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2010 (4) TMI 238 - HC - Income TaxBook profit- Depreciation- The assessee filed a return declaring loss of Rs. 2, 27, 31, 201 and income under section 115J of the Act amounting to Rs. 1, 60, 00, 606. However the return was revised declaring a loss of Rs. 3, 99, 31, 911 and income u/s 115J of the Act nil . The Assessing Officer however computed profit under section 115J of the Act at Rs. 4, 10, 60, 334. The Assessing Officer did not accept the contention that depreciation could be provided as per the Schedule XIV to the Companies Act 1956 and ignored the revised return where the revised computation of profit u/s 115J of the Act was given. The Commissioner (Appeals) upheld the view taken by the Assessing Officer and the Tribunal decided the issue in favour of the assessee. Thus the revenue filed the appeal. Held that- the appeal and allowing the applications that if in respect of assessment year 1990-91 the Revenue had accepted the order of the Commissioner (Appeals) then it followed that in respect of the earlier year the same principle would apply. once the revenue had accepted the view of the Commissioner (Appeals) in respect of the assessment year 1990-91 then it was not open to the revenue to challenge the similar finding and deviate from its earlier stand. Even on the merits the question of law appear to be covered in favour of the assessee and against the revenue.
Issues:
1. Disposal of I. T. A. Nos. 46 and 47 of 2003 for the assessment year 1990-91. 2. Computation of profit under section 115J of the Income-tax Act for the assessment year 1989-90. 3. Acceptance of the method for working out 'book profit' under section 115J(1A) of the Income-tax Act. Issue 1: Disposal of I. T. A. Nos. 46 and 47 of 2003 for the assessment year 1990-91: The appellant filed applications for the disposal of I. T. A. Nos. 46 and 47 of 2003, seeking to exclude a specific amount of depreciation for the purpose of ascertaining book profits. The Commissioner of Income-tax (Appeals) had earlier passed an order in favor of the assessee for the assessment year 1990-91, which had attained finality as no appeal was filed by the Revenue before the Tribunal. The High Court noted the finality of the Commissioner's order and applied the principle of consistency, stating that once the Revenue accepted the Commissioner's view for 1990-91, it could not challenge a similar finding for the earlier year. Citing relevant judgments, the Court dismissed the appeals, deciding the question of law against the Revenue and in favor of the assessee. Issue 2: Computation of profit under section 115J for the assessment year 1989-90: For the assessment year 1989-90, the Assessing Officer computed profit under section 115J of the Income-tax Act differently from the revised return filed by the assessee. The Assessing Officer insisted on providing depreciation as per the Companies Act's Schedule XIV, disregarding the revised return's computation. The Commissioner of Income-tax (Appeals) upheld the Assessing Officer's view. However, the Tribunal ruled in favor of the assessee, citing a judgment that allowed the assessee to adopt a different method for working out depreciation for section 115J purposes. The High Court, considering the principle of consistency and relevant case laws, decided the issue in favor of the assessee for the assessment year 1989-90. Issue 3: Acceptance of the method for working out 'book profit' under section 115J(1A) of the Income-tax Act: The Revenue challenged the method adopted by the Assessing Officer for working out 'book profit' under section 115J(1A) of the Income-tax Act. The High Court, after reviewing the Commissioner's order for the assessment year 1990-91, held that the principle of consistency applied. The Court found that the question of law favored the assessee based on a judgment from another case. Consequently, the Court allowed the applications, dismissed the appeals, and decided the question of law against the Revenue and in favor of the assessee. In conclusion, the High Court's judgment addressed the disposal of appeals for different assessment years, the computation of profit under section 115J, and the acceptance of the method for working out 'book profit' under the Income-tax Act, providing detailed analysis and applying legal principles and relevant case laws to decide in favor of the assessee.
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