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Issues Involved:
1. Whether the Appellate Tribunal is justified in upholding the orders of the Commissioner of Income-tax (Appeals) directing withdrawal of the deduction by way of depreciation allowed by the Income-tax Officer. Summary: Issue 1: Justification of Tribunal's Decision on Depreciation Deduction Withdrawal The High Court of Andhra Pradesh addressed a reference made by the Revenue u/s 256(1) of the Income-tax Act, 1961, concerning the assessment years 1980-81 and 1981-82. The core question was whether the Appellate Tribunal was justified in upholding the orders of the Commissioner of Income-tax (Appeals) directing the withdrawal of depreciation deductions allowed by the Income-tax Officer (ITO). The assessee did not claim depreciation deductions in its returns for the relevant years and did not furnish the prescribed particulars u/s 34(1) of the Act. Despite this, the ITO allowed depreciation deductions, prioritizing them over other claims such as u/s 80J and investment allowance. The Commissioner of Income-tax (Appeals) accepted the assessee's contention that it was not open to the ITO to compulsorily press the relief against the assessee's will and directed the withdrawal of the depreciation allowance. The Revenue's appeal to the Tribunal argued that without current depreciation, it would be impossible to ascertain the income of the assessee, citing the principles laid down in Addl. CIT v. Andhra Printers Ltd. [1979] 117 ITR 555. However, the Tribunal dismissed the appeal, relying on the decision in Beco Engineering Co. Ltd. v. CIT [1984] 148 ITR 478. Before the High Court, the Revenue cited decisions from the Allahabad High Court in Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477, the Madras High Court in Dasaprakash Bottling Co. v. CIT [1980] 122 ITR 9, and the Supreme Court in CIT v. Mother India Refrigeration Industries P. Ltd. [1985] 155 ITR 711, supporting the mandatory deduction of depreciation. The High Court noted that the assessee did not claim depreciation or furnish particulars, and the ITO did not request such particulars, aligning with the Central Board of Revenue's circular dated August 31, 1965, which directed that if no claim for depreciation was made, the ITO should estimate income without allowing depreciation. The High Court observed that u/s 34(1), deductions for depreciation shall be allowed only if the prescribed particulars are furnished. The court found that the Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) directing the withdrawal of the depreciation deduction allowed by the ITO. The High Court referenced various cases, including Dasaprakash Bottling Co. [1980] 122 ITR 9 (Mad), Ascharajlal Ram Parkash's case [1973] 90 ITR 477 (All), and Beco Engineering Co. Ltd. [1984] 148 ITR 478 (P&H), noting differences in circumstances and interpretations. Ultimately, the High Court concluded that the Tribunal's decision was justified based on the facts of the case and the applicable legal provisions. Conclusion: The reference was answered against the Revenue and in favor of the assessee, with no costs awarded. The High Court thanked Mr. A. V. Krishna Kaundinya for his assistance.
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