CIT PATIALA vs. M/S DURGA MERCHANTILE PVT.LTD.

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ITR/94/1998HC Punjab & HaryanaPHHC01038079199808 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, in its judgment dated October 28, 2006, referred the question of law for opinion. The Court stated that in view of its judgment rendered on the same day in I.T.R. No.100 of 1999, The Commissioner of Income Tax, Ludhiana v. M/s Sona Woollen Mills (P) Limited, Ludhiana, the referred question is answered against the revenue and in favour of the assessee. The specific reasoning from the Sona Woollen Mills case is not provided in this excerpt, but it formed the basis for deciding this case. The operative direction is to answer the question in favour of the assessee.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning an order passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated October 3, 1997, in I.T.A. No.1171/Chandigarh/1993. The assessment year in question is 1990-91. The Commissioner of Income-tax, Patiala (the revenue), is the applicant, and M/s Durga Mercantile Pvt. Ltd. (the assessee) is the respondent. The dispute centers on the allowance of depreciation for computing income under Section 115J of the Income Tax Act.

What were the issues?

The Tribunal referred the following question of law for the opinion of the High Court: 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 Central Board of Direct Taxes in a departmental publication? The revenue's contention, implied by the question referred, is that depreciation should not have been allowed under Section 115J based on a departmental publication. The assessee's position, as indicated by the Tribunal's confirmation of the CIT(A)'s order, is that the depreciation was correctly allowed. The judgment does not explicitly detail the arguments made by each side before the High Court, beyond the framing of the question by the Tribunal.

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.94 of 1998 Date of decision: 28.10.2006 The Commissioner of Income-tax, Patiala. -----Applicant Vs. M/s Durga Mercantile Pvt. 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 03.10.1997 in I.T.A. No.1171/Chandigarh/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 Central Board of Direct Taxes 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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