Commissioner Of Income-Taxcoimbatore v. M/S.kikani Exports P. Ltd

In the High Court of Judicature at Madras Dated: 09.09.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKARand The Honourable Mr.JUSTICE G.M.AKBAR ALI Tax Case (A) Nos.330, 333, 509, 510, 511, 512, 516, 529, 583 of2013,89, 107, 272, 373, 422, 511, 488 of 2014 and 1011 to 1017 of 2010& connected M.Ps. COMMISSIONER OF INCOME-TAXCOIMBATORE..... APPELLANT IN ALL TAX CASES. . Vs. M/S.KIKANI EXPORTS P. LTD.,104, WEST PERIASAMY ROAD,R S PURAM, COIMBATORE - 641 002. ... RESPONDENT IN TC.330/13. M/S ASSOCIATED AUTOTEX ANCILIARIES P LTD 13/20 SITRA KALAPATTY ROAD COIMBATORE-641 014 ..Respondent in TCA 333/2013 M/S REVATHY EQUIPMENT LTD, POLLACHI ROAD MALUMICHAMPATTY POST COIMBATORE 641 021 ..Respondent in TCA 509/2013 M/S COIMBATORE ANAMALLAIS AGENCIES P LTD 172 DR. RAJENDRA PRASAD RD COIMBAORE ..Respondent in TCA 510/2013 M/S VETAL TEXTILES AND ELECTRONICS P LTD, NO.1 INDUSTRIAL ESTATE CIVIL AERODRAOME POST COIMBATORE 641 018 ..Respondent in TCA 511/2013 M/S G.V.D TEXTILES PVT LTD 13/14 AVINASHI RD CIVIL AERODROME POST COIMBATORE 641 002 ..Respondent in TCA 512/2013 M/S RAJAVE TEXTILES P LTD RUKMANI NAGAR RAMANTHAPURAM COIMBATORE 641 045 ..Respondent in TCA 516/2013SHRI.M.R. RAMANUJAM NO. 9 SIVA NAGAR UPPILIPALAYAM COIMBATORE 641 045 ..Respondent in TCA 529/2013M/S LAKSHMI RING TRAVELLERS CBE LTD, 34-A, KAMARAJ ROAD, COIMBATORE- 641 018. ..Respondent in TCA 583/2013M/S MAHAVEER SAREES P LTD NO. 9/8 CROSS CUT RD COIMBATORE 641 012 ..Respondent in TCA 89/2014SHRI C.CHANDRAMOHAN NO.7 COTTON MILL ST P.N.RD TIRUPUR-2 ..Respondent in TCA 107/2014MR.K.MOHAMED HYDER 69 E.M.BALASUBRAMANIAN STREET,THIRUNAGAR COLONY, ERODE - 638003....RESPONDENT IN TC(A) 272/2014M/S.RSM AUTOKAST LTD.,603, C BLOCK, PIONEER COMPLEX,1075, AVINASI ROAD,COIMBATORE-641018....RESPONDENT IN TC(A) 373/2014M/S.SUPER SPINNING MILLS LTD.,737, GREEN FIELDS, PULIAKULAM ROAD,COIMBATORE-641045....RESPONDENT IN TC(A) 422/2014 M/S.RSM AUTOKAST LTD.,603, C BLOCK, PIONEER COMPLEX,1075, AVINASI ROAD,COIMBATORE-641018....RESPONDENT IN TC(A) 488/2014M/S.K.K.S.LEATHER PROCESSORS P LTD.,15, E.M.BALASUBRAMANIAN ROAD,THIRU NAGAR, ERODE-638003....RESPONDENT IN TC(A)NOS.1011/2010 1012/2010M/S.KKSK TRAINING CO.P LTD.,15 E.M.BALASUBRAMANIAN STREETERODE - 638003....RESPONDENT IN TC(A)NOS.1013, 1014/2010 https://hcservices.ecourts.gov.in/hcservices/ M/S.KK SKHADER MOHIDEEN SAHIB & SONS15 E.M.BALASUBRAMANIAN STREETERODE - 638003....RESPONDENT IN TC(A)NOS.1015 TO 1017/2010 Prayer T.C.(A) 330/2013: APPEAL under Section 260A of the Income Tax Act against theorder dated 19th November, 2012 made in I.T.A.No.1671/Mds/2012on the file of the Income Tax Appellate Tribunal "C" Bench,Chennai for the assessment year 2005-06, against the order ofthe Commissioner of Income Tax, [Appeals] - 1, Coimbatore dated11.6.2012 in PA/GIR -AABCK4784H, for the Assessment year 2005-06. Prayer T.C.(A) 333/2013: Appeal under Section 260 A of the Income tax against theorder dated 19th November 2012 made in ITA No.1670/Mds/2012, forthe Assessment Year 2004-05 on the file of the Income TaxAppellate Tribunal 'C' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated11.6.2012, P.A.N/G.I.R.-AACCA 2278 B, for the Assessment year2004-05. Prayer TC(A) 509/2013: Appeal under Section 260 A of the Income tax against theorder dated 1st March 2013 made in ITA No.2188/Mds/2012, for theAssessment Year 2004-05 on the file of the Income Tax AppellateTribunal 'C' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated7.9.2012,in PAN No.AABCR 0624 D, for the Assessment year 2004-05. Prayer TC (A) No.510/2013: Appeal under Section 260 A of the Income tax against theorder dated 19th November 2012 made in ITA No.1670/Mds/2012, forthe Assessment Year 2004-05 on the file of the Income TaxAppellate Tribunal 'C' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated11.6.2012, P.A.N/G.I.R.-AACCA 2278 B, for the Assessment year2004-05. Prayer TC(A) 509/2013: Appeal under Section 260 A of the Income tax against theorder dated 1st March 2013 made in ITA No.2188/Mds/2012, for theAssessment Year 2004-05 on the file of the Income Tax AppellateTribunal 'C' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated7.9.2012,in PAN No.AABCR 0624 D, for the Assessment year 2004-05. Prayer TC (A) No.510/2013: Appeal under Section 260 A of the Income tax against theorder dated 19th February 2013 made in ITA No.2162/Mds/2012, forthe Assessment Year 2004-05 on the file of the Income TaxAppellate Tribunal 'A' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated10.9.2012, in PAN No.