Commissioner of Income Tax vs J.K. Synthetics Ltd. (No. 1)

This petition pertains to the assessment year 1975-76. Against the assessment order which had been passed, an appeal was filed to the Commissioner of Income Tax (Appeals) by the assessed and thereafter before the Income Tax Tribunal. Before the Income Tax Appellate Tribunal, the assessed, for the first time, sought to claim depreciation at 15% instead of 10% as claimed by him earlier. The Income Tax Appellate Tribunal entertained the said additional ground and remanded the case to the Income Tax Officer for a fresh decision on the question whether the assessed was entitled to depreciation at 15% or not.

Against the aforesaid decision, the Department filed a petition in this court being Income Tax Case No. 36 of 1987 u/s 256(2) of the Income Tax Act. Vide judgment dated July 14, 1987, Commissioner of Income Tax Vs. J.K. Synthetics Ltd., , this court directed the Tribunal to state the case and refer the question of law to this court to the effect whether the Tribunal was right in admitting the additional ground of appeal about the higher rate of depreciation at 15%.

Pursuant to the original order of the Tribunal remanding the case, proceedings were taken and the Commissioner of Income Tax allowed depreciation at 15% on some items of machinery and 10% on the other items. Both the Income Tax Officer as well as the assessed filed appeals to the Tribunal which, vide its order dated November 25, 1986, had allowed depreciation at 15% thereby allowing the assessed appeal and dismissing the Revenue''s appeal. The application u/s 256(1) having been dismissed, the present application u/s 256(2) has been filed.

In view of the fact that this Court has already directed reference to be made with regard to the Tribunal entertaining the additional ground, it is necessary that the present case be kept alive, because if reference in that case is answered in favor of the Revenue, then the present reference will have to be allowed.

We, Therefore, direct the Tribunal to state the case and refer the following question of law to this court :

"Whether the Income Tax Appellate Tribunal was justified in law and on facts in holding that not only the plant used in manufacturing cement but also those used in packaging of the same are entitled to depreciation at higher rate of 15% when the element of corrosion could not be proved by the assessed either by way of producing any weight ratio analysis and evidence regarding volume of formation of acid-producing gases or by way of producing evidence of additional expenses incurred on repairs, etc., owing to corrosion ?"

There will be no order as to costs.