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TMI Blog2017 (11) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Assessing Officer, the question of depreciation arose for consideration. The Respondent-Assessee claimed that it had not claimed depreciation even though the assets were put in use during the year. The Assessing Officer disagreed with the contention of the Respondent-Assessee and held that under the Block of Assets Concept and in view of the decision of the Apex Court in Saharanpur Electrical Supply Company Ltd., vs CIT 194 ITR 294, there is no option with the Assessee not to claim depreciation and therefore disallowed the case of the Respondent-Assessee and took the depreciation into consideration. The Assessing Officer thereafter determined the total income of the Respondent-Assessee at Rs. 44,91,314/- and passed an order accordingly. 3. The Respondent-Assessee filed an Appeal ITA No.154/PNJ/92-93 before the Commissioner of Income Tax (Appeals). The main contention of the Respondent-Assessee, relevant for the purpose of the present Appeal was that the Assessee has an option whether to claim depreciation or not, and depreciation cannot be thrust upon the Assessee by the Assessing Officer suo motu. Decision of this Court in CIT vs Sri Someshwar Sahnkari Sakhar Karhana Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment to the Income Tax Act, with effect from 1.4.1988, deleting section 34 of IT Act ? C) Whether the decision of the Hon'ble Bombay High Court in the case of "CIT vs. Gannon Dunkerly and Company Pvt. Ltd.," is applicable in the facts and circumstances of the case ?" 6. When the Appeal came up for final hearing, it was urged on behalf of the Respondent-Assessee that the Tax effect, which forms subject matter of the Appeal, is Rs. 1,47,340/-, which is less than Rs. 2,00,000/- and, therefore, in view of the view taken by this Court as well as the circulars of the Central Board of Direct Taxes of not pursuing Appeals where tax amount was less than Rs. 2,00,000, the Appeal is not maintainable. The Division Bench (Karnik & Reis, JJ) accepted this contention and disposed of the Appeal by order dated 25th August 2010. The Appellant- Revenue filed a Review Application No.26 of 2010. The Review Application was rejected on the ground that it is not maintainable. A Special Leave Petition No.10603-10604/2014 was filed by the Appellant-Revenue in the Apex Court. In Special Leave Petition, in the affidavit, one of the ground raised by the Appellant-Revenue was that since the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular No.21 of 2015 of CBDT were kept open. The Appeal is thus placed for final hearing before us. 8. Ms. Razaq, the learned Counsel for the Appellant has tendered an additional substantial question of law. We have heard Mr Supekar, the learned Counsel for the Respondent on the request made by the learned Counsel for the Appellant-Revenue for framing an additional question of law. 9. For the purpose of appreciating the request of the Revenue for framing an additional question of law, we refer to Section 260(4) of the Act, which reads thus : "260 (1) ... (2) ... 260A. Appeal to High Court.- (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) ... (a) ... (b) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) ... (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent-Assessee itself on 31st December 1990 and revised the return filed on 17th July 1991, make it clear that the Respondent-Assessee falls within the ambit of Chapter VI-A of the Act. 12. Mr. Supekar for the Assessee submitted that it was never the case of the Revenue that the Assessee falls with the Section 80HH of the Act and that its claim for depreciation must be construed under the said provision. He submitted that it was the case of the Revenue that the Respondent-Assessee is not entitled to claim depreciation under the general provisions dealing with depreciation under Section 32, which was rightly negated by the Tribunal, as at that point of time there was an option available to an Assessee not to claim depreciation. 13. We have considered the rival contentions. We are of the opinion that the correct course of action is to remand the proceedings to the Tribunal. The two factors persuade us to take this course of action,that is to frame the above additional question of law and send the same for consideration of the Tribunal both on factual as well as legal aspects. Firstly, factor is that, prima facie, we find that in the Return of income of the Assessee, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee claims special deduction under Chapter VI-A. The matter can be looked at from another angle. While computing normal income, an assessee may set off depreciation against its gross income. In such cases, depreciation is like any other ordinary expense. However, such depreciation cannot be equated with special deduction under Chapter VI-A. In any event, in this case, on the facts, the assessee claims depreciation of Rs. 75 from the balance income of Rs. 80 and, therefore, the judgment of the Supreme Court in Mahendra Mills case [2000] 243 ITR 56 has no application." (Emphasies supplied) 15. Thus, if the factual position is established that the Respondent-Assessee falls within the ambit of Section 80HH of the Act, then the entire complexion of the dispute will change. Therefore, the appropriate course of action would be to quash and set aside the Order passed by the Income Tax Tribunal, Panaji and restore the IT Appeal No.1113/PN/95. 16. Mr Supekar during the earlier hearing had taken a preliminary objection regarding the maintainability of the present Appeal in view of the circular of CBDT dated 10th December 2015 based on the tax effect. However, in view of the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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