CIT LUDHIANA vs. M/S MUNISHA CYCLES P.LTD.

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ITR/147/1998HC Punjab & HaryanaPHHC01037936199828 October 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL1 pages
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What did the High Court hold?

The High Court of Punjab and Haryana at Chandigarh, in its judgment dated 28.10.2006, answered the referred question of law against the revenue and in favour of the assessee. The Court stated that this decision was rendered in view of its judgment in a connected case, I.T.R. No.100 of 1999, The Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana. The specific reasoning from the cited judgment is not provided in the text of this order, but the outcome is clear: the Tribunal's confirmation of the CIT(A)'s order allowing depreciation for computing income under Section 115J was upheld. The operative direction is to answer the reference in favour of the assessee.

What were the facts?

The Commissioner of Income-tax, Ludhiana (the revenue) has filed an Income Tax Reference application before the High Court of Punjab and Haryana at Chandigarh. The reference arises from an order dated 28.07.1997 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, in I.T.A. No.1597/CHANDI/1993. The assessment year in question is 1990-91. The dispute pertains to the allowance of depreciation to the assessee, M/s Munisha Cycles (P) Ltd., for computing income under Section 115J of the Income Tax Act. The Tribunal had confirmed the order of the Commissioner of Income-tax (Appeals) which allowed the depreciation.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the CIT(A) allowing depreciation as per Income-Tax Rules to the assessee for computing the quantum of Income u/s 115J primarily on the ground that the same was based on the views expressed by the then Chairman of the CBDT in a departmental publication? The revenue's contention, implied by the reference, is that the Tribunal erred in law by allowing depreciation under Section 115J based on a departmental publication. The assessee's contention, also implied, is that the Tribunal's decision to allow depreciation was correct, likely arguing that the departmental publication provided valid guidance or that depreciation is indeed allowable under Section 115J. The judgment does not explicitly detail the arguments of either party beyond the question framed.

Which sections of the Income-tax Act were involved?

Section 115J

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.147 of 1998 Date of decision: 28.10.2006 The Commissioner of Income-tax, Ludhiana. -----Applicant Vs. M/s Munisha Cycles (P) Ltd. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. S.K. Garg Narwana, Advocate for the revenue. ----- ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 28.07.1997 in I.T.A. No.1597/CHANDI/1993 in respect of assessment year 1990-91:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the CIT(A) allowing depreciation as per Income-Tax Rules to the assessee for computing the quantum of Income u/s 115 J primarily on the ground that the same was based on the views expressed by the then Chairman of the CBDT in a departmental publication?”

In view of our judgment rendered today in I.T.R. No.100 of 1999 The Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana, the question referred is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE October 28, 2006 ( RAJESH BINDAL ) ashwani JUDGE

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