1996 (7) TMI 8 - HC - Income Tax

Summary

Issues:
- Interpretation of provisions related to deduction of unabsorbed depreciation for determining book profit under section 115J of the Income-tax Act, 1961.
- Whether the Tribunal's decision in allowing deduction of unabsorbed depreciation instead of unabsorbed business loss for calculating book profits is legally justified.

Analysis:
The case involved an application filed by the Commissioner of Income-tax seeking direction to the Tribunal to state a proposed question regarding the deduction of unabsorbed depreciation for determining book profit under section 115J of the Income-tax Act, 1961. The Tribunal, in its order, allowed the deduction of unabsorbed depreciation instead of unabsorbed business loss for calculating book profits, resulting in nil income for the assessee. The Assessing Officer and the Commissioner of Income-tax (Appeals) had previously denied this deduction. The Tribunal's decision was based on the interpretation that the expression "the amount of the loss" in the relevant provision should include depreciation and unabsorbed depreciation. The Tribunal referred to relevant case law and concluded in favor of the assessee, stating that the computation of loss must include depreciation and unabsorbed depreciation. The Tribunal declined to refer the proposed question, deeming it a finding of fact not giving rise to a question of law.

The Tribunal's decision was supported by the application of relevant legal provisions and previous court decisions, including Garden Silk Weaving Factory v. CIT and CIT v. Jaipuria China Clay Mines. The Tribunal's conclusion was considered to be based on the appreciation of facts and correct application of law, as per the principles established in CIT v. Ashoka Marketing Ltd. and CIT v. Kotrika Venkataswamy and Sons. The High Court upheld the Tribunal's decision, stating that there was no identifiable question of law arising from the Tribunal's findings. The Court emphasized that the Tribunal's order was well-founded in fact and law, and the decision to reject the application was made without any costs awarded. The legal representatives' fees were fixed at Rs. 750 for each side, if certified.