JUDGMENT
Rakesh Kumar Garg, J.
1. Delay of 465 days in re-filing the appeal is condoned for the reasons stated in the application.
The revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) against the order of the Tribunal, Chandigarh Bench ‘A’, Chandigarh, passed in ITA No. 282/Chd/2002, dated 5-8-2005 for the assessment year 1998-99 raising the following substantial question of law:
Whether on the facts and law, the Hon’ble Tribunal was legally justified to ignore Clause (b) of Section 41(2) of Income Tax Act, when the entire machinery of an independent unit No. 1 as owned and used by the respondent for business and depreciation allowed to it under Section 32 of Income Tax Act, was sold in the previous year ?
2. The respondent assessee is a company which filed its return of income-tax for the assessment year 1998-99 on 30-11-1998 declaring total income of Rs. 16,83,090. The assessment was completed on 29-3-2001 under Section 143(3) of the Act on a total income of Rs. 39,37,200. While completing the assessment, the assessing officer made an addition of Rs. 25,76,119 by treating the difference between the sale price of Rs. 29,80,000 of entire machinery installed at unit No. 1 of the factory premises of the respondent company and the WDV of the said machinery as on 1-4-1997 at Rs. 4,11,811 by invoking the provisions of Section 41(2) of the Income Tax Act, 1961 read with amended provisions of Sections 50 and 50A of the Act.
3. The assessee filed an appeal before the Commissioner (Appeals) against the order of the assessing officer dated 29-3-2001. The Commissioner (Appeals), Ludhiana vide his order dated 25-1-2002 allowed the appeal of the assessee and deleted the addition of Rs. 25,76,119 by holding that:
1. Section 41(2) was not applicable to the facts of this case as it was applicable only to plant and machinery engaged in generation and distribution of power.
2. Effect of the insertion of Section 50A of Income Tax Act, was to make special provisions for computation of the cost of acquisition in the case of depreciable assets referred to in Section 32(1)(i) of the Act.
3. Section 50 of the Act was not applicable to the facts of the case as the block of the assets existed at the opening as well as at the closing of the financial year.
4. Feeling aggrieved by the aforesaid order, the revenue filed an appeal before the Tribunal, Chandigarh. The said appeal has been dismissed by the Tribunal as it did not find any infirmity in the order of the learned Commissioner (Appeals), vide its order dated 50-8-2005.
5. Shri Sanjeev Bansal, learned Counsel appearing for the appellant revenue has argued that the entire machinery, owned by the respondent and used for independent business of unit No. 1 in respect of which depreciation was claimed was sold in the previous year. Accordingly, the excess amount of sale consideration of the machinery over the WDV was considered as profit chargeable to tax under the head “Business income” within the meaning of Clause (b) of Section 41 (2) of Income Tax Act, on sale of machinery on which depreciation was claimed @ of 12.50 per cent under Clause (i) of Sub-section (1) of Section 32 of Income Tax Act. It was also argued by him that the entire machinery of unit No. 1 as owned by the respondent was sold during the year and therefore, as per the provisions of Section 50(2) of the Act, the block of assets ceased to exist.
6. We have heard learned Counsel for the revenue and perused the impugned order.
7. In the present case, after noticing the provisions of Section 2(11) of the Act for the period, the Tribunal has given a finding of fact that block of assets was intact and the same did not cease to exist. From the facts of the case, the Tribunal has found that in the present case, plant and machinery was block of assets and all the assets of similar nature had been shown under this head and as per depreciation chart filed by the assessee opening balance in plant and machinery as on 1-4-1997 was Rs. 4,11,881.11. In this block of assets there was an addition of Rs. 75,33,668 and the sale was at Rs. 29,80,000. Thus, the total cost as on 31-3-1998 was Rs. 49,57,549.11. And after providing depreciation @ of 12 per cent amounting to Rs. 6,19,693.11, WDV as on 31-3-1998 remained at Rs. 43,37,856. Thus, it was found by the Tribunal that the plant and machinery had not been sold totally. There was addition as well as sale but the plant and machinery as a whole remained in existence and therefore, it cannot be said that the block of assets under the head “Plant and machinery” was sold and the difference was chargeable to tax.
8. On the basis of this finding, the Tribunal found that depreciation was claimed under the provisions of Section 32(1) of the Act as prescribed. Thus, the Tribunal found no infirmity in the order of the Commissioner (Appeals) and dismissed the appeal filed by the revenue.
9. There is no material on the record of the case to arrive at a different finding of fact than the one given by the Tribunal regarding the existence of block of assets in the present case. There is also no evidence on the record that the entire plant and machinery of unit No. 1 has been sold and the purchases of Rs. 75,33,668 of new machinery have been made for the unit No. 2. From the facts it is clear that there was addition as well as sale but the plant and machinery as a whole remained in existence. Thus, the provisions of Section 32(1) of the Act were rightly made applicable in the present case and the depreciation had been correctly claimed on the WDV merged after making the adjustment of addition and sale in the block of assets.
10. Thus, we find no infirmity in the orders of the Tribunal and no substantial question of law arises in this appeal for the determination of this Court. Hence, this appeal is dismissed.