ORDER
Adarsh Kumar Goel, J.
1. The revenue has preferred this appeal under Section 260A of the Income-tax Act, 1961 (for short, 'the Act') against the order of Income-tax Appellate Tribunal, Chennai Bench 'A' passed in I.T.A. No. 120/Mds./99 dated 19-5-2006 for the assessment year 1993-94, proposing to raise following substantial question of law.:
Whether the Hon'ble ITAT is justified in law in holding that depreciation allowed earlier cannot be withdrawn by revoking the provisions of Section 154 of the Income-tax Act, 1961, in the case where asset never existed in possession of the assessee?
2. In the order of assessment, claim of the assessee for depreciation was allowed. Later, it was alleged that depreciation was not allowable as the asset did not exist and on that ground, depreciation had been disallowed in the earlier assessment year. Accordingly, notice under Section 154 of the Act was issued and order of rectification, disallowing the depreciation, was passed. CIT(A) set aside the disallowance on the ground that the same was beyond the scope of Section 154 of the Act. The said view has been upheld by the Tribunal. The Tribunal observed that the business of the assessee was of hiring out the machinery and, depreciation was permissible, as held by the Hon'ble Supreme Court in CIT v. Shaan Finance (P.) Ltd. : [1998] 231 ITR 308 : 97 Taxman 435. It was further observed that the issue of disallowance of depreciation was a debatable issue and thus, could not be covered by scope of rectification in view of law laid down by the Hon'ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros. : [1971] 82 ITR 50.
3. We have heard learned Counsel for the appellant.
4. Only argument raised is that the asset itself did not exist and thus, the claim of the assessee was bogus. This submission cannot be accepted. There is nothing to substantiate this argument. Regular assessment had been done under Section 143(3) of the Act and depreciation was held to be admissible. It has been held that the assessee purchased the asset and leased out the same in the course of its business. Rectification was permissible only if there was error apparent on the face of the record and not something which could be established by long drawn process of reasoning.
5. Learned Counsel for the revenue relies upon Delhi High Court judgment in Addl CIT v. Kanta Behan : [1983] 140 ITR 187 : [1982] 9 Taxman 24.
6. In our view, the said judgment does not apply. In that case, the assessee purchased a cinema building and machinery and claimed deduction for repairs and hiring charges. Subsequently, reassessment proceedings were undertaken and the assessee agreed for withdrawal of deductions towards repairs but pressed the claim for depreciation. While holding that depreciation was allowable, the same was not allowed in the operative part. It was held that the error could be rectified under Section 154 of the Act. Rectification was held to be permissible where there was conflict in the findings and the operative part, which is not the case here.
7. We are, thus, unable to hold that any substantial question of law arises.
8. The appeal is dismissed.