CIT LUDHIANA vs. M/S SHAKTI SPINNERS P.LTD.LUDH

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ITR/80/1999HC Punjab & HaryanaPHHC01038771199928 October 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL1 pages
AI SummaryAllowed

What did the High Court hold?

The High Court, in its judgment dated 28.10.2006, referred the aforementioned question of law for opinion. The Court answered the question against the revenue and in favour of the assessee. This decision was rendered in view of the Court's judgment in a related case, I.T.R. No.100 of 1999, Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana. The ratio decidendi is that for the purpose of calculating book profit under Section 115J, depreciation should be allowed as per the provisions of the Income-tax Act, 1961, not as per the Companies Act, 1956. The operative direction is that the question of law is answered in favour of the assessee.

What were the facts?

This case involves a reference from the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, to the High Court of Punjab and Haryana at Chandigarh. The reference concerns the assessment year 1990-91. The Commissioner of Income-tax, Ludhiana (the revenue), is the applicant, and M/s Shakti Spinners, Ludhiana (the assessee), is the respondent. The core of the dispute revolves around the calculation of book profit under Section 115J of the Income-tax Act, 1961. The ITAT had passed an order dated 19.02.1997 in I.T.A. No.1418/Chd/92, which led to this reference.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT is right in holding that for the purpose of calculating book profit u/s 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 Companies Act, 1956? Contentions: Assessee: The judgment does not record specific contentions for the assessee. Revenue: The revenue is seeking to challenge the ITAT's decision regarding the calculation of depreciation for book profit purposes 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.80 of 1999 Date of decision: 28.10.2006 The Commissioner of Income-tax, Ludhiana. -----Applicant Vs. M/s Shakti Spinners, Ludhiana. -----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 19.02.1997 in I.T.A. No.1418/Chd/92 in respect of assessment year 1990-91:- “Whether, on the facts and in the circumstances of the case, the ITAT is right in holding that for the purpose of calculating book profit u/s 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 Companies Act, 1956?”

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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