CIT LUDHIANA vs. BHASKAR CERAMICS P.LTD.

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ITR/149/1998HC Punjab & HaryanaPHHC01037938199828 October 2006Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL1 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Punjab and Haryana at Chandigarh answered the referred question of law against the revenue and in favour of the assessee. The Court's decision was based on its judgment rendered on the same day in a similar case, I.T.R. No.100 of 1999, Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana. While the specific reasoning from the Sona Woollen Mills judgment is not detailed here, the operative direction is that the Tribunal was indeed right in law in confirming the CIT(A)'s order allowing depreciation as per Income-Tax Rules for computing income under Section 115J, based on the departmental publication. No issue was expressly left undecided.

What were the facts?

The Commissioner of Income-tax, Ludhiana (the revenue) has filed a reference application before the High Court of Punjab and Haryana at Chandigarh. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, concerning assessment years 1989-90 and 1990-91. The ITAT had confirmed the order of the Commissioner of Income-tax (Appeals) [CIT(A)] which allowed depreciation to the assessee, M/s Bhaskar Ceramics (P) Ltd., Malerkotla. The depreciation was allowed for computing the quantum of income under Section 115J of the Income Tax Act, 1961. The primary ground for the CIT(A)'s decision, as confirmed by the ITAT, was that it was based on the views of the then Chairman of the Central Board of Direct Taxes (CBDT) as expressed in a departmental publication.

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 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? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The revenue's contention is implicit in the question referred, which questions the correctness of the Tribunal's decision to allow depreciation based on a departmental publication's views, particularly in the context of computing income under Section 115J.

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.149 of 1998 Date of decision: 28.10.2006 The Commissioner of Income-tax, Ludhiana. -----Applicant Vs. M/s Bhaskar Ceramics (P) Ltd., Malerkotla. -----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 passed in I.T.A. No.1720 & 1721/Chandi/92 in respect of assessment years 1989-90 and 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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