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TMI Blog2002 (12) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Ltd. [1994] 207 ITR 718. The Assessing Officer rejected the claim of the assessee and added back the said amount of Rs. 56,15,081 by following the reasonings for the assessment year 1991-92. However, the Assessing Officer stated that the learned Commissioner of Income-tax (Appeals) in the appeal filed by the assessee had deleted the addition made by the Assessing Officer for the assessment year 1991-92 but the department had filed the appeal against the said order of learned Commissioner of Income-tax (Appeals) before the Tribunal. Being aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals) . The learned Commissioner of Income-tax (Appeals) by following the decision of the Calcutta High Court in the case of Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718 allowed the claim of the assessee. Hence, the Department is in appeal before the Tribunal. During the course of hearing of the appeal, the learned Departmental Representative justified the action of the Assessing Officer. However, the learned Authorised Representative of the assessee submitted that the very same issue was considered by the Tribunal D Bench, Calcutta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentatives of the parties and have also gone through another order of the jurisdictional High Court in the case of Century Enka Ltd. [1992] 196 ITR 447 (Cal). On a perusal of the earlier order of the Tribunal dated November 28, 2000, we observe that the said decision of the jurisdictional High Court in the case of Century Enka Ltd. [1992] 196 ITR 447 was not considered. Further, the jurisdictional High Court has considered the aforesaid issue in Century Enka Ltd. [1992] 196 ITR 447 which was decided on May 30, 1991, i.e., subsequent to the decision in the case relied on by the learned Authorised Representative of the assessee, namely, CIT v. Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718 which was decided on March 28, 1991. The Bombay High Court has held in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 that when there are two different decisions of the same court, it is advisable to follow the later decision of the court. Accordingly, we respectfully following the later decision of the jurisdictional High Court in the case of Century Enka Ltd. [1992] 196 ITR 447, hold that the assessee is entitled for the incremental depreciation on the basis of the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta High Court also held in the said decision that there is no difference so far as the fact is concerned between actual devaluation and day-to-day fluctuation in the exchange rate. Therefore, in the case of Indian Aluminium Co. Ltd., I decided the issue in favour of the assessee by following the direct judgment of the hon'ble Calcutta High Court, in the case of Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718. It is also a cardinal principle of taxation law that whenever two different views are possible, one which is in favour of the assessee is required to be taken. So far as the issue involved in the present case is concerned, the hon'ble Calcutta High Court took diametrically opposite views in the cases of Century Enka Ltd. [1992] 196 ITR 447 and Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718, almost around the same point of time. Again, in the case of Indian Aluminium Co. Ltd., I considered the detailed discussions made by the hon'ble Supreme Court in the case of Arvind Mills Ltd. [1992] 193 ITR 255 at page 262 of the said reported judgment, the hon'ble Supreme Court discussed as below : Under the definitions contained in section 32 read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case, the order of the Commissioner of Income-tax (Appeals) directing to allow depreciation on the additional liability arising to the assessee due to fluctuation in the exchange rate is to be upheld or not ? The facts are that the assessee claimed Rs. 56,15,081 as depreciation on exchange fluctuation capitalized during the year under section 43A of the Income-tax Act. The Assessing Officer disallowed the claim in the light of the order for the earlier years. On appeal, the learned Commissioner of Income-tax (Appeals) allowed the claim in the light of the order for the assessment year 1991-92 following the decision of the Calcutta High Court in the case of CIT v. Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718. The Assessing Officer was directed to allow depreciation on the additional liability arising out of the difference in the rate of exchange. He accordingly directed the Assessing Officer to follow the order of the hon'ble High Court in the present case and allow the depreciation and the other liability. Aggrieved by the said order, the Revenue came up in appeal before the Tribunal and it was submitted that the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present order, my learned Brother, the Judicial Member, has passed his order by mainly relying on the discussions made by the hon'ble High Court at Calcutta in the case of Century Enka Ltd. [1992] 196 ITR 447. It is, however, required to be mentioned in this connection that the said discussions were of the nature of obiter, inasmuch as, the hon'ble Calcutta High Court was not required to adjudicate upon the issue which forms the subject matter of the present appeal. On the other hand, the other case of Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718 is a direct authority, so far as the issue before us is concerned, inasmuch as, the factual circumstances as well as the point to be decided by the hon'ble High Court were exactly the same in that case, as in the present case before us. The hon'ble Calcutta High Court held in favour of the assessee in the case of Kanoria Chemicals and Industries Ltd. [1994] 207 ITR 718 and decided that depreciation and investment allowance are required to be granted on the increased liability caused by fluctuation in the exchange rate. The hon'ble Calcutta High Court also held in the said decision that there is no difference so far as the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be entitled to depreciation as well as investment allowance on the enhanced liability in respect of the cost of the assets concerned due to fluctuation in the exchange rate, since the assessee follows the mercantile system of accounting. Therefore, I uphold the order of the learned Commissioner of Income-tax (Appeals) on this issue. On this difference of opinion, the above question was referred to me for decision. At the time of hearing before me, Shri Kai Sang, the learned senior Departmental Representative appeared for the Revenue and Shri R. Venkatkrishnan, learned counsel appeared for the assessee. They were heard at length. On a careful consideration of the rival submissions in the light of the material on record, I am of the view that the order of the learned Judicial Member is factually incorrect. While reversing the order of the learned Commissioner of Income-tax (Appeals), on the basis of the jurisdictional High Court in the case of Century Enka Ltd. [1992] 196 ITR 447, he relied on the decision of the hon'ble Bombay High Court in the case of CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 wherein it was held that when there are two different decisions of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of Oil and Natural Gas Corporation Ltd. v. Deputy CIT [2003] 261 ITR (AT) 1 (Delhi) in I. T. A. No. 2472 (Delhi) of 1996. By the order dated August 1, 2002, the Tribunal enunciated the principles on the basis of which the claim of the assessee has to be considered as follows (page 12) : On the basis of principles enunciated in various judicial decisions, we propose to formulate certain test questions with a view to deciding the issue before us in the light of answers to those questions. These are as under : (i) Whether the system of accounting followed by the assessee is mercantile system, which brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed and brings into credit what is due, immediately it becomes due and before it is actually received ? (ii) Whether the same system is followed by the assessee from the very beginning and, if there was a change in the system, whether the change was bona fide ? (iii) Whether the assessee has given same treatment to the losses claimed to have accrued and to the gains that may accrue to it? (iv) Whether there has been consistency and definiteness ..... X X X X Extracts X X X X X X X X Extracts X X X X
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