2015 (7) TMI 1199 - HC - Income Tax

Tax effect - monetary limit - Additional depreciation and investment allowance eligibility - whether ITAT was right holding that the jetty is tool or an apparatus of the assessee with the help of which the business is carried on and it is a plant - Held that - As the present reference has a tax effect in the aggregate of less than 1 lakh the reference is returned unanswered. See Commissioner of Income Tax v. M/s.Computer Point 2015 (7) TMI 1087 - BOMBAY HIGH COURT

Summary

Issues:
1. Interpretation of Section 256(1) of the Income Tax Act, 1961 for the Assessment Year 1985-86 regarding additional depreciation and investment allowance for a jetty.

Analysis:
The High Court of BOMBAY HIGH COURT considered a reference under Section 256(1) of the Income Tax Act, 1961 for the Assessment Year 1985-86. The question at hand was whether the ITAT was correct in holding that a jetty qualifies as a tool or apparatus of the assessee aiding in conducting business, thus being categorized as a plant eligible for additional depreciation and investment allowance. The reference arose from the disallowance of &8377; 28,044 for additional depreciation and &8377; 93,478 for investment allowance, totaling &8377; 1,21,522. It was acknowledged that the tax impact of this disallowance would be minimal, not exceeding &8377; 1,00,000. Consequently, the Respondent argued that the reference should be left unanswered due to its negligible tax effect.

Furthermore, the Court referred to a previous order in Income Tax Reference No. 430 of 1997, where it was highlighted that instructions issued by the CBDT in 2014, along with relevant judicial decisions, should be considered for pending appeals and references. The Court emphasized the importance of reducing the burden on the department and the judiciary by refraining from pursuing appeals with tax effects below a certain threshold, as outlined in the Circular. It was noted that the current reference did not fall within the exclusion clause of the 2014 Circular, nor did it have a cascading effect or align with specific Apex Court decisions. Consequently, the Court decided to return the reference unanswered due to the minimal tax impact, following the principles outlined in previous judgments.

In conclusion, given the negligible tax effect of the disallowed amounts in question, the High Court decided to return the reference unanswered. The decision was influenced by the need to adhere to the guidelines set forth in the CBDT instructions of 2014, aiming to streamline the judicial process and alleviate the burden on the tax department and the courts.