COMMISSIONER OF INCOME TAX vs. MAHENDRA MILLS LTD

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ITR/281/1987HC GujaratGJHC24012013198707 March 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH2 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the assessee possesses an option to claim depreciation. The Court reasoned that the provision for claiming depreciation is for the benefit of the assessee, and if the assessee does not wish to avail of this benefit for any reason, it cannot be forced upon them. The decision emphasizes that it is for the assessee to determine if claiming depreciation is advantageous. Therefore, the Court concluded that merely because the assessee did not file the necessary particulars in the return, the ITO does not acquire jurisdiction to grant depreciation allowance. The reference was answered in the affirmative, in favour of the assessee and against the Revenue. The Court did not expressly leave any issue undecided.

What were the facts?

This case concerns an Income Tax Reference made by the Income Tax Appellate Tribunal, Ahmedabad Bench "C", at the instance of the Revenue. The reference pertains to Assessment Year 1975-76 and seeks the opinion of the High Court on a question of law. The assessee is Mahendra Mills Ltd., and the Revenue is the Commissioner of Income Tax. The core issue revolves around whether the Income Tax Officer (ITO) had jurisdiction to grant depreciation allowance when the assessee did not file the necessary particulars in the return, implying the assessee might not have claimed it. The procedural history involves the Tribunal referring a question of law to the High Court for its opinion.

What were the issues?

1. Whether, on the facts and in law, the assessee possesses any option to claim depreciation or not, and merely because the assessee did not file the necessary particulars in the return, the ITO did not have jurisdiction to grant the depreciation allowance as per law? (Question of law and fact, concerning the interpretation and application of depreciation provisions). Assessee's Contention: Not explicitly recorded as the assessee did not appear. However, the High Court's decision implies the assessee would argue they have an option not to claim depreciation and that the ITO cannot grant it unilaterally if particulars are not provided. Revenue's Contention: The Revenue, through its learned counsel, conceded that the controversy is concluded by a Supreme Court decision. The Revenue's implicit argument, before conceding, would likely be that the ITO has the power to grant depreciation if it is legally admissible, even if not explicitly claimed or if particulars are missing, perhaps to the assessee's benefit. The Revenue relied on the Supreme Court decision in the case of the very assessee for Assessment Year 1974-75, reported in (2000) 243 ITR 56.

Which sections of the Income-tax Act were involved?

No specific section numbers were explicitly mentioned in the provided text, but the discussion pertains to the provisions for claiming depreciation under the Income Tax Act.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 281 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 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 MAHENDRA MILLS LTD -------------------------------------------------------------- Appearance: MR MANISH R BHATT for the petitioner

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

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 07/03/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of Revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench "C" has referred following question of law for the opinion of this Court relating to Assessment Year 1975-76:-

"Whether, on the facts and in law, the assessee possess any option to claim depreciation or not and merely because the assessee did not file the necessary particulars in the return, the ITO did not have juri iction to grant the depreciation allowance as per law?"

We have heard the learned Counsel for the Revenue. Though served, no one appears on behalf of the respondent. The learned Counsel for the Revenue fairly states at the bar that the controversy raised in the present reference is concluded by the decision of the Supreme Court rendered in the case of the very assessee relating to Assessment Year 1974-75, which is reported in (2000) 243 ITR 56. In the said decision, the Supreme Court has ruled that the provision for claim of depreciation is certainly for the benefit of the assessee and if he does not wish to avail of that benefit for some reason, the benefit cannot be forced upon him. What is emphasised therein is that it is for the assessee to see if the claim of depreciation is to his advantage. In view of the principle laid down by the Supreme Court in the case of this very assessee, we are of the opinion that the assessee possesses an option to claim depreciation and merely because the assessee did not file necessary particulars in the return, the ITO does not have juri iction to grant depreciation allowance. The reference is therefore answered in the affirmative i.e. in favour of the assessee and against the Revenue. The reference stands disposed of accordingly with no order as to costs. ---

*/Mohandas

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