COMMISSIONER OF INCOME TAX vs. SYNERGY MULTIBASE LTD.

By way of filing this appeal under Section 260A of the  Income­tax Act, 1961 the Commissioner of Income­tax,

This appeal was contested up to the Income Tax Appellate   Tribunal,   which   decided   against   the revenue and in favour of the assessee. Therefore, the Revenue has preferred this appeal wherein the following questions are framed: “(A)   Whether   on   the   facts   and   in   the circumstances of the case and in law was the Tribunal right in holding that no depreciation can be thrust upon in this case, though the assessee   has   not   forgone   its   right   to   claim depreciation in case of positive income? (B) Whether on the facts and circumstances of the case and in law was the Tribunal ought to have upheld that depreciation need to be worked out   even   in   the   cases   where   deduction   under Chapter VI A is not claimed/allowed because of paucity of profits?”

We have heard Mr. Sudhir Mehta, learned advocate for the Revenue and Mr. Bandish S. Soparkar for the respondent.

At   the   outset,   learned   advocate   Mr   Mehta   has fairly conceded that the question posed for our determination is no longer res integra in view of the latest Division Bench of this Court in the case   of   Sakun   Polymers   Limited   v.   Joint Commissioner   of   Income­tax   (Assessment),   (2015) 231 Taxman 532 (Gujarat) and therefore has urged that the appropriate order may be passed.

While learned advocate Mr Bandish S. Soparkar for the respondent has also relied upon the decision in the case of Sakun Polymers Limited (supra) and has further relied upon the unreported decision of the Division Bench of this Court in the case of Dy. CIT (Asst.) v. Sun Pharmaceuticals India Limited,   Tax   Appeal   No.93   of   2000   decided   on 17.12.2014. 7. Having heard learned advocates on either side and upon perusing the judgment of Division Bench of this Court in the case of Sakun Polymers Limited (supra) and in the case of Dy. CIT (Asst.) v. Sun Pharmaceuticals India Limited (supra) we are of the   opinion   that   the   question   posed   for   our consideration has already been concluded by the aforesaid   two   Division   Bench   judgments   of   this Court   wherein   in   paragraphs   6   to   11   of   Sun Pharmaceuticals   Limited   (supra)   it   is   held   as under:

We have heard the learned counsels appearing for the parties and considered the submissions. Mr. Soparkar learned counsel at the out set submitted that the question no. 2 cannot be re­agitated as it is covered by the decision of this Court in Tax Appeal No. 175 of 2001 as well as Tax Appeal No.   2/2002  decided   on   17.11.2014. However,   Mr. Parikh learned counsel for Revenue submitted that the question of law as raised in this case was never decided in those matters, and therefore, he requested   that   the   question   of   law   be   decided afresh. As both the questions of law are inter connected are decided together.

We have heard the learned counsel appearing for the parties at length. According to the learned counsel   Mr.   Parikh,   the   decision   of   the   Full Bench of the Bombay High Court in the case of Plastiblends   India   Limited   v.   Additional Commissioner   of   Income­tax   &   Ors.,   reported   in [2009] 318 ITR (Bom)[FB] will have to be applied to the facts of this case. Ld. Counsel has relied on the grounds of challenge raised in this appeal as it original was and amended.

In contra, learned counsel Mr. Soparkar for revenue has drawn our attention to the decision of   the   Honble   Supreme   Court   in   the   case   of Commissioner   of   Income   Tax   v.   Mahendra   Mills, reported in [2000] 243 ITR 56 and the decision of this Court in  Tax Appeal 2/2002  and  Tax Appeal No. 175/2001. It is submitted that the questions of law are concluded, but no elaborate reasons are to be given in view of the finding of fact and the question also having been answered in the case   of   Manehdra   Mills   (supra),   and   therefore, the   decision   of   the   Honble   Supreme   Court   will enure for the benefit of the present assessee as the   amendment   is   after   2000   and   not   prior thereto.

