COMMISSIONER OF INCOME TAX vs. JINDAL STEEL & POWER LTD.

In the High Court of Punjab and Haryana at Chandigarh Date of Decision: 02 .09. 2008 Commissioner of Income Tax, Hisar .....Appellant Versus Jindal Steel & Power Ltd., Delhi Road, Hisar ...... Respondent Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Ajay Tewari

ii)Whether on the facts and circumstances of the case, the examination of the claim of deduction claimed by the assessee company by the Assessing Officer is fettered with the finding of the Auditor of the Company? iii)Whether on the facts and circumstances of the case, the Hon'ble ITAT is correct in deleting the disallowance made by the AO pertaining to the exaggerated profit of captive power generating unit by claiming higher rate than the cost price or the market price charged by it on the supply of power made by it to 3rd party i.e. State Electricity Board?” At the very outset we may record that the counsel for the revenue has very fairly stated that question No.3 stands covered against the revenue and we hold as such accordingly.

As regards the other issues it may be noticed that the assessee claimed depreciation on Written Down Value which was disallowed by the Assessing Officer on the ground that the assessee had not opted for the same as per proviso to sub Rule (1A) of Rule 5 of the Income Tax Rules, 1962 which is quoted herein below:- “Provided further that the undertaking specified in clause (i) of sub-section (1) of Section 32 of the Act may, instead of the depreciation specified in Appendix IA, at his option, be allowed depreciation under sub-rule (1) read with Appendix I, if such option is exercised before the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act,....................................................................................” In appeal the learned Appellate Authority upheld the same. In second appeal the learned Tribunal accepted the appeal on the question of permission to claim depreciation on WDV basis holding as follows:- “It is seen that no particular format or procedure has been laid down in the second proviso in relation to exercise of option by an assessee. Second proviso only says that option is to be exercised before the due date for furnishing the return of income u/s 139(1) for the assessment year 1998-99 in respect of power generating undertaking then existing and for the assessment year in which a new undertaking begins to generate power. The case of the assessee is that it began to generate power during the previous year relevant to assessment year 1999-2000. As per Annexure-D annexed to the computation of income chargeable to tax filed along with the return of income for assessment year 1999-2000, the assessee had claimed depreciation in accordance with sub-rule (1) read with appendix I. Thereafter the assessee's return of income was processed u/s 143(1) on 29.09.2000 and no adjustment in that behalf was made by the Assessing Officer. According to the learned counsel for the assessee the return of income filed before the due date of furnishing the return u/s 139(1) for assessment year 1999-2000, made proper compliance to the requirements of the second proviso to Rule 5(1A) of Income Tax Rules. On consideration of the matter we accept this argument.” We find no perversity in this reasoning and questions No. 1 and 2 cannot be held to be substantial questions of law. In this view of the matter, the appeal is dismissed. (AJAY TEWARI) JUDGE (ADARSH KUMAR GOEL) JUDGE September 02, 2008 sunita