedural lapses.
Making strong observations on the functioning of the tax administration, the Tribunal held that while a computer system may reject a claim because of coding limitations, the rectification mechanism exists precisely to enable human officers to correct genuine mistakes. It remarked that the claim of depreciation cannot be denied merely by transferring the blame to the machine, adding that “the machine is dumb” and that tax officers should not act “as dumb like the machine” when considering genuine rectification requests.
Accordingly, the ITAT directed the Jurisdictional Assessing Officer to allow the depreciation claim of ₹2,62,860, holding that a substantive statutory deduction cannot be defeated by a technical omission in the return. The assessee’s appeal was allowed.
Cases Discussed
- S&P Capital IQ (India) (P.) Ltd. v. Assistant Commissioner of Income-Tax (ITAT Hyderabad),[2024] 158 taxmann.com 12 (Hyderabad – Trib.) / [2024] 205 ITD 217 (Hyderabad – Trib.)
- Vedanta Limited (Successor To Cairn …) vs Principal Commissioner Of Income … (Delhi High Court),on 19 March, 2018
- DCIT v. Prithvi Insurance Brokers (P.) Ltd. (Mumbai – Trib.),[2016] 160 ITD 400 (Mumbai – Trib.)
- CIT v. Infosys Technologies Ltd. (Kar.),[2012] 341 ITR 293 (Kar.)
- Goetze (India) Ltd. v. CIT (SC),[2006] 284 ITR 323 (SC)
- CIT v. Shelly Products (SC),[2003] 261 ITR 367 (SC)
- CIT v. Mahalaxmi Sugar Mills Co. Ltd. (SC),[1986] 160 ITR 920 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal filed by the assessee is directed against the order of ld. Addl./JCIT (Appeals), Mysore [for short ‘ld. CIT (A)] dated 17.11.2025 for the Assessment Year 2012-13 raising following grounds of appeal :-
“1. That on the facts and circumstances of the appellant’s case, the learned Commissioner of Income Tax (Appeals) erred in law in upholding the addition of Rs,2,62,860/- on account of disallowance of depreciation as per Income Tax Act. 1961, which is completely technical in nature as error has not been generated while generating xml file for uploading the return of income, by rejecting the detailed submission of the appellant and without considering the fact that option to revise the return of income has been lapsed and appellant had filed rectification under section 154 of the Income Tax Act. 1961.
2. That the impugned appeal order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.”
2. At the time of hearing, ld. AR of the assessee brought to our notice relevant facts and submitted his submissions as under. Brief facts of the case are, the assessee is a company incorporated under the provisions of Companies Act, 1956 having its registered office at E – 253, Saraswati Kunj Apartments 25, I.P. Extension, Patparganj, Delhi – 110 092 has e-filed its return of income for the Assessment Year 2012-13 on 14.10.2023 declaring total income of Rs.1,93,510/- under the head ‘Profits and gains from business or profession’ which has been processed on 15.11.2023 in which total income has been assessed at Rs.4,56,370/- against the returned income of Rs.1,93,510/-, thereby making addition of Rs.2,62,860/- on account of disallowance of depreciation as per Companies Act, 1956 and accordingly, demand has been raised amounting to Rs.1,12,200/-. Ld. AR submitted that it is pertinent to note that the assessee filed rectification applications under Section 154 of the Income Tax Act, 1961 on the following dates:
- 20.01.2014 (Rectification Ref. No. 865255521200114)
- 15.01.2019 (Rectification Ref. No. 409005641150119)
- 28.10.2020 (Rectification Ref. No. 681384561281020)
3. He submitted that all of the above rectification applications were rejected by CPC, Bengaluru, and no relief in respect of depreciation was granted. He further submitted that assessee had filed physical application with the jurisdictional assessing officer on 05.12.2019 whose copy of the letter has been placed on record, however, the Assessing Officer did not bother to consider the rectification application till date.
