COMMISSIONER OF INCOME TAX vs. GUJARAT STATE FERTILIZER CO. LTD.

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ITR/144/1985HC GujaratGJHC24012276198513 March 2001Author: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages

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What did the High Court hold?

The High Court reframed the second question to address development rebate instead of investment allowance, as agreed by both parties. Regarding initial depreciation, the Revenue conceded that the assessee was entitled to it, and therefore, the Tribunal was correct in its conclusion. The High Court answered this part of the question in the affirmative, in favour of the assessee. For the development rebate aspect, the assessee conceded that the Tribunal had erred and that the matter should be decided in favour of the Revenue. Consequently, the High Court answered this part of the question in favour of the Revenue and against the assessee. The operative direction was to answer the reference accordingly.

What were the facts?

The Commissioner of Income Tax (Revenue) has filed an Income-tax Reference Application before the High Court of Gujarat at Ahmedabad, challenging an order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench 'C'. The reference pertains to assessment year 1976-77. The Tribunal had ruled that the assessee, Gujarat State Fertilizers Co. Ltd., was entitled to initial depreciation and investment allowance on an expenditure of Rs. 12,10,000, which arose due to increased liability from currency rate fluctuations. The High Court noted that the Tribunal's order incorrectly referred to 'investment allowance' instead of 'development rebate'.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the assessee was entitled to initial depreciation on an expenditure of Rs. 12,10,000 arising from increased liability due to currency rate fluctuations? (Question of law) 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the assessee was entitled to investment allowance (reframed as development rebate) on an expenditure of Rs. 12,10,000 arising from increased liability due to currency rate fluctuations? (Question of law) Assessee's Contention: The assessee conceded that the matter pertains to development rebate and not investment allowance, and that the Tribunal had wrongly decided this aspect, agreeing with the Revenue. Revenue's Contention: The Revenue conceded that the assessee is entitled to initial depreciation, agreeing with the Tribunal's conclusion on this point.

Which sections of the Income-tax Act were involved?

Section 10(2)(vi), Section 10(2)(vib)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 144 of 1985

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus GUJARAT STATE FERTILIZER CO. LTD. -------------------------------------------------------------- Appearance: MR AQUIL QURESHI for MR MANISH R BHATT for Petitioner MR JP SHAH for Respondent

--------------------------------------------------------------

CORAM : MR.JUSTICE B.C.PATEL and MR.JUSTICE D.A.MEHTA

Date of decision: 13/03/2001

ORAL JUDGEMENT (Per : MR.JUSTICE B.C.PATEL) Income-tax Appellate Tribunal, Ahmedabad Bench `C' in Reference Application no. 506/Ahd./83 for assessment year 1976-77 has referred the following question for opinion of this Court at the instance of the Revenue.

"Whether on the facts and under the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessee was entitled to initial depreciation and investment allowance on the expenditure of Rs. 12,10,000/being increased liability due to fluctuations in the rates of currency?"

After hearing the learned counsel appearing for the parties and after going through the record, it appears that the latter part of the question actually pertains to development rebate and not investment allowance and therefore, the question is required to be reframed and words ` investment allowance' shall be replaced by `development rebate'. After going through the matter, Mr. Shah, learned counsel for the respondent fairly conceded that the matter pertains to development rebate and not investment allowance and the Tribunal has wrongly decided the same and therefore, in that behalf, answer be given in favour of the Revenue and against the assessee. So far as the initial depreciation is concerned, it is fairly conceded by Mr. Qureshi, learned counsel appearing for the Revenue that the assessee is entitled for initial depreciation and therefore, the Tribunal was right in coming to a conclusion that the assessee was entitled to the initial depreciation. We therefore answer in affirmative and in favour of the assessee. In so far as the depreciation is concerned, we answer accordingly.

[B.C. PATEL, J.] [D.A. MEHTA] ***** pirzada/-

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