-AABCV 2462 L, for the Assessment year2004-05. prayer TC(A) No.511/2013: Appeal under Section 260 A of the Income tax against theorder dated 13th February 2013 made in ITA No.1691/Mds/2012, forthe Assessment Year 2004-05 on the file of the Income TaxAppellate Tribunal 'D' Bench, Chennai against the order of theCommissioner of Income Tax (Appeals)-I Coimbatore dated13.06.2012, PAN, , for the Assessment year 2004-2005. TC(A)512/2013:- Appeal under Section 260 A of the Income Taxagainst the order dated 1st March 2013 in I.T.A.No.2078/Mds/2012on the file of the Income Tax Appellate Tribunal 'B' Bench,Chennai, against the order of the Commissioner of Income Tax(Appeals)-I Coimbatore dated 12.09.2012 PAN.AABCG24414 for theAssessment year 2004-2005; T.C.A.516/2013:- under Section 260 A of the Income Taxagainst the order dated 12th February 2013 for the Assessmentyear 2004-2005 in in ITA No.1771/Mds/ 2012 on the file of theIncome Tax Appellate Tribunal 'B' Bench, Chennai, against theorder of the Commissioner of Income Tax (Appeals)-I Coimbatoreorder dt. 5.7.2012, PAN for Assessment year 2004-2005. TC(A) 529/2013: Appeal under Section 260 A of the Income Taxagainst the order dated 24th April 2012 for the Assessment year2005-2006 in I.T.A.NO.1905/Mds/ 2011, on the file of the IncomeTax appellate Tribunal (C) Bench, Chennai against the order ofthe Commissioner of Income Tax(Appeals)-I Coimbatore orderdated.21.09.2011 PAN. ABUPR0 055D for Assessment year 2004-05; TC(A)583/2013: Prayer Appeal under Section 260 of the IncomeTax against the order dated 7th March 2013 for the Assessmentyear 2004-05 in I.T.A.No.1748/Mds/2012 on the file of the IncomeTax Appellate Tribunal (C) Bench, Chennai against the order ofthe Commissioner of Income Tax (Appeals)-I, Coimbatoredt.13.07.2012 PAN for the Assessment year 2004-05. TC(A)89/2014: Appeal under Section 260A of the Income Taxagainst the order dated 22nd January 2013 in for the Assessmentyear 2004-05 I.T.A.No.1658/Mds/2012 on the file of the IncomeTax Appellate Tribunal 'B' Bench, Chennai, against the order ofthe Commissioner of Income Tax (Appeals)-I, Coimbatore dt.13.06.2012 PAN for the Assessment year 2004-05; TC(A) 107/2014 Appeal under section 260 A of the Incoem Taxagainst the order dated 24th January 2013 for the Assessmentyear 2006-2007 in I.T.A.No.1939/Mds/2012 and 1940/Mds/2012 onthe file of Income Tax Appellate Tribunal 'C' Bench Chennai,against the order of the Commissioner of Income TAx (Appeals)-IICoimbatore, date 27.7.2012, PAN for the Assessmentyear 2006-07; TC(A)89/2014: Appeal under Section 260A of the Income Taxagainst the order dated 22nd January 2013 in for the Assessmentyear 2004-05 I.T.A.No.1658/Mds/2012 on the file of the IncomeTax Appellate Tribunal 'B' Bench, Chennai, against the order ofthe Commissioner of Income Tax (Appeals)-I, Coimbatore dt.13.06.2012 PAN for the Assessment year 2004-05; TC(A) 107/2014 Appeal under section 260 A of the Incoem Taxagainst the order dated 24th January 2013 for the Assessmentyear 2006-2007 in I.T.A.No.1939/Mds/2012 and 1940/Mds/2012 onthe file of Income Tax Appellate Tribunal 'C' Bench Chennai,against the order of the Commissioner of Income TAx (Appeals)-IICoimbatore, date 27.7.2012, PAN for the Assessmentyear 2006-07; TC(A)272/2014: Appeal under section 260 A of the Income Taxagainst the order dated 20th December 2013 for the assessmentyear 2004-05 in T.I.A.No.1868/Mds/2012 on the file of Income TaxAppellate Tribunal 'D' Bench, Chennai, against the order of thecommissioner of Income Tax (Appeals)-1 Coimbatore dt.18.09.2012, for the Assessment year 2004-05 PAN ALDPK78626 forAssessment year 2004-05; https://hcservices.ecourts.gov.in/hcservices/ TC(A) 373/2014: Appeal under Section 260 A of the TC(A)373/2014Income Tax against the order dated 24th October 2013 for theAssessment year 2005-2006 in I.T.A.No.1643/Mds/ 2013 on the fileof Income Tax Appellate Tribunal 'C' Bench, Chennai against theorder of the Commissioner of Income Tax (Appeals)-I, Coimbatore,dated 15.05.2013) PAN, , For the Assessment year 2005-06. TC(A)422/2014, prayer Appeal under Section 260 A of the Income tax against the orderdated 8th January 2014 for the Assessment Year 2007-2008 inI.T.A.No.173/Mds/2013 on the file of the Income Tax AppellateTribunal 'C' Bench, Chennai against the order of thecommissioner of