1981 (5) TMI 38 - AT - Income Tax

Summary

Issues:
1. Impugning an order under section 154 after an appeal against a substantive order.
2. Claim of depreciation on a building disallowed by ITO but allowed by CIT.
3. Interpretation of the term 'owned by the assessee' for claiming depreciation.
4. Tax treatment of annuity policy amount as constructive receipt by the assessee.
5. Tribunal's decision in favor of the assessee based on CBDT circular.

Analysis:
1. The judgment dealt with the issue of impugning an order under section 154 after an appeal against a substantive order. The Appellate Tribunal held that the revenue was estopped from challenging the section 154 order passed by the CIT after an appeal against the substantive order. The Tribunal emphasized that both orders were separate and independent, proceeding from different legal bases, with the substantive order being appealable only by the assessee, while the section 154 order could be passed at the discretion of the AAC or the CIT.

2. Another issue involved the claim of depreciation on a building, which was disallowed by the ITO but allowed by the CIT. The Tribunal considered the history of the building's depreciation allowance and directed the ITO to allow depreciation for the assessment year 1977-78 based on the WDV of the building. The Tribunal rejected the Revenue's challenge, citing precedents and the investment made by the appellant company as grounds for allowing the depreciation.

3. The judgment also addressed the interpretation of the term 'owned by the assessee' in claiming depreciation on a building. The Departmental representative relied on precedents to argue that a building must be registered in the name of the owner assessee to claim depreciation under section 32. However, conflicting views from different High Courts were presented, with some courts interpreting the term differently.

4. The tax treatment of an annuity policy amount as constructive receipt by the assessee was another issue discussed in the judgment. The assessee, following a cash system of accounting, had the sum of Rs. 85,000 considered as income by the ITO. However, the CIT (A) and the Tribunal ruled in favor of the assessee, citing a CBDT circular that supported the assessee's position. The Tribunal found no question of law to refer, given the circular's backing of the assessee's stance.

5. Finally, the Tribunal's decision in favor of the assessee was based on the CBDT circular and previous tribunal rulings. The Tribunal dismissed the reference application filed by the Revenue, concluding that the matter was adequately covered by the circular and no further legal questions needed to be addressed.