COMMISSIONER OF INCOME TAX, LUDHIANA vs. M/S LAXMI SPINNERS LUDHIANA

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ITR/5/2003HC Punjab & HaryanaPHHC01031250200309 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court, in its decision dated November 9, 2006, answered the question of law in favor of the assessee and against the Revenue. The Court noted that the issue had been previously decided by this very Court in I.T.R. No.100 of 1999 (Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana), which was decided on October 28, 2006. That earlier judgment had relied upon the Supreme Court's decision in Appollo Tyres Limited v. Commissioner of Income Tax, (2002) 255 ITR 273. The ratio decidendi is that for calculating book profit under Section 115J, depreciation should be allowed as per the Income Tax Act, 1961, not as per the Companies Act. The reference was disposed of in accordance with this finding.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning Income Tax Reference No. 5 of 2003. The reference arises from an order dated February 4, 1997, passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', in I.T.A. No. 1421/Chandi/92. The assessment year in question is 1990-91. The applicant is the Commissioner of Income Tax, Ludhiana, and the respondent is M/s Laxmi Spinners Ludhiana. The matter was referred to the High Court for its opinion on a specific question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that for the purpose of calculating book profit under Section 115J, depreciation is to be allowed as per the provisions of the Income Tax Act, 1961, instead of depreciation as allowable under the provisions of the Companies Act? The Revenue's contention, as stated by its counsel, was that the question of law referred to the Court had already been decided in its favor by a previous judgment of this Court in I.T.R. No.100 of 1999 – The Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana, decided on 28.10.2006. This judgment, in turn, relied upon the Supreme Court's decision in Appollo Tyres Limited v. Commissioner of Income Tax, (2002) 255 ITR 273. The assessee did not present any arguments as 'Nemo' was recorded for the respondent.

Which sections of the Income-tax Act were involved?

Section 115J

AI-generated summary — verify with the full judgment below

I.T.R. No.5 of 2003 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.No. 5 of 2003 Date of decision: 9.11.2006 Commissioner of Income Tax, Ludhiana Applicant through

Mr. S. K.Garg Narwana, Advocate v. M/s Laxmi Spinners Ludhiana Respondent through Nemo CORAM: Hon'ble Mr.Justice Ajay Kumar Mittal Hon'ble Mr.Justice Rajesh Bindal

1.

Whether Reporters of local papers may be allowed to see the judgment ?

2.

To be referred to the Reporters or not ?

3.

Whether the judgment should be reported in the Digest? Rajesh Bindal, J. Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench `B' (for short, `the Tribunal'), arising out of its order dated 4.2.1997 in I.T.A. No. 1421/Chandi/92, in respect of assessment year 1990-91: “Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that for the purpose of calculating book profit under Section 115J depreciation is to be allowed as per provisions of the Income Tax Act, 1961 instead of depreciation as allowable under the provisions of the Companies Act ?” At the very out-set, learned counsel for the Revenue stated that the question of law, referred to this Court, has already been decided in favour of the assessee and against the revenue by the judgment of this Court in I.T.R. No.100 of 1999 – The Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana, decided on 28.10.2006, relying upon the judgment of Hon'ble the Supreme Court in Appollo Tyres Limited v. Commissioner of Income

I.T.R. No.5 of 2003 [2] Tax, (2002) 255 ITR 273. Accordingly, the question is answered in favour of the assessee and against the Revenue. The reference is disposed of in the manner indicated above. ( Rajesh Bindal ) Judge (Ajay Kumar Mittal) Judge 9.11.2006 mk

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