Income Tax(Appeals)-1 Coimbatore dated27.11.2012 PAN AADC.067 2G, for the Assessment Year 2007-08. Appeal under Section 260 A of the Income Tax against the orderdated 28th January 2014 for the Assessment Year 2004-05 inI.T.A.No.1624/Mds/2013 on the file of the Income Tax AppellateTribunal 'C' Bench Chennai. against order of the Commissionerof Income Tax (Appeals)-1 Coimbatore dated 06.05.2013PAN.No.AABCR4344J for the Assessment Year 2004-05. TC(A)1011/2010: Appeal under Section 260 A of the Income Tax against the orderdated 20th November 2009 in I.T.A.No.826, and 827/Mds/2009 forthe Assessment Year 2003-04 & 2005-06 on the file of the IncomeTax Appellate Tribunal'D' Bench, Chennai against the order ofthe Commissioner of Income Tax(Appeals)I, Coimbatore dated18.3.2009 in PAN.No.AABCK5735 A, for the Assessment Year 2003-04& 2005-06. Appeal under Section 260 A of the Income Tax against the Orderdated 20.11.2009 in I.T.A.No.826 and 827/Mds/2009 for theAssessment Year 2003-2004 & 2005-06 on the file of Income TaxAppellant Tribunal'D' Bench, Chennai against the order of theCommissioner of Income Tax(Appeals)-1, Coimbatore dated18.3.2009 in PAN.No. for the Assessment Year 2003-04 &2005-06 Appeal under Section 260 A of the Income Tax against the Orderdated 18.03.2009 in I.T.A.No.826 to 836/Mds/2009 for theAssessment Year 2003-2004 & 2005-06 on the file of Income Taxhttps://hcservices.ecourts.gov.in/hcservices/ Appellant Tribunal'D' Bench, Chennai against the order of theCommissioner of Income Tax(Appeals)-1, Coimbatore dated18.3.2009 in PAN.No. for the Assessment Year 2003-04 &2005-06. Appeal under Section 260A of the Income Tax against orderdated 18.3.2009 in I.T.A.No.826 to 836/Mds/2009 for theAssessment Year 2003-04 and 2005-06 on the file of the IncomeTax Appellant Tribunal 'D' Bench, Chennai against the order ofthe Commissioner of Income Tax (Appeals)-I, Coimbatore PANAABCK5734B for the Assessment year 2003-04 and 2005-06. Appeal under Section 260 A of the Income Tax against the Orderdated 18.03.2009 in I.T.A.No.826 to 836/Mds/2009 for theAssessment Year 2003-2004 & 2005-06 on the file of Income Taxhttps://hcservices.ecourts.gov.in/hcservices/ Appellant Tribunal'D' Bench, Chennai against the order of theCommissioner of Income Tax(Appeals)-1, Coimbatore dated18.3.2009 in PAN.No. for the Assessment Year 2003-04 &2005-06. Appeal under Section 260A of the Income Tax against orderdated 18.3.2009 in I.T.A.No.826 to 836/Mds/2009 for theAssessment Year 2003-04 and 2005-06 on the file of the IncomeTax Appellant Tribunal 'D' Bench, Chennai against the order ofthe Commissioner of Income Tax (Appeals)-I, Coimbatore PANAABCK5734B for the Assessment year 2003-04 and 2005-06. Appeal under Section 260A of the Income Tax against orderdated 20.11.2009 in I.T.A.No.826 to 829 and 832 to 36/Mds/2009,for the Assessment Year 2001-02, 2002-03, 2003-04 & 2004-05 onthe file of the Income Tax Appellate Tribunal 'D' Bench ofChennai against the order of the Commissioner of Income Tax(Appeals)-I, Coimbatore, PAN AAefk6858Q for the Assessment Year2001-02, 2002-03, 2003-04 and 2004-05. Appeal under Section 260A of the Income Tax against order20.11.2009 in I.T.A.No.832 to 836/Mds/2009 for the AssessmentYear 2003-04 and 2005-06 on the file of the Income Tax AppellantTribunal 'D' Bench, Chennai, against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated19.3.2009 PAN for the Assessment Year 2001-02, 2002-03, 2003-04 and 2004-05. Appeal under Section 260A of the Income Tax against orderdated 20.11.2009 I.T.A.No.832 to 836/Mds/2009 for the AssessmentYear 2003-04 and 2005-06 on the file of the Income Tax AppellantTribunal 'D' Bench Chennai against the order of the Commissionerof Income Tax (Appeals)-I, Coimbatore PAN for theAssessment year 2001-02, 2002-03, 2003-04 and 2004-05. For Appellant in the above T.C.(A)s : Mr.T.R.Senthil Kumar Mr.M.Swaminathan Mr.K.Suresh Kumar Standing Counsel for Income Tax For Respondent in T.C.(A)Nos.330, 333, 529 of 2013, 488 and 373 of 2014 : Mr.S.SridharFor Respondent in T.C.(A)No.509/13 : Dr.Anita Sumanth For Respondent in T.C.(A)No.510/13 : Mr.Karthik Raja For Respondent in T.C.(A)Nos.511/13,272/14, 1011 to 1017 of 2010 : Mr.R.Vijayaraghavan & Mr.Venkat Narayanan For Respondent in T.C.(A)No.529/13 : Mr.J.Balachander For Respondent in T.C.