COMMISSIONER OF INCOME-TAX vs. MAHENDRA MILLS LTD

ITR/137/1994HC GujaratGJHC24020214199403 October 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C', referred a question of law to the High Court of Gujarat concerning Assessment Year 1983-84 (accounting period ending June 30, 1982). The dispute involved the allowability of depreciation at the normal rate of 30% on an old diesel generating set. The ITAT had set aside the order of the Commissioner of Income-tax (CIT) and allowed the depreciation. The revenue, represented by the Commissioner of Income-tax, was the applicant, and Mahendra Mills Ltd. was the respondent-assessee. The High Court heard the revenue's counsel, Ms. M.M. Bhatt, but no appearance was made by the assessee despite being served.

What did the High Court hold?

The High Court held that the Appellate Tribunal was not right in law in setting aside the order made by the Commissioner of Income-tax and allowing depreciation at the normal rate of 30% on the old diesel generating set. The Court applied the ratio of its own decision dated June 21, 2005, in the case of Nachmo Marketing Private Limited (I.T.R. No.187 of 1993), which had been carried before it by way of reference. This earlier decision had answered the issue in favour of the revenue. Therefore, the reference was answered in the negative, meaning in favour of the revenue and against the assessee. The operative direction was to answer the question in favour of the revenue, effectively reversing the ITAT's finding on depreciation.

What were the issues?

1. Whether, as a matter of law, the Appellate Tribunal was correct in setting aside the order of the Commissioner of Income-tax and holding that depreciation at the normal rate of 30% was allowable on an old diesel generating set, as per Section 32 of the Income-tax Act, 1961? The revenue contended that the ITAT's decision was based on its earlier ruling in the case of Nachmo Marketing Private Limited. However, the revenue pointed out that this very case, Nachmo Marketing Private Limited, had been referred to the High Court (I.T.R. No.187 of 1993) and was subsequently answered in favour of the revenue by a decision dated June 21, 2005. The revenue argued that the ratio of this subsequent decision should be applied to the present reference. The assessee did not present any arguments as no appearance was made.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 32

AI-generated summary — verify with the full judgment below

ITR/137/1994 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.137 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== COMMISSIONER OF INCOME-TAX - Applicant(s) Versus MAHENDRA MILLS LTD - Respondent(s) ===================================================== Appearance : MS MM BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 03/10/2005 ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI)

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The Income-tax Appellate Trib

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