Sangam Cold Storage Ice Factory vs Commissioner of Income Tax

Ashok Bhan, J.—We take up IT case No. 40 of 1994 and CWP 6685 of 1997 together for disposal as the facts of both these cases are interconnected. The assessee filed its return of income tax for the assessment year 1982-83 declaring net loss of Rs. 7,28,830. The ITO reduced the amount of subsidy from the cost of building and machinery for the purposes of depreciation. The assessee filed an appeal before the Commissioner (Appeals), which was accepted. Against the order of the Commissioner (Appeals), revenue filed an appeal before the Tribunal, Amritsar Bench, Amritsar. The Tribunal set aside the order of the Commissioner (Appeals) and restored the order of the Assessing Officer. The assessee filed a petition u/s 256(1) of the income tax Act, 1961 (''the Act''), claiming the following questions of law, said to be arising from the order of the Tribunal passed u/s 254 of the Act:

Whether, on the facts and in the circumstances of the case, the Hon''ble Tribunal was right in holding that the subsidy received by the assessee has to be adjusted from the cost of assets or which it was given for the purpose of allowing depreciation following the Punjab and Haryana High Court judgment in the case of Commissioner of Income Tax Vs. Jindal Brothers Rice Mills,

Whether, the Hon''ble Tribunal was right in following the judgment of the Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. Jindal Brothers Rice Mills, in spite of the fact that against the said judgment, the Hon''ble Punjab and Haryana High Court has granted a certificate u/s 261 of the income tax Act holding that it is an interesting and important question of law?

Petition filed by the assessee u/s 256(1) was delayed by 23 days, and the same was dismissed by the Tribunal, both on the ground of delay in filing the petition as well as on merits. On merits, the Tribunal held that the questions of law claimed by the assessee were covered by a judgment of the jurisdictional High Court, i.e., Punjab and Haryana High Court in Commissioner of Income Tax Vs. Jindal Brothers Rice Mills, . Subsequent to that, assessee filed an application u/s 254(2) for rectification of the order passed by the Tribunal in the petition u/s 256(1), which was dismissed vide order dated 29-6-1993.

When the case was taken up for hearing on the previous date of hearing, question arose whether in a reference application, the High Court could condone the delay in filing the petition u/s 256(1) before the Tribunal. Counsel for the assessee sought an adjournment to file a writ petition to challenge the portion of the order of the Tribunal declining to condone the delay in filing the petition u/s 256(1). Assessee has, thereafter, filed CWP 6685 of 1997. Instead of challenging the portion of the order of the Tribunal declining to condone the delay in filing the petition u/s 256(1), assessee filed the writ petition challenging the order of the Tribunal passed u/s 254 on merits.

Today, during the course of arguments, counsel for the assessee made a prayer that the lapse on his part may be condoned and the writ petition be taken as challenging the order of the Tribunal passed in the petition u/s 256(1), copy of which has been attached as Annexure P.4 in IT case No. 40 of 1994.

Counsel for the parties have been heard.

The Tribunal had refused to refer the questions of law as the same were covered by a judgment of this Court in Jindal Bros. Rice Mills ''case (supra). The aforesaid judgment stands overruled by their Lordships of the Supreme Court in Commissioner of Income Tax, Hyderabad Vs. M/s. P.J. Chemicals Ltd.,

Keeping in view the peculiar facts and circumstances of the case and particularly the fact that on merits the assessee has a strong case, we accept the request of the counsel for the assessee and permit him to challenge the portion of the order of the Tribunal declining to condone the delay in filing the petition u/s 256(1), copy of which has been attached as Annexure P.4 with IT Case No. 40 of 1994. Under proviso to section 256(1), the Tribunal had the jurisdiction to condone the delay up to the period of 30 days. Application filed by the assessee was within the period of 30 days and there was sufficient cause shown by the assessee for condoning the delay. We accept the explanation of the assessee that there was sufficient cause for condoning the delay of 23 days in filing the petition u/s 256(1) and the Tribunal erred in not accepting the explanation rendered by the assessee. In writ jurisdiction, we set aside the order of the Tribunal to the extent it refused to extend limitation in filing the petition u/s 256(1). Writ petition, accordingly, stands accepted. Reverting back to IT Case No. 40 of 1994, we find that a question of law does arise from the order of the Tribunal. Tribunal had refused to make a reference to this Court in view of the judgment of this Court in Jindal Bros. Rice Mills'' case (supra), which stands overruled by a subsequent judgment rendered by their Lordships of the Supreme Court in P.J. Chemicals Ltd''s case (supra). Accordingly, we direct the Tribunal, to refer the following question of law, arising from the order of the Tribunal, along with the statement of the case to this Court for its opinion:

Whether, on the facts and in the circumstances of the case, the amount of subsidy is to be reduced from the cost of building and machinery for determining the depreciation allowable?