(A)No.422/14 : Mr.K.Ravi This batch of Tax Case (Appeals) are filed by the Revenuechallenging the orders of the Income Tax Appellate Tribunal onthe ground that the assesees in the above Tax Case (Appeals)have not exercised their option to claim depreciation underSection 32 of the Income Tax Act in the manner prescribed undersecond proviso to Rule 5(1A) of the Income Tax Rules beforefiling their return of income. 2. Since the issue involved in all the above Tax Case(Appeals) are one and the same, common order is passed in theabove matters. 3. The brief facts common to all the above Tax Case(Appeals) are as follows: The respondent/ assessee in each of the cases, which arecompanies, have installed wind electric generator and claimeddepreciation at the rate prescribed under Rule 5(1) Appendix -Iof the Income Tax Rules. The Assessing Officer was of the viewthat the assessee in each of the cases should exercise theiroption in terms of second proviso to Rule 5(1A) prior to thefiling of return, which they failed to do and therefore theywould not be entitled to depreciation in terms of Rule 5(1)Appendix - I, but only under Rule 5(1A) Appendix - IA of theIncome Tax Rules. Rule 5(1A) second proviso reads as follows:"Provided further that the undertaking specified inclause (i) of sub-section (1) of section 32 of theAct may, instead of the depreciation specified inhttps://hcservices.ecourts.gov.in/hcservices/ Appendix IA, at its option, be allowed depreciationunder sub-rule (1) read with Appendix I, if suchoption is exercised before the due date forfurnishing the return of income under sub-section (f)of section 139 of the Act" 4. Aggrieved by the orders of the Assessing Officer, theassessees went on appeal before the Commissioner of Income Tax(Appeals). In some of the cases, it appears, the Commissionerof Income Tax (Appeals) following the decision of the Tribunalin the case of M/s.K.K.S.K.Leather Processors (P) Ltd. V. TheIncome-tax Officer I.T.A.No.826 and 827 of 2009 dated 20.11.2009allowed the appeals and in some cases, the Commissioner ofIncome Tax (Appeals) dismissed the appeals. 5. Aggrieved by the orders of the Commissioner of Income Tax(Appeals), both the Revenue, as against the granting of reliefto the assessees, as well as the assessees, as against thedismissal of their appeals, filed appeals before the Income TaxAppellate Tribunal. 6. The Income Tax Appellate Tribunal, uniformly applying theprinciple laid down in the case of M/s.K.K.S.K.LeatherProcessors (P) Ltd. V. The Income-tax Officer I.T.A.No.826 and827 of 2009 dated 20.11.2009, (subject matter of appeal in T.C.(A)Nos.1011 and 1012 of 2014) allowed the appeals filed by theassessees and rejected the appeals filed by the Revenue holdingthat so long as the option of depreciation is exercised by theassessees in their return of income along with the audit reportand books of accounts, it is within the time limit prescribedunder second proviso to Rule 5(1A) of the Income Tax Rules andthe benefit will flow therefrom. 7. As against the orders of the Income Tax AppellateTribunal, the Revenue is before this Court by filing the aboveTax Case (Appeals). 8. Learned Standing Counsel appearing for the Revenuesubmits that as per the provisions of Section 32(1)(i) of theIncome Tax Act, the undertakings engaged in thegeneration/generation and distribution of power, the rate ofdepreciation on machineries engaged for such purposes are to beallowed on such percentage on the actual cost thereof as may beprescribed. The prescribed rates under Rule 5(1A) of the IncomeTax Rules are set out in Appendix IA Schedule. However, thesecond proviso to Rule 5(1A) provides that the undertaking maybe permitted to avail depreciation at the normal rates undersub-Rule (1) read with Appendix I, at the option of theassessee, provided such option has to be exercised before thedue date for furnishing the return of income under Section 139https://hcservices.ecourts.gov.in/hcservices/ (1) of the Income Tax Act. He further submits that the Ruleprescribes that the assessee should have to exercise theiroption before furnishing the return of income. Since theassessees did not exercise their option before furnishing thereturn of income, they are not eligible to claim depreciation asper Rule 5(1) Appendix I and they are eligible to claim onlyunder Rule 5(1A) Appendix 1A. He submits that when statuteprescribes that the assessee has to exercise their option"before" the due date, it means, "only before and not the duedate or after the due date". Hence, when the intentment isclear in the provision, it should not be brushed aside to conferbenefits. The learned counsel appearing for the Revenue pleadedthat the Tribunal is not correct in granting the benefit to theassessees ignoring the language of second proviso to Rule 5(1A)of the Income Tax Rules. 