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2026 Supreme(Guj) 1114
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
A.S. SUPEHIA, PRANAV TRIVEDI, JJ.
Commissioner Of Income Tax Gandhinagar – Appellant
Versus
Gujarat State Energy Generation Ltd. – Respondent
R/Tax Appeal No. 1973 Of 2009, R/Tax Appeal No. 1972 Of 2009
Decided On : 09-04-2026
For The Appellant : Ms Maithili D Mehta, With Mr. Karan Sanghani, Senior Standing Counsel
For The Respondent:Mr. B.S.Soparkar, Advocate With Mrs Swati Soparkar
A revised return of income, filed to correct bona fide omissions, effectively supersedes the original return. Where an assessee has initially opted for a depreciation method within the statutory due date, a subsequent change in the computation method within a valid revised return is permissible and constitutes substantial compliance.
Headnote:(A) Income Tax Act, 1961 - Sections 139(1), 139(5) - Income Tax Rules, 1962 - Rule 5(1A) - Revised return of income - Substitution of original return - Permissibility to change method of depreciation calculation from straight-line to written down value in a revised return - Where an initial election for a depreciation method is made before the statutory due date, a subsequent change to the method within a validly filed revised return constitutes substantial compliance with the law. (Paras 6.8, 6.9, 7.3, 9, 16)
(B) Appeals - Scope of statutory interpretation - Procedural provisions regarding the exercise of options for tax computation are to be construed as directory when the taxpayer’s claim is shown to be genuine, bona fide, and based on the discovery of legitimate omissions or erroneous statements in the original filing. (Paras 9, 16)
Facts of the case:
An entity engaged in power generation filed its original return of income within the statutory due date, opting for the straight-line method of depreciation. Subsequently, it filed a revised return incorporating adjustments regarding unconfirmed sales, additional business expenditures, and a change in the depreciation method from straight-line to the written down value method. The revenue contested the validity of the revised return specifically regarding the change in the depreciation methodology.
Findings of Court:
The court held that the revised return was filed based on bona fide discoveries of omissions. Upon acceptance of the revised return, it effectively supersedes the original return for all purposes. Since the taxpayer had initially exercised the option for depreciation before the prescribed due date, a subsequent modification of the computation method within a validly filed revised return is permissible, as the law does not strictly prohibit changing the methodology if the initial eligibility criteria were met.
Issues: Whether an assessee, having filed an original return within the due date, is precluded from opting for a different method of depreciation calculation in a subsequent revised return.
Ratio Decidendi: A revised return filed in compliance with the statute supplants the original return. Because the taxpayer satisfied the requirement of exercising an initial depreciation option within the prescribed due date, the change in computation method in a subsequent revised return is viewed as a substantial compliance. Procedural strictness should not override the right to rectify genuine omissions or errors in the computation of total income.
Result: Appeals dismissed.
| Table of Content |
|---|
| 1. determination of substantial questions of law regarding tax appeal validity and return filings. (Para 1 , 3) |
| 2. factual context of original return filing, revised return submission, and assessment discrepancies. (Para 2) |
| 3. revenue's contention that revised returns cannot override depreciation methods once an initial option is exercised. (Para 4) |
| 4. assessee's defense that a validly filed revised return relates back to the original date of filing. (Para 5) |
| 5. validation of revised returns where discovery of omission or wrong statement is shown to be bona fide. (Para 6) |
| 6. interpretation of rule 5(1a) concerning depreciation methodology and the directory nature of time-bound options. (Para 7 , 8 , 9 , 10) |
| 7. distinction between mandatory exemption provisions in wipro ltd. and machinery provisions for depreciation. (Para 11 , 12 , 13 , 14 , 15) |
| 8. final determination that valid revised returns enable the adoption of favorable depreciation methods. (Para 16 , 17) |
JUDGMENT :
A.S. SUPEHIA, J.
1. By the order dated 20.06.2011, the Coordinate Bench of this Court had admitted Tax Appeal No.1973 of 2009 for answering the following substantial questions of law:
“[A] “Whether the Appellate Tribunal was justified in upholding the revised return as a valid return and in directing the Assessing Officer to allow the assessee’s claim as per the revised return on the basis of the revised claim made under WDV method?”
[B] “Whether the Appellate Tribunal was justified in directing the Assessing Officer to allow claim made by the GEB as the same was found to be incurred by the assessee during the course of business?”
[C] “Whether the Appellate Tribunal was justified in directing the Assessing Officer not to charge interest under Section 234D of the IT Act for A.Y 2002-2003?”
1.1 The proposed substantial question of law [B] was rejected by the Coordinate Bench of this Court. The same is as under:
“[B] Whether the Appellate Tribunal was justified in directing the Assessing Officer to allow claim made by the GEB as the same was found to be incurred by the assessee during the course of business?”
1.2 In Tax Appeal No. 1972 of 2009, by the order of the even date, the tax appeal was admitted for the following substantial question of law:
“Whether the Appellate Tribunal is right in law and on facts in holding that the revised return was a valid return.?”
1.3 Thus, the substantial question of law [A] in Tax Appeal No. 1973 of 2009 will encompass the sole substantial question of law in Tax Appeal No. 1972 of 2009.
BRIEF FACTS
2. The respondent is a Company promoted by Central and State PSUs and is engaged in the business of generation and distribution of power. The Company commenced its business operations during the previous year relevant to the Assessment Year 2002-03 by starting first phase of its project on 01.12.2001. The Company filed its Return of Income on 31.10.2002 declaring total income of Rs.3,29,21,310/-. While computing income from business, it claimed depreciation at Rs.11,51,34,221/- on Straight Line Method (for short “SLM”) basis as per Appendix-IA to Rule 5 of the Income Tax Rules, 1962 (for short “the Rules”). The Company being engaged in the generation of power, is entitled to have an option of claiming depreciation either as per Written Down Value (for short “WDV”) method under Rule 5 of the Rules and Appendix-IA or as per the SLM basis.
2.1 The return of income was processed under Section 143(1) of the Income Tax Act, 1961 (for short “the Act”) and a refund of Rs.11,53,840/- was issued. Subsequently, the Company filed a revised return on 31.03.2003 declaring net loss of Rs.21,65,72,270/- and total income was admitted at Rs.31,52,683/- as per Section 115JB of the Act.
2.2 The revised return was filed for the claims to the extent that in the previous year relevant to the Assessment Year 2002-03, the Gujarat Electricity Board (for short “the GEB”) did not confirm sale of power by the Company to the extent of Rs.2,85,37,373/- out of Bill No
