Sec. 43(6) & 51 of Income-tax Act, 1961— Depreciation—Quoting a wrong section would not be fatal in making a correct disallowance.

Facts: Crux of assessee’s arguments is that provisions of s. 51 do not apply to the facts of the case and written down value of assets cannot be reduced by the forfeited amount of Rs. 19,81,58,000 since s. 51 applies to the computation of capital gains and not to s. 43(6) and s. 43(6) also does not provide for the adjustment of forfeited advance received from cancellation of sale of capital asset.

Held, that it is the substance which prevails over the form. In this case, the issue is the AO’s action of denying the assessee depreciation on its assets for the value received by it in the form of forfeiture of amount in an earlier agreement for sale of asset. A plain reading of ss. 51 and 43(6) in a harmonious manner, and keeping in mind learned CIT(A)’s finding that assessee has indulged in dubious transaction of claiming forfeiture, it would show that the amount involved has been correctly reduced from the value of assets of the assessee. It is settled law that revenue authorities are not supposed to put on blinkers. It is also settled that quoting a wrong section would not be fatal in making a correct disallowance. The assessee has retained a large amount of receipt under the original agreement partly by way of forfeiture and also received partly by way of subsequent sale of part assets. Hence, there is no reason why assessee’s claim of depreciation to the extent of entire amount of receipt should not be reduced. - DY. CIT V/s SUPREME INDUSTRIES LTD. - [2020] 203 TTJ 988 (ITAT-MUMBAI)