9. Per contra, learned counsels appearing for the assesseessubmitted that the return of income filed on the due date offiling of returns of income as per Section 139(1) of the IncomeTax Act along with the audit reports showing the claim of theassessee regarding depreciation has to be treated as an optionexercised by the assessee in terms of second proviso to Rule 5(1A) of the Income Tax Act. They further submit that there isno prescribed form to exercise the option. The Rule is silentabout the procedure to be followed. The claim made by theassessees for depreciation in the return of income satisfies therequirement of second proviso to Rule 5(1A) of the Income TaxRules. Hence, the Tribunal is right in granting the benefit tothe assesee. 10.HeardMr.T.R.SenthilKumar,Mr.M.Swaminathan,Mr.K.Suresh Kumar, learned Standing Counsel appearing for theRevenue and Mr.S.Sridhar, Mrs.(Dr.) Anita Sumanth, Mr.KarthikRaja,Mr.R.Vijayaraghavan,Mr.R.VenkatNarayanan,Mr.J.Balachander and Mr.K.Ravi, learned counsel appearing forthe assessees and perused the materials placed before this Court. 11. Substantial questions of law in different manner wereraised by the Revenue on this issue and some of them wereadmitted by this Court in few cases. We find that the issue iscommon in all these cases. The only relevant substantialquestion of law that arises for consideration now in the aboveTax Case (Appeals) is as follows:"Whether the return of income filed by theassessee under Section 139(1) of the Income Tax Actclaiming depreciation can be treated as exercisingof option before the due date as prescribed in thesecond proviso to Rule 5(1A) of the Income TaxRules." https://hcservices.ecourts.gov.in/hcservices/ 12. Before going into the merits of the case, it isappropriate to extract the relevant provisions, which are asfollows: Section 139(1) provides filing of return of income:-"139. Return of income.--(1) Every person, if histotal income or the total income of any other personin respect of which he is assessable under this Actduring the previous year exceeded the maximum amountwhich is not chargeable to income-tax, shall, on orbefore the due date, furnish a return of his income orthe income of such other person during the previousyear, in the prescribed form and verified in theprescribed manner and setting forth such otherparticulars as may be prescribed." 13. Section 32 of the Income Tax Act deals withdepreciation, which reads as follows:“32.Depreciation.--(1)Inrespectofdepreciation of buildings, machinery, plant orfurniture owned wholly or partly by the assessee andused for the purposes of the business or profession,the following deductions shall, subject to theprovisions of section 34, be allowed-- (i) in the case of assets of an undertakingengaged in generation or generation and distributionof power, such percentage on the actual cost thereofto the assessee as may be prescribed. (ii) in the case of any block of assets, suchpercentage on the written down value thereof as may beprescribed: 14. Rule 5 of the Income Tax Rules deals with depreciation,which read as follows: “ 5. Depreciation (1) Subject to the provisionsof sub-rule (2), the allowance under clause (ii) ofsubsection (I) of section 32 in respect ofdepreciation of any block of assets shall becalculated at the percentages specified in the secondcolumn of the Table in Appendix I to these rules onthe written down value of such block of assets as areused for the purposes of the business or professionof the assessee at any time during the previous year.(1A) The allowance under clause (i) of sub-section(1) of section 32 of the Act in respect ofdepreciation of assets acquired on or after 1st dayof April, 1997 shall be calculated at the percentagespecified in the second column of the Table inAppendix IA of these rules on the actual cost thereof https://hcservices.ecourts.gov.in/hcservices/ https://hcservices.ecourts.gov.in/hcservices/ to the assessee as are used for the purposes of thebusiness of the assessee at any time during theprevious year :Provided that the aggregate depreciation allowed inrespect of any asset for different assessment yearsshall not exceed the actual cost of the said asset :Provided further that the undertaking specified inclause (i) of