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TAXAP/454/2009 6/ 6 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 454 of 2009
For
Approval and Signature:
HONOURABLE
MR. JUSTICE D.A.MEHTA
HONOURABLE
MS. JUSTICE H.N.DEVANI
=========================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================
COMMISSIONER
OF INCOME TAX-I - Appellant(s)
Versus
ARVIND
PRODUCTS LTD - Opponent(s)
=========================================
Appearance
:
MR MANISH R
BHATT, SR. STANDING COUNSEL with MRS MAUNA M BHATT
for Appellant(s) : 1,
None
for Opponent(s) : 1,
=========================================
CORAM
:
HONOURABLE
MR. JUSTICE D.A.MEHTA
and
HONOURABLE
MS. JUSTICE H.N.DEVANI
Date
: 09/03/2010
ORAL
JUDGMENT
(Per :
HONOURABLE MR. JUSTICE D.A.MEHTA)
1. In
this Tax Appeal under Section 260A of the Income Tax Act, 1961 (the
Act) filed by Revenue for assessment year 1997-98, following question
of law stated to be substantial question of law has been proposed:-
Whether
the Appellate Tribunal is right in law and on facts in reversing the
order passed by the CIT(A) directing the