| The Tax Publishers2020 TaxPub(DT) 1001 (Jp-Trib) INCOME TAX ACT, 1961
Section 154 Section 32(1)(iia)
Since the issue was debatable as to whether the assessee was manufacturing or not and for purpose firstly it should be decided that whether mining of marble block is manufacturing or not the issue which had been rectified by the AO under section 154 was therefore, highly debatable and it was the settled legal preposition of law that a debatable issue cannot be rectified under section 154.
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Rectification - Debatable issue - Assessee whether manufacturer or not -
Assessee was engaged in the business of Mine Contractor, manufacturing and trading of Marble Block. Assessment was completed under section 143(3). However thereafter the AO had issued the notice under section 154 on the ground that additional depreciation @20% claimed as per provision of section 32(1)(iia) on addition of plant and machinery, as per decision of Supreme Court in the case of CIT v. Lucky Minerals (P) Ltd. 2001 the business of mining & trading of marble block does not cover under the business of manufacture and production of any article or things, therefore the additional depreciation @20% was not allowable and required to be added in the total income. However, the AO did not feel satisfied with the reply and made disallowance. CIT(A) confirmed the action of the AO.Held: As per present facts of the case the AO disallowed the additional depreciation charged @ 20% on the machinery purchased during the year under section 154. The purchase of the machinery and used in the business was not disputed. The matter was assessed under section 143(3). Since the issue was debatable as to whether the assessee is manufacturing or not and for purpose firstly it should be decided that whether mining of marble block was manufacturing or not. and when the interpretation of manufacturing had not been decided in the case of the assessee, then as to how it can be said that the assessee was not a manufacturer. From the various facts, it was on record of the AO that the issue was debatable and the issue which had been rectified by the under section 154 was highly debatable and it was the settled legal preposition of law that a debatable issue cannot be rectified under section 154. These grounds raised by the assessee were therefore, allowed and the decisions of the lower authorities were thus, quashed on this issue.
Relied:Dy. CIT-6, Kanpur v. JK Cement, Kamla Tower (2016) 45 ITR 50 (Luck) : 2016 TaxPub(DT) 0302 (Luck-Trib), S.R. Industries Ltd. v. ACIT Circle-3(1) Chandigarh in (2016) 156 ITD 125 (Chd) : 2016 TaxPub(DT) 318 (Chd-Trib), Volkart Bros. & Ors. v. ITO (1967) 65 ITR 179 (Bom) : 1967 TaxPub(DT) 0290 (Bom-HC), D.S. Srinivas v. ITO & Anr. (2003) 262 ITR 209 (Karn) : 2003 TaxPub(DT) 1153 (Karn-HC), ITO v. Volkart Bros. (1971) 82 ITR 50 (SC) : 1971 TaxPub(DT) 355 (SC), CIT v. South India Bank (2001) 166 CTR (SC) 216 : (2001) 249 ITR 304 (SC) : 2001 TaxPub(DT) 889 (SC), M.D. Narayan v. Agrl. ITO (1974) 95 ITR 452 (Mys) : 1974 TaxPub(DT) 0240 (Mys-HC), Pr. CIT v. Raigunj Central Co-Operative Bank Ltd. (2017) 98 CCH 78 (Kol-HC) and Harbans Lal Malhotra & Sons (P) Ltd. v. ITO & Anr. (1972) 83 ITR 848 (Kol-HC) : 1972 TaxPub(DT) 168 (Cal-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14 & 2014-15
INCOME TAX ACT, 1961
Section 145(3)
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