sub-section (1) of section 32 of theAct may, instead of the depreciation specified inAppendix IA, at its option, be allowed depreciationunder sub-rule (1) read with Appendix I, if suchoption is exercised before the due date forfurnishing the return of income under sub-section (f)of section 139 of the Act, (a) for the assessment year 1998-99, in the case ofan undertaking which began to generate power prior to1st day of April, 1997; and (b) for the assessment year relevant to the previousyear in which it begins to generate power, in case ofany other undertaking :Provided also that any such option once exercisedshall be final and shall apply to all the subsequentassessment years.”(emphasis supplied) 15. We notice that depreciation is claimed in differentmethods and it is set out in the form. Form ITR - 6 containsspecific schedules for depreciation. Schedule DOA provides forfiling returns claiming depreciation on other assets andSchedule DEP is for summary of depreciation on assets. Schedule DOADepreciation on other assets (Other than assets on which full capitalexpenditure is allowable as deduction) DEPRECI1Block of assets Building FurnituIntangShips ATIONre andibleONfittingassetsOTHERs ASSETS 2Rate (%) 5 10 100 10 25 20 (i)(ii)(iii) (iv) (v)(vi) 3 Written down value on the first day of previous year 4 Additions for a period of 180 days or more in the previous year 5 Consideration or other realization during theprevious year out of 3 or 4 previous year out of 3 or 4 6 Amount on which depreciation at full rate to be allowed (3 + 4 -5) (enter 0, if result is negative) 7 Additions for a period of less than 180 days in theprevious year previous year 8 Consideration or other realizations during the yearout of 7 out of 7 9 Amount on which depreciation at half rate to be allowed (7-8) (enter 0, if result is negative) 10 Depreciation on 6 at full rate 11 Depreciation on 9 at half rate 12 Additional depreciation, if any, on 4 13 Additional depreciation, if any, on 7 14 Total depreciation (10+11+12+13) 15 Expenditure incurred in connection with transfer ofasset/ assets 16 Capital gains/ loss under section 50* (5 + 8 -3-4 -7 -15) (enter negative only if block ceasesto exist) 17 Written down value on the last day of previous year*(6+ 9 -14) (enter 0 if result is negative) Schedule DEP Schedule DEP Summary of depreciation on assets(Other than on assets on which fullcapital expenditure is allowable asdeduction under any other section) 16. Short of repetition, the issue that arise forconsideration is for the purpose of claiming depreciation,whether the assessee should exercise an option before the duedate in the manner other than by filing return of income interms of sub-section (1) of Section 139 of the Income Tax Act.According to the Revenue, each one of the assessee should file aseparate application or a letter indicating their intention toavail depreciation in terms of Section 32 read with Rule 5(1) ofthe Income Tax Rules and since the assessee in each case has notexercised such an option before the due date for furnishing the https://hcservices.ecourts.gov.in/hcservices/ return of income, they will not be entitled to the benefit ofRule 5(1) Appendix I, but depreciation only under Rule 5(1A)Appendix 1A. https://hcservices.ecourts.gov.in/hcservices/ return of income, they will not be entitled to the benefit ofRule 5(1) Appendix I, but depreciation only under Rule 5(1A)Appendix 1A. 17. It is relevant to note that while filing the return ofincome, a procedure has been prescribed for claimingdepreciation as pointed out above. The assessee has to set outthe manner in which depreciation is claimed for the assessmentyears in question. All the details required for claimingdepreciation under various heads are set out thereunder. Rule 5of the Income Tax Rules is in relation to determination ofprofits and gains of business or profession and depreciationforms part of such determination. Therefore, there cannot be anoption exercised in isolation (i.e.,) depreciation with regardto determination of profits and gains of business or professionin the manner other than the procedure prescribed under Section139(1) of the Income Tax Act. The assessee is liable to filethe return of income and claim depreciation in accordance withthe various provisions and state in exactitude what he claimsunder different heads of depreciation. Schedules DOA and DEP inForm ITR – 6 contain the break up of various heads under whichdepreciation