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TMI Blog2019 (8) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 260A of the Income Tax Act, 1961 (for short, the Act) is directed against the order dated 27.9.2007 made in ITA.No.2445/Mds/2005 on the file of the Income Tax Appellate Tribunal, Chennai 'A' Bench for the assessment year 2000-01. 3. The appeal was admitted on 09.6.2008 on the following substantial questions of law : "i. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to 10% depreciation on residential flats used for its employees? and ii. Whether, in the facts and circumstances of the case, the Tribunal was right in allowing deduction under Section 80HHC on the basis of book profits under Section 115JA and not on the basis of eligible profits under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mrs.R.Hemalatha, learned Senior Standing Counsel for the Revenue that the Tribunal failed to take into consideration the fact that the assessee had not provided residential accommodation for all its employees, but provided only for five of such employees and that too, the residential accommodation is situated away from the business premises of the assessee, that therefore, the said Circular dated 12.12.1996 could not have been applied and that the CIT(A) was right in interpreting the said Circular by holding that the said Circular must have been issued in the context of employees' quarters built in the factory premises itself and not to residential flats acquired away from the factory though they might have been used for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to and necessary for the purpose of their duties. It is considered that what applies to buildings applies also to the fans, air- conditioners and refrigerators fitted to those buildings, as those are amenities which virtually form part of such buildings. 3. On reconsideration therefore the Board have decided, in super session of the instructions issued in their letter dt. the 29th Feb., 1964, that fans, airconditioners, refrigerators etc. provided by the employer at the residence of the employees should be considered to have been used wholly for the purpose of the employer's business and full depreciation as may be admissible in accordance with the rules, should be allowed in the assessment of the employer. Where such assets have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees nor does it place any restriction that the residential accommodation provided by the employer should be situated within the factory premises or business premises of the assessee. Thus, we are required to interpret the said Circular dated 12.12.1996 issued by the Board in its letter and spirit and we are not expected to add any 'words' or 'phrases' in the Circular. 11. An identical issue came up for consideration before a Division Bench of the High Court of Punjab in the case of CIT Vs. Delhi Cloth and General Mills Co. Ltd. [reported in (1966) 59 ITR 152] wherein one of the questions, which was framed for consideration, was as to whether the assessee company therein was rightly assessed under Section 9 in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly, is a business expediency and it is not for the Assessing Officer to sit in the arm chair of the assessee to decide as what would be best for their employees. Thus, the first substantial question of law is required to be answered against the Revenue and it is accordingly answered against the Revenue. 13. With regard to the second substantial question of law i.e. whether the Tribunal was right in allowing deduction under Section 80HHC of the Act on the basis of book profits under Section 115JA of the Act and not on the basis of eligible profits under Section 80HHC as per normal computation, this question was considered in the case of CIT Vs. M/s.Prime Textiles Limited [TCA.No.13 of 2009 dated 14.11.2018], to which, one of us (TSSJ) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 115JA, clause (ix). In our view, the judgment of the Special Bench of the Tribunal in Syncome Formulations squarely applies to the present case. Following the view taken by the Special Bench in Syncome Foundations, the Tribunal in the present case came to the conclusion that deduction claimed by the assessee under Section 80HHE has to be worked out on the basis of adjusted book profit under Section 115JA and not on the basis of the profits computed under regular provisions of law applicable to computation of profits and gains of business. The judgment of the Tribunal has been upheld by the High Court.?" 14. An identical question was considered by us in the case of CIT Vs. Sundaram Brake Linings [TCA.Nos.1351 to 1353 of 2008 dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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