Commissioner Of Income Tax vs Jindal Steel & Power Ltd. on 2 September, 2008

ITA No. 544 of 2006                    1

                      In the High Court of Punjab and Haryana
                            at Chandigarh

                                       ITA No. 544 of 2006

                                       Date of Decision: 02 .09. 2008



Commissioner of Income Tax, Hisar                        .....Appellant


        Versus


Jindal Steel & Power Ltd., Delhi Road, Hisar             ...... Respondent


Coram:       Hon'ble Mr. Justice Adarsh Kumar Goel
             Hon'ble Mr. Justice Ajay Tewari


1. Whether Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?


Present:     Mr.Sanjeev Kaushik, Addl. Advocate General, Haryana
             for the appellant.

                      ****
Ajay Tewari, J.

This is an appeal under Section 260-A of the Income Tax Act,

1961( hereinafter referred to as ‘the Act’) by the revenue against the order

dated 31.03.2006 passed by the Income Tax Appellate Tribunal, Delhi

Bench ‘H’, New Delhi passed in ITA No. 3663(Del.)/2005 for the

assessment year 2000-2001, proposing following substantial questions of

law:-

i) Whether on the facts and circumstances of the case, the
Hon’ble ITAT can ignore the compliance to statutory
provisions of exercising option to adopt WDV method in
place of straight line method prescribed under the statutory
provisions on the assets used for power generation?

ITA No. 544 of 2006 2

ii) Whether on the facts and circumstances of the case, the
examination of the claim of deduction claimed by the
assessee company by the Assessing Officer is fettered with
the finding of the Auditor of the Company?

iii)Whether on the facts and circumstances of the case, the
Hon’ble ITAT is correct in deleting the disallowance made
by the AO pertaining to the exaggerated profit of captive
power generating unit by claiming higher rate than the cost
price or the market price charged by it on the supply of
power made by it to 3rd party i.e. State Electricity Board?”

At the very outset we may record that the counsel for the

revenue has very fairly stated that question No.3 stands covered against the

revenue and we hold as such accordingly.

As regards the other issues it may be noticed that the assessee

claimed depreciation on Written Down Value which was disallowed by the

Assessing Officer on the ground that the assessee had not opted for the same

as per proviso to sub Rule (1A) of Rule 5 of the Income Tax Rules, 1962

which is quoted herein below:-

“Provided further that the undertaking specified in clause

(i) of sub-section (1) of Section 32 of the Act may,
instead of the depreciation specified in Appendix IA, at
his option, be allowed depreciation under sub-rule (1)
read with Appendix I, if such option is exercised before
the due date for furnishing the return of income under
sub-section (1) of Section 139 of the
Act,…………………………………………………………………………”

In appeal the learned Appellate Authority upheld the same. In

second appeal the learned Tribunal accepted the appeal on the question of

permission to claim depreciation on WDV basis holding as follows:-

“It is seen that no particular format or procedure has been
laid down in the second proviso in relation to exercise of
ITA No. 544 of 2006 3

option by an assessee. Second proviso only says that
option is to be exercised before the due date for
furnishing the return of income u/s 139(1) for the
assessment year 1998-99 in respect of power generating
undertaking then existing and for the assessment year in
which a new undertaking begins to generate power. The
case of the assessee is that it began to generate power
during the previous year relevant to assessment year
1999-2000. As per Annexure-D annexed to the
computation of income chargeable to tax filed along with
the return of income for assessment year 1999-2000, the
assessee had claimed depreciation in accordance with
sub-rule (1) read with appendix I. Thereafter the
assessee’s return of income was processed u/s 143(1) on
29.09.2000 and no adjustment in that behalf was made by
the Assessing Officer. According to the learned counsel
for the assessee the return of income filed before the due
date of furnishing the return u/s 139(1) for assessment
year 1999-2000, made proper compliance to the
requirements of the second proviso to Rule 5(1A) of
Income Tax Rules. On consideration of the matter we
accept this argument.”

We find no perversity in this reasoning and questions No. 1

and 2 cannot be held to be substantial questions of law.

In this view of the matter, the appeal is dismissed.

(AJAY TEWARI)
JUDGE

(ADARSH KUMAR GOEL)
JUDGE

September 02, 2008
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