Recently in a case, it was held that the proceedings initiated u/s 154 by the Assessing Officer was dismissed on the ground that mere change in opinion of the Assessing Officer shall not be the basis of rectification. Any mistake which is apparent from the record in an order passed by the Assessing Officer can be rectified under section 154.

 Facts of the case:

The assessee claimed depreciation on Vapour Absorption Machine at100% for the assessment year 2000-01. It was then allowed by the Assessing Officer. Afterwards, the Assessing Officer found that the same machine which is a energy saving device should be depreciated at 25% instead of 100%. Therefore, under section 154, the Assessing Officer recomputed the depreciation at 25%. Against which the assessee went for an appeal to Commissioner (Appeals). The Commissioner (Appeals) was of view that Vapor Absorption Machine is includible in energy saving device which is eligible for 100% depreciation. However, Commissioner (Appeals) rejected the plea of assessee that the Assessing Officer was not justified in passing an order under section 154.   

On this, cross appeal was made to the Tribunal. The Tribunal was of view that the rate of depreciation charged on the machine is a debatable issue which required examination of materials, details, particulars and application of mind and could not be rectified in the proceedingsinitiated under section 154. Thus, the Tribunal dismissed the appeal of the Revenue.

It was held that:

The plea raised by the revenue was that the vapour absorption machine is part of the centralized air conditioner and shall not be treated as an independent machine. Thus, the depreciation allowed shall be 25% only.

The High Court held that the revenue’s plea can not be accepted. As the Assessing Officer in first instance has allowed 100% depreciation and also the Commissioner (Appeals) was of same view, it is evident that it is just a change of opinion of the Assessing Officer which shall not be entertained.

The subsequent proceeding initiated under section 154 merely stating that the machine is a part of centralized air conditioner is not an enough ground for rectification proceedings. Only mistakes which are apparent from the record can be rectified under section 154. Therefore, decision of Tribunal was upheld and appeal of revenue was dismissed.

Hence, cross appeal filed by the assessee was allowed and the proceedings u/s 154 by merely stating that Vapour Absorption machine was a part of Centralized Air Conditioner and liable for depreciation at 25 per cent was not justified.

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