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TMI Blog1989 (12) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ITO in which he had made an addition on account of unabsorbed depreciation pertaining to A. Ys. 1975-76 and 1977-78 as such unabsorbed depreciation cannot be validly carried forward in the hands of the firm and the same ought to have been allocated between the partners according to the judgment of Hon'ble Gujarat High Court in the case of CIT v. Garden Silk Wvg. Factory [1975] 101 ITR 658. He contended that the said judgment was delivered by the Hon'ble Gujarat High Court on 26th September, 1974. The assessment order for A.Y. 1980-81, which has been rectified by the ITO u/s 154, was originally passed on 14th December, 1982 and the order of rectification u/s 154 was passed on 10th January, 1986. He submitted that when the original assessment order was passed by the ITO for A.Y. 1980-81, the judgment of Hon'ble Gujarat High Court in the case of Garden Silk Wvg. Factory was already there and, therefore, the benefit of carry forward of past unabsorbed depreciation allowed by the ITO in A.Y. 1980-81 was a mistake apparent from records and has rightly been rectified by the ITO. He placed reliance on the judgment of Hon'ble Gujarat High Court in the case of CIT v. Ramjibhai Hirjib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment orders passed for A.Ys. 1975-76 and 1977-78 will not stand in the way of the department to rectify the assessment order for A.Y. 1980-81. In view of these facts, the learned D.R. contended that the CIT(A) ought to have sustained the order passed by the ITO u/s 154 in which he had added an amount of Rs. 89,281 being the amount of unabsorbed depreciation pertaining to A.Ys. 1975-76 and 1977-78. 2.1 As regards ground No. 2, the learned D.R. submitted that the CIT(A) was not justified in directing the ITO to remit the interest u/s 215 of the Act. It was submitted that an order of rectification passed u/s 154 is covered by the term 'regular assessment' as held by the Hon'ble Gujarat High Court in Bardolia Textile Mills v. ITO [1985] 151 ITR 389 (FB). It was contended that interest u/s 215 was originally charged by the ITO at Rs. 1,317 and since the income assessed and demand increased on account of order u/s 154, interest charged u/s 215 was also consequently increased to Rs. 9,541. The learned D.R. supported the order passed by the ITO in increasing the levy of penal interest u/s 215 to Rs. 9,541. 3. The learned counsel for the assessee contended that the CIT(A) had right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders for A.Ys. 1975-76 and 1977-78. In A.Y. 1975-76 the ITO, while passing the assessment order on 18th January, 1977, has clearly held that depreciation of Rs. 80,489 and 80J relief of Rs. 14,998 may be carried forward. In the order u/s 158 for allocation of loss amongst the partners, the said amount of unabsorbed depreciation has not been allocated between the partners. Similarly while passing the assessment order for A.Y. 1977-78, the learned ITO, in the assessment order dated 19th November, 1979, has clearly observed that depreciation, investment allowance and relief u/s 80J are allowed to be carried forward. The amount of unabsorbed depreciation has also not been allocated u/s 158 between the partners of the said firm for A.Y. 1977-78. The learned counsel submitted that in case any mistake, as alleged by the revenue, had occurred it occurred in the assessment orders passed for A.Ys. 1975-76 and 1977-78. Since these orders could not be rectified as time limit prescribed u/s 154(7) had already expired, the benefit of carry forward of assessed amount of unabsorbed depreciation pertaining to these two years cannot be denied by resort to order u/s 154 for A.Y. 1980-81. He invited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 is allowed to be carried forward : A.Y. 1975-76 Rs. 6,134 A.Y. 1977-78 Rs. 84,224 ------------------- Rs. 90,358 -------------------- In view of the aforesaid orders passed by the ITO for A.Ys. 1975-76, 1977-78, 1978-79 and 1979-80, the denial of carry forward of the balance amount of unabsorbed depreciation pertaining to A.Ys. 1975-76 and 1977-78 in A.Y. 1980-81 is apparently contrary to the provisions of law especially because the orders passed for earlier years had become final and could not be validly reopened u/s 154 or under any other provisions of the I.T. Act. The learned counsel, therefore, supported the order passed by the CIT(A) and contended that he has rightly cancelled the order u/s 154 passed by the ITO in this respect. 3.1 As regards ground No. 2, the learned counsel contended that interest u/s 215 was originally charged at the time of passing the original assessment order on 14th December, 1982 amounting to Rs. 1,317. The ITO has increased the amount of interest charged u/s 215 at the time when he passed the order u/s 154 on 10th January, 1986 to Rs. 9,541. He invited our attention towards the provisions of section 215(3) as it existed prior to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the income-tax authorities situated within the jurisdiction of a particular High Court is bound by the judgment of the High Court and such judgment is a valid foundation for passing an order of rectification u/s 154. Merely because some other High Courts have taken a different view it is not correct to say that the issue, which has been subjected to rectification, was debatable one in so far as that particular State is concerned. In our considered view it is permissible for the income-tax authorities to resort to the provisions of sec. 154 for bringing a matter in consonance with the judicial pronouncements of the High Court of the State where such authorities are working. This view is fully supported by the judgments of the Hon'ble Gujarat High Court in the cases of Ramjibhai Hirjibhai Sons and Standard Radiators relied upon by the learned D.R. However, the unabsorbed depreciation was held to be eligible for being carried forward in the hands of the assessee firm in assessment order for A.Ys. 1975-76 and 1977-78. While completing the assessments for these two years, the ITO has given a definite and specific finding that the unabsorbed depreciation is allowed to be carried for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1977-78, in which it was held that the unabsorbed depreciation is allowed to be carried forward in the hands of the firm, became final and complete and the time limit for rectification of those orders u/s 154 had also expired. In view of this fact the proceedings of rectification pertaining to A.Ys. 1975-76 and 1977-78, which had already become barred by limitation of time, cannot be revived by allowing the ITO to pass an order u/s 154 for A.Y. 1980-81 to deny carry forward of past assessed amount of unabsorbed depreciation pertaining to A.Ys. 1975-76 1977-78. In view of these reasons and in view of detailed reasons given by the CIT(A) in his order, we have no hesitation in sustaining the findings given by the learned CIT(A) with regard to ground No. 1. Accordingly ground No. 1 taken by the revenue stands rejected. 4.1 As regards ground No. 2, we are inclined to accept the submissions made on behalf of the assessee. The interest u/s 215 was originally charged to the tune of Rs. 1,317. The provisions of section 215(3) as it existed prior to its amendment with effect from 1-4-1985 did not provide for any enhancement or increase in the amount of interest charged u/s 215 where the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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