can be claimed. All that the second proviso toRule 5(1A) of the Income Tax Rules states is that the assesseehas to exercise the option before the due date for furnishingthe return of income. In otherwords, if the option is exercisedafter furnishing of the return of income under sub-section (1)of Section 139, it is of no avail. This assumes importance, asno procedure is prescribed for exercising the option. Form ITR-6 gives the methodology on which depreciation can be claimed andtherefore, the statue did not provide for any other method toexercise the option except through filing of return. Therefore,to read something more into the second proviso to Rule 5(1A),that an option should be exercised separately would make thereturns filed meaningless. 18. Our view as above is fortified by the reasoning in thedecision reported in 229 ITR 772 ( CIT Vs. Vijaya HirasaKalamkar (HUF), the Bombay High Court while dealing with theword "before", held as follows:"Having regard to the object of the Ordinanceand the words used in section 3(1), it seems to usthat the declaration received on January 1,1976,was well within time. In the whole context, theword “before” will have to be construed as “up to”or as “not after”. There are various pro-visions inthe Income-tax Act, wherein the expression “before”has been used (sections 139(1)(a)(i), section 139(1)(b) ; section 184 ; section 212). The expressionhas always been taken to mean “up to”. Section 3specified the period before which a declaration inrespect of income has to be made for the purposes https://hcservices.ecourts.gov.in/hcservices/ of getting a benefit under the Ordinance. Itprovides a period of limitation within whichcertain benefits are available. In case ofambiguity the construction which preserves theright to the one which defeats it, has to bepreferred. After all, this is a taxing statutewhich in case of doubt should be interpreted infavour of a taxpayer. Had the legis-lativeintention been to make December 31, 1975, the lastday for making the declaration, it could haveclearly said so in the proviso. The very fact thatthe date January 1, 1976, is in terms mentionedindicates that the time limit was up to that date.That in a given case the word “before”in thecontext of the time can be construed as “not after”is well settled.(R v. Arkwright, [1848] 12 QB 960).This court in the case of PremchandNathmal Kothariv. Kisanlal Bachharaj Vyas, AIR 1976 Bom 82, hadread the word “before” in section 3 of theMaharashtra(VidarbhaRegion)Agricul-turalDebtors’ Relief Act, 1969, as “up to”. 19. The Tribunal in the case of M/s.K.K.S.K.LeatherProcessors (P) Ltd. V. The Income-tax Officer I.T.A.No.826 and827 of 2009 dated 20.11.2009 (subject matter of appeal in T.C.(A)Nos.1011 and 1012 of 2014) following the decision of theBombay High Court reported in 229 ITR 772 ( CIT Vs. VijayaHirasa Kalamkar (HUF), held as follows: "From the above mentioned decisions, it is clearthat the word 'before' would have to be construed asupto or not after. The Hon'ble Bombay High Court hasspecifically referred to provisions of Section 139 ofthe Act while explaining the expression of the word'before'. Therefore, we hold that the optionexercised by the assessee on due date by way of makingclaims of depreciation in the return of income alongwith audit report and books of account wherein theassessee has adopted the rate as claimed is withintime limit prescribed under second proviso to Rule 5(1A) of Income-tax Rules. Even otherwise as held bythe Bombay High Court in the case of CIT vs. ShivanandElectronics (supra) the provision can be understoodwith reference to the intent of legislature and notupon the language in which the intent is clothed. Ifthe object of enactment will be defeated by holding itas directory it should be construed as mandatory.Whereas if by holding it mandatory, serious generalinconvenience will be created to innocent personswithout very much furthering the object of theenactment, it should be construed as directory. Thelimit provided under the second proviso to Rule 5(1A) https://hcservices.ecourts.gov.in/hcservices/ is only to facilitate the Assessing Officer indischarging its obligations and duties as per theprovisions of sub-section (1) of section 32 of theIncome-tax Act. Therefore the said requirement cannotbe considered as mandatory. Moreover the AssessingOfficer cannot act on the option exercised before thereturn is filed and therefore no fruitful purpose orobject