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2004 (6) TMI 26 - HC - Income TaxCIT rejecting the petitioner s application for condonation of delay in filing the revision petitions under section 264 on the ground that the petitioner had not shown sufficient cause Held that it cannot be assumed at the outset that what the petitioner had received was general subsidy and on that basis one should jump to the conclusion that the orders passed by the Assessing Officer in the year 1986 were so illegal, arbitrary and perverse as to treat them as orders causing gross and manifest injustice warranting either interference by the Commissioner of Income-tax in exercise of his powers under sub-section (3) of section 264 for condoning the delay of nine years or to warrant interference of this court in exercise of its extraordinary, prerogative and discretionary writ jurisdiction under article 226 of the Constitution. Petition is dismissed
Issues Involved:
1. Condonation of delay in filing revision petitions under Section 264 of the Income-tax Act, 1961. 2. Interpretation of the Supreme Court's decision in CIT v. P.J. Chemicals Ltd. regarding government subsidies and depreciation. 3. Application of the principle of substantial justice over technical considerations. Detailed Analysis: Issue 1: Condonation of Delay in Filing Revision Petitions The petitioner challenged the rejection of their application for condonation of delay in filing revision petitions under Section 264 of the Income-tax Act, 1961. The Commissioner of Income-tax, Rajkot, refused to condone the delay, stating that the petitioner had not shown sufficient cause for the delay. The relevant assessment years were 1982-83, 1983-84, and 1984-85, and the petitioner filed the revision petitions in 1995, long after the rectification orders were passed in 1986. The petitioner argued that the delay should be condoned based on the Supreme Court's decision in CIT v. P.J. Chemicals Ltd., which clarified that government subsidies should not be deducted from the cost of assets for depreciation purposes. The petitioner claimed that this decision was not available at the time of the rectification orders, thus justifying the delay. The court held that while a liberal approach should be taken in condoning delays to advance substantial justice, the petitioner must still show sufficient cause, including that there was no negligence, inaction, or want of bona fides. The court found that the petitioner had not shown any action or vigilance for eight years after the rectification orders were passed and had not offered any explanation for not taking action after the Gujarat High Court's decision in CIT v. Grace Paper Industries (1990), which also supported the petitioner's position. Issue 2: Interpretation of Supreme Court's Decision in CIT v. P.J. Chemicals Ltd. The petitioner relied heavily on the Supreme Court's decision in CIT v. P.J. Chemicals Ltd., arguing that the government subsidy should not reduce the cost of assets for depreciation purposes. The court noted that this decision did not automatically apply to all subsidies and that each case must be examined to determine whether the subsidy was a general incentive or specifically intended to meet a portion of the actual cost of assets. The court found that the petitioner had not provided any material to show that the subsidy in question was a general subsidy. Therefore, it could not be assumed that the rectification orders passed in 1986 were illegal, arbitrary, or perverse. Issue 3: Substantial Justice Over Technical Considerations The petitioner argued that the court should adopt a liberal approach and prioritize substantial justice over technical considerations, citing various precedents. The court acknowledged this principle but emphasized that it must be balanced with the requirement to show sufficient cause for the delay. The court referred to several cases, including Karamchand Premchand (P) Ltd. v. CIT and Nand Kishore v. State of Punjab, to illustrate that sufficient cause must be shown and that mere reliance on a subsequent Supreme Court decision does not automatically justify condonation of delay. The court found that the petitioner had not demonstrated sufficient cause for the delay and had abandoned their right to challenge the rectification orders by not taking any action for eight years. Conclusion The court dismissed the petition, finding no merit in the petitioner's contentions. The rule was discharged with no order as to costs. The court held that the petitioner had not shown sufficient cause for the delay in filing the revision petitions and had not demonstrated that the subsidy in question was a general subsidy, as required to apply the Supreme Court's decision in CIT v. P.J. Chemicals Ltd.
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