Decision taken by Authorities in Previous Year would not estop or operate as res judicata for Subsequent Year: ITAT [Read Order]

Decision taken by authorities in previous year would not estop or operate as res judicata for subsequent year, so was held by the Income Tax Appellate Tribunal (ITAT), Ahmedabad.

The assessee, M/s. S.P. Chips Potato Pvt. Ltd. filed its return of income for assessment year 2014-15 declaring total income of ₹ 25,31,420/-. The assessment u/s 143 (3) of the Income Tax Act, 1961 for assessment year 2014-15 was finalized on 01-12-2016 by the DCIT accepting the returned income and book profit u/s 115JB of the Act as per the return of income at Rs 3,54,138/-. The case of the assessee was selected for scrutiny and the assessee claimed depreciation @30% on opening WDV of Rs 22.95 lakhs under the head “plant and machinery”.

However, Pr. CIT noticed that no such asset eligible for depreciation @30% is found under the head “plant and machinery”. It was also noticed that depreciation allowable to the assessee under the head “plant and machinery” would be @15% and not @30% and therefore, excess depreciation was incorrectly allowed to the assessee @30%.

The Pr. CIT issued notice under section 263 of the Act on 17-12-2018 and in response thereof, the Counsel for the Assessee, Sanjay R Shah submitted that the assessee was doing trading in potatoes and having two cold storages. The trucks on which depreciation was claimed @30% were used for delivery of potatoes and a sum of ₹ 5,79,960/- has been earned as freight income, which is shown as trading receipts, but not shown separately in the accounts. Therefore, the assessment order is not erroneous and prejudicial to the interests of the revenue. The Pr. CIT rejected the contention of the assessee.

The Bench consisting of P M Jagtap, Vice President and Siddhartha Nautiyal, Judicial Member held that “We are not persuaded to agree with the contention of the counsel for the assessee that if an incorrect/higher claim of depreciation has been allowed to the assessee in a previous year, the same shall be allowed to the assessee in the following years as well, simply for the reason that the asset was forming part of the block of assets on which higher depreciation has been allowed (albeit incorrectly) in the previous year.”

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