Commissioner of Income Tax vs Poompuhar Shipping Corporation

K. Raviraja Pandian, J.—This appeal is filed against the order of the Tribunal, Madras ''B'' Bench, Chennai, dated 14-9-2007, passed in ITA Nos. 281 & 282/Mad/ 1995.

The assessee is the Poompuhar Shipping Corporation owned by the Government of Tamilnadu. For the assessment year 1992-93, the assessee filed returns and claimed that unabsorbed depreciation of the earlier years from income from heads of income other than business and brought its taxable income to nil. The assessing officer held that as per the provisions of Section 34A, unabsorbed depreciation can only be set off against profits and gains of business and not against other income. He therefore restricted the set off to 2/3rd of the unabsorbed depreciation to business income only.

Aggrieved by the order of the assessing officer, the assessee carried the matter on appeal to the Commissioner (Appeals), who by his order, held that the restriction contemplated in Section 34A is only to setting off of 1/3rd of unabsorbed depreciation pertaining to assessment year 1991-92 and earlier, and does not prevent the operation of Sections 32(1)(ii) and 32(2) beyond this. It is further held that the assessee is entitled to tag 2/3 of the unabsorbed depreciation from the earlier assessment years to the claim of the current years and set off the same and thus decided the issue in favour of the assessee.

The revenue, aggrieved by the order of the Commissioner (Appeals), went on further appeal to the Tribunal. The Tribunal, following its own decision in the case of Eoswaran & Sons Engineers Ltd., and taking in aid the judgment of the Supreme Court in the case of M/s. Garden Silk Weaving Factory, Surat Vs. The Commissioner of Income Tax, Gujarat, Ahmedabad, has come to the conclusion that the unabsorbed depreciation can be carried forward and set-off subject to the provisions of Section 34A against the income under other heads and decided in favour of the assessee. The revenue is before us, on appeal against the said order by formulating the following substantial questions of law:

Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that even that part of the unabsorbed depreciation deferred to be set-off as per Section 34A can be set-off against income other than income from business ?

We heard the arguments of the learned Counsel for the appellant and perused the materials available on record.

The appellant being the Government department before filing an appeal against the State owned corporation, we are of the view has to obtain clearance from the Committee on Disputes (CoD). The Apex Court, in the case of Oil and Natural Gas Corporation Ltd. Vs. City and Indust. Dev. Corpn., Maharashtra and Others, , after referring to the earlier cases in 1992 (61) ELT 3 (SC) , Oil and Natural Gas Commission and Another Vs. Collector of Central Excise, , Oil and Natural Gas Commission Vs. Collector of Central Excise, ; in which directions have been issued to set up governmental committee to resolve the dispute between the intra-governmental or inter-governmental disputes involving Government departments or government owned companies of the Central and State Governments, rather than adjudicating the same before courts of law, and having regard to the fact of the particular case, that the matter was pending since 1990 and considering the nature of the controversy, which is a recurring feature, directed that a committee be formed to sort out the differences between the Central Government and the State Government entities. The composition of such committee is also stated to be as follows:

The cabinet secretary of the Union;

Chief secretary of the State;

Secretaries of the departments concerned of the Union and the States; and

Chief executive officers of the undertakings concerned.

The Supreme Court in the case of Chief Conservator of Forests, Govt. of A.P. Vs. The Collector and Others, has held as follows:

Disputes between Government departments cannot be contested in court. States/Union of India must evolve a mechanism for resolving inter-departmental controversies. Constitution of Committees suggested which should consist of chief secretary, secretaries of the departments concerned, secretary of law and secretary of finance (where financial commitments are involved) whose decision should be binding on all departments concerned.

The Apex Court also held that it shall be the obligation of every court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with. The same has been reiterated in the latest decision of the Supreme Court in the case of CIT v. Oriental Insurance Co. Ltd., in Civil Appeals Nos. 4529 of 2008, etc., decided on 18-7-2008 .

In order to discharge that obligation, when we posed a question to the learned Counsel as to whether such a clearance has been obtained from the Committee of Disputes, he admitted that such a certificate from Committee of Disputes has not been obtained. Hence, the appeals are dismissed as not entertainable in the absence of the clearance, however, by giving liberty to the appellant to move this Court after obtaining clearance from Committee of Disputes. No costs. Consequently, connected miscellaneous petition is also dismissed.