Jt. C.I.T. vs United Phosphorous Ltd.

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K.S. Jhaveri, J.—Briefly stated, the facts are that the assessee filed its return of income along with the Tax Audit Report on 29.11.1995. However, subsequently, the assessee filed a revised return of income showing total income at Rs. 2,99,88,894/- on 31.03.1997. The return was scrutinized u/s. 143(1)(a) and ultimately, the Assessing Officer passed the order of assessment dated 30.03.1998. On appeal being preferred, the learned CIT(A) passed the order dated 28.10.1999. Being aggrieved by the same, appeals were preferred before the Income Tax Appellate Tribunal. After hearing both the sides, the Appellate Tribunal partly allowed the appeals, vide order dated 22.05.2001. Hence, this Tax Appeal.

When the matter was earlier heard on 08.01.2002, the following order was passed by the coordinate Bench of this Court;

"Heard both the sides. No substantial question of law arises in this matter, because, the question No. 1 which is suggested in paragraph 2 of the appeal memo is covered by a decision of this Court in Dy. C.I.T. v. Core Healthcare Ltd. reported in 243 ITR 61 and the question No. 2 is covered by the decision of the Supreme Court which is referred to in that question itself Commissioner of Income Tax Vs. Mahendra Mills, . The question No. 3 does not raise any question of law. The appeal is, therefore, summarily dismissed."

Against the aforesaid order, Civil Appeal No. 1183/2008 was preferred before the Apex Court. In that appeal, the following two questions of law were formulated;

"(1) Whether interest paid in respect of borrowings on capital assets not put to use in the concerned financial year can be permitted as allowable deduction u/s. 36(1)(iii) of the Income-tax Act, 1961?

(2) Whether respondent-assessee had an option in law to claim partial depreciation in respect of any block of assets?"

Insofar as question No. (1) was concerned, the Apex Court answered the same in favour of the assessee and against the Revenue as the same was covered by its decision rendered in the case of Dy. Commissioner of Income Tax, Ahmedabad v. M/s. Core Health Care Ltd. passed in Civil Appeal No. 3952-55 of 2002. However, insofar as question No. (2) was concerned, the Apex Court remitted the matter to the High Court for reconsideration in view of the omission of Section 34(1) of the Act w.e.f. 01.04.1988.

We have heard learned counsel for both the sides. We have gone through the judgment rendered by the Appellate Tribunal and we find that the decision on which the Appellate Tribunal has based its finding, came up for consideration in the case of Commissioner of Income Tax Vs. Mahendra Mills, . Identical issue was considered by this Court in the case of Surat Textile Mills Ltd. v. Income-tax Officer, [2014] 46 taxmann.com 419 (Gujarat) and also in an unreported decision rendered in Tax Appeal No. 175/2001 decided on 16.08.2001.

In Para-11 of the judgment rendered in Surat Textile Mills Ltd.''s case (supra), it has been observed as under;

"11. Reverting back to the facts of the case, we may recall that the sole ground on which the Assessing Officer desires to reopen the assessment is that the assessee did not claim depreciation of the current year while seeking set off of the unabsorbed business loss of earlier years. This, according to the Assessing Officer, would enable the assessee to claim depreciation selectively and prolong the claim beyond eight years. In view of the legal position clarified by different High Courts, what the assessee had done was well within thin the legal framework. It was open for the assessee not to claim depreciation till the amendment was made by explanation 5 in section 32(1) of the Act which had the effect only from 1.4.2002. That being the position, the very belief of the Assessing Officer that income chargeable to tax had escaped assessment lacks validity."

Similarly, in Tax Appeal No. 175/2001 disposed of by the coordinate Bench, the following observations are relevant for our purpose;

"We have heard the learned advocates at length and have also perused the order of the Tribunal and judgment delivered in the case of Commissioner of Income Tax Vs. Mahendra Mills, .

In our opinion, no substantial question of law arises in this appeal as the Tribunal has rightly decided the appeal in view of the ratio laid down by the Hon''ble Supreme Court in the case of Mahendra Mills (supra). It is also pertinent to note that the Tribunal had taken similar view in the case of Sun Pharmaceutical Industries v. Deputy Commissioner of Income-tax (Assessment) in I.T.A. Nos. 2355/A/98, 1261 and 1190/A/89 for the Assessment Years 1995-96 and 1996-97 and against the said view taken by the Tribunal in the case of Sun Pharmaceutical Industries (supra), the revenue had not filed an appeal though an appeal has been filed by the revenue in the said case on other points. It has been submitted by learned advocate Shri Qureshi that the revenue proposes to amend the appeal memo filed in the case of Sun Pharmaceutical Industries, but as on today, the fact remains that the issue regarding claim of depreciation in the case of Sun Pharmaceutical Industries decided by the Tribunal has not been challenged by the revenue.

Looking to the view expressed by the Supreme Court in the case of Mahendra Mills (supra), in our opinion, the Tribunal was justified in taking the view with regard to the depreciation in the instant case and, therefore, we do not find any substantial question of law involved in this appeal and, therefore, the appeal is dismissed."

In view of the above, the question of law raised in this appeal is answered in favour of the assessee and against the Revenue.

Since the issue is already concluded, no elaborate reasons are assigned by us in this appeal. The appeal stands disposed of accordingly.