can be achieved by mandating exercise of optionprior to filing of return on due date." 20. A reading of the above-said decision of the Bombay HighCourt makes it clear that if the assessee exercised the optionin terms of second proviso to Rule 5(1A) of the Income Tax Rulesat the time of furnishing of return of income, it will sufficeand no separate letter or request or intimation with regard toof exercise of option is required. Since the returns are filedin accordance with Section 139(1) of the Income Tax Act and theform prescribed therein make a provision for exercising anoption in respect of the claim of depreciation, no separateprocedure is required, as contended by the Department. We arein agreement with the reasoning of the Tribunal. 21. Accordingly, the question of law is answered in favourof the assessee and against the Revenue. 22. In so far as T.C.(A)No.509 of 2013 is concerned, ascontended by the learned counsel appearing for the assessee, onthe quantum appeal, the Commissioner of Income Tax (Appeals) aswell as the Tribunal held in favour of the assessee and there isno appeal on that issue before this Court. Therefore, thequestion of law raised in this appeal becomes academic, in anyevent, not required to be answered. 23. In T.C.(A)Nos.1012, 1014 of 2010 and 272 of 2014, theassessee therein filed the return of income belatedly for thesubsequent years and claimed the benefit of depreciation. Theassessee in these cases filed return of income for the previousassessment year claiming depreciation within the time inaccordance with Section 32(1) of the Income Tax Act and theRules and that will enure to the benefit of the assessee for thesubsequent years in view of the third proviso to Rule 5(1A) ofthe Income Tax Rules, which reads as follows: 23. In T.C.(A)Nos.1012, 1014 of 2010 and 272 of 2014, theassessee therein filed the return of income belatedly for thesubsequent years and claimed the benefit of depreciation. Theassessee in these cases filed return of income for the previousassessment year claiming depreciation within the time inaccordance with Section 32(1) of the Income Tax Act and theRules and that will enure to the benefit of the assessee for thesubsequent years in view of the third proviso to Rule 5(1A) ofthe Income Tax Rules, which reads as follows: "5. Depreciation (1) Subject to the provisions ofsub-rule (2), the allowance under clause (ii) ofsubsection (I) of section 32 in respect ofdepreciation of any block of assets shall becalculated at the percentages specified in the secondcolumn of the Table in Appendix I to these rules onthe written down value of such block of assets as areused for the purposes of the business or profession https://hcservices.ecourts.gov.in/hcservices/ of the assessee at any time during the previous year......................Provided also that any such option once exercisedshall be final and shall apply to all the subsequentassessment years.”24. As the third proviso clearly states that the option onceexercised will continue to all the subsequent years, theassessee is not required to exercise such option each and everyyear separately. 25. In view of the foregoing discussions, we pass thefollowing order: (i) We answer the substantial question of law infavour of the assessee and against the Revenue;(ii) Consequently, the order of the Tribunal(ii) Consequently, the order of the Tribunalstands confirmed. In the result, all the above Tax Case (Appeals) aredismissed. No costs. Consequently, connected M.P.s are alsodismissed. Sd/- Asst. Registrar[cs.iv]Dt/-15/10/2014.Dt/-15/10/2014. /true copy/ sl Sub Asst. Registrar. To 1. The Income Tax Appellate Tribunal "C" Bench, Chennai. 2. The Income Tax Appellate Tribunal "A" Bench, Chennai. 3. The Income Tax Appellate Tribunal "B" Bench, Chennai. 4. The Income Tax Appellate Tribunal "D" Bench, Chennai. 5. The Commissioner of Income Tax [Appeal] I, Coimbatore. 6. The Commissioner of Income Tax [Appeal] II, Coimbatore. 5 CCs To Mr.S.Sridhar, Advocate SR NO.43070 1 CC To Mr.R.Vijayaraghavan, Advocate SR NO.43073 3 CCs To Mr.T.R.Senthil Kumar, Advocate SR NO.42615 1 CC To Mr.J.Balachander, Advocate SR NO.42681 1 CC To Mr.K.S.Karthik Raja, Advocate SR NO.42940 1 CC To Dr.Anitha Sumanth, Advocate SR NO.42644 1 CC To Mr.M.Swaminathan, Advocate SR NO.42694 kki[co]gp/29.10 Tax Case (A) Nos.330, 333, 509, 510, 511, 512, 516, 529, 583 of 2013,89, 107, 272, 373, 422, 511, 488 of 2014 and 1011 to 1017 of 2010 & connected M.Ps.