The   decision   cited   by   the   learned   counsel for the Revenue of the Bombay High Court (supra) cannot be applied in the facts of this case and as far as this question of law is concerned.

This takes us to the original first question wherein   also   the   learned   counsel   for   the appellant has placed reliance on the decision of the Full Bench of Bombay High Court Plastiblends India   Limited   v.   Additional   Commissioner   of Income­tax   &   Ors.,   reported   in   [2009]   318   ITR (Bom)[FB]  and submitted that this appeal should be allowed.

As   far   as   this   aspect   is   concerned,   the finding   of   fact   recorded   by   the   CIT(Appeals) which reads as under: '

The contentions of the appellant and the reasons   given   by   the   Assessing   Officer   in allowing full depreciation are considered. The decision of CIT v. Mother India Refrigeration (P)   Ltd.   (supra)   relied   on   by   the   assessing Officer is not applicable in the instant case as   the   issue   as   to   whether   depreciation   is optional or not was never before the Supreme Court. The second decision of Madras High Court in the case of Dasa Prakash Bottling Co. v. CIT (supra)   will   also   not   be   applicable   as   the Gujarat High Court,which is jurisdictional High Court in the case of CIT v. Arun Textiles 192 ITR 700 did not agree with this decision. In the case of Arun Textiles (supra), the Gujarat High Court held that there is nothing in the provisions of section 32(1) read with section 29   of   the   Income­tax   Act,   1961,   to   indicate that even when no claim is made for allowing deduction in respect of the depreciation under section 32(1), the Income­tax Officer is bound to allow a deduction. Under the scheme of the Act,   income   is   to   be   charged   regardless   of depreciation on the value of the assets and it is only by way on an exception that section 32(1)   grants   an   allowance   in   respect   of depreciation on the value of the capital assets enumerated therein. There is intrinsic evidence under   section   43(6)(b)   of   the   Act   in   the expression   less   all   depreciation   actually allowed   to   show   that   it   is   not   as   if   all allowable deductions are to be granted by the Income­tax Officer even when the assessee does not   want   the   same.   Sub­section   (2)(a)   of Section   143(3)   of   the   Act   provides   that   an assessee   can   object   to   such   deduction   made under section 143(1). Therefore, the assessee can come forward in such a case and make clear its intention that it does not want to compute depreciation on the assets and wants no benefit of   claiming   any   depreciation   in   respect thereof. The Circular of CBDT 29 D (XIX­4) of 1965 (F. No. 45/239/65­ITJ), dated 31.8.1996) directed that, where the required particulars have not been furnished by the assessee and no claim   for   depreciation   has   been   made   in   the return, the Income­Tax Officer should estimate the   income   without   allowing   depreciation allowance. Respectfully following the decision of   the   Gujarat   High   Court,   I   hold   that   the depreciation is optional to the assessee and once he chooses not to claim it, the Assessing Officer   cannot   allow   it   while   computing   the income.   Further,   once   the   depreciation   is option, applying the same ratio of Gujarat High Court and other Courts, it will be optional for block of assets also. It is not necessary that the depreciation is allowable not allowable as a whole. The assessee can claim it partly also in respect of certain block of assets and not claim in respect of other block of assets. I, therefore,   direct   the   Assessing   Officer   to withdraw   depreciation   allowance   of   Rs. 85,24,227/­ not claimed by the appellant.'“

In   view   of   the   aforesaid   position   of   law settled by two Division Bench judgments of this Court we do not find any substance in this appeal and   the   questions   framed   for   our   consideration are answered in the negative. We hold that it is optional for the assessee whether or not to claim the   depreciation   and   we   further   hold   that   the authorities below were right in law in holding that the depreciation which the assessee was not desirous of claiming cannot be foisted on him.

Accordingly,   the   appeal   is   decided   against the revenue and in favour of the assessee. (A.J.DESAI, J.) (A.G.URAIZEE,J) Asma