1998 (6) TMI 86 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the revised return u/s 139(5).
2. Authority of the Income-tax Officer to consider particulars from the original return for depreciation.
3. Applicability of the Madras High Court's decision in Dasaprakash Bottling Co. v. CIT.
4. Department's imposition of a declined claim on the assessee.
5. Applicability of Board's Circular No. 29D dated August 31, 1965.
6. Admissibility of depreciation on capitalized expenditure for the assessment year 1976-77.
7. Admissibility of depreciation on roads within the factory.
8. Admissibility of 15% depreciation on laboratory equipment.

Summary:

1. Validity of the Revised Return u/s 139(5):
The Tribunal held that the revised return filed by the assessee was valid u/s 139(5) of the Income-tax Act. However, the High Court disagreed, stating that the revised return was not valid as it did not correct any omission or wrong statement in the original return. The High Court emphasized that the particulars for depreciation were already available in the original return, and the revised return could not withdraw these particulars.

2. Authority of the Income-tax Officer:
The Tribunal ruled that the Income-tax Officer could not consider the particulars from the original return for allowing depreciation. The High Court overturned this, referencing the decision in Dasaprakash Bottling Co. v. CIT, which allows the Income-tax Officer to grant depreciation even if the particulars were not furnished in the revised return.

3. Applicability of Dasaprakash Bottling Co. v. CIT:
The Tribunal distinguished the case from Dasaprakash Bottling Co. v. CIT, but the High Court found this distinction unwarranted. The High Court reiterated that depreciation is a statutory allowance and must be granted if particulars are available, regardless of the revised return.

4. Department's Imposition of a Declined Claim:
The Tribunal held that the Department could not impose a declined claim on the assessee. The High Court disagreed, stating that the Income-tax Officer must determine the correct income and grant statutory allowances like depreciation, even if the assessee withdraws the claim in the revised return.

5. Applicability of Board's Circular No. 29D:
The Tribunal applied the Board's Circular No. 29D to the case. The High Court found this application misplaced, stating that the circular only applies when particulars are not available, which was not the case here.

6. Depreciation on Capitalized Expenditure:
The Tribunal allowed depreciation on capitalized expenditure for the assessment year 1976-77. The High Court upheld this decision, referencing its own judgment in the assessee's case for the same year.

7. Depreciation on Roads:
The Tribunal allowed depreciation on roads within the factory. The High Court affirmed this, citing the Supreme Court's decision in CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd., which treats factory roads as part of the buildings.

8. Depreciation on Laboratory Equipment:
The Tribunal granted 15% depreciation on laboratory equipment. The High Court upheld this, agreeing with the Tribunal's finding that the equipment was used in corrosive environments, justifying the higher depreciation rate.

Conclusion:
The High Court answered questions 1 to 5 in the negative and in favor of the Revenue, and questions 6 to 8 in the affirmative and against the Revenue. No order as to costs was made due to divided success.