Commissioner of Income Tax vs Maltax Malsters Ltd.

This petition has been filed u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), for issuing a direction to the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as "the Tribunal"), to refer the following question of law for the opinion of this court :

" Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the decision of the Commissioner of Income Tax (Appeals) allowing full depreciation, when the Assessing Officer while passing order u/s 3(4) imposed condition that depreciation allowance for the assessment year 1984-85 will be restricted to 7/12 of the admissible amount of depreciation and the assessee did not challenge the same in appeal ?"

The petition filed u/s 256(1) of the Act has been declined by the Tribunal. The accounting period of the assessee-company up to the assessment year 1983-84 ended on November 30. The assessee made an application for change of its accounting period from November 30, to June 30. The Assessing Officer allowed the change vide order dated December 30, 1982, and that is how the accounting period for the year relevant to the assessment year 1984-85 was from December 1, 1982, to June 30, 1983, i.e., for a period of seven months. The Assessing Officer imposed a condition that the depreciation allowance for the year 1984-85 will be restricted to 7/12ths of the admissible amount of depreciation. The assessee did not challenge the order dated December 30, 1982, in any other proceedings.

During the course of assessment proceedings for the assessment year 1984-85, the Assessing Officer restricted the claim of depreciation to 7/12 as the admissible amount of depreciation. The assessee preferred an appeal. In appeal, it was held that in view of Rule 5(1) of the Income Tax Rules, the assessee was entitled to full depreciation instead of 7/12ths. Further appeal filed by the Revenue was dismissed by the Tribunal. The Tribunal relied upon a judgment of the Gujarat High Court in Vxl India Limited Vs. Income Tax Officer and Others, and J.K. Synthetics Ltd. Vs. O.S. Bajpai, Income Tax Officer, Central and Another, a judgment of the Allahabad High Court.

A reference application filed u/s 256(1) of the Act by the Revenue was dismissed by the Tribunal holding that the decision was arrived at by the Tribunal relying upon the judgments in Vxl India Limited Vs. Income Tax Officer and Others, and J.K. Synthetics Ltd. Vs. O.S. Bajpai, Income Tax Officer, Central and Another, given by the Gujaral and Allahabad High Courts, respectively, and that of the Supreme Court judgment in Commissioner of Income Tax, Madras Vs. V. Mr. P. Firm, Muar, .

So far as the judgment of the Supreme Court in Commissioner of Income Tax, Madras Vs. V. Mr. P. Firm, Muar, is concerned, the same is not directly on the point in issue. The other two judgments are of the Gujarat and Allahabad High Courts. The question which has been claimed by the Revenue is a question of law, which has been declined by the Tribunal in the absence of a binding precedent either of the apex court of the country or of the jurisdictional court. If there is no binding precedent of the Supreme Court or of the jurisdictional High Court, then the Tribunal could not decline to refer a question of law.

For the reasons stated above, we are inclined to agree with the Revenue that the question of law does arise from the facts and circumstances of this case. Accordingly, we direct the Tribunal at Chandigarh to refer the question of law already reproduced in the earlier part of the judgment to this court for opinion along with the statement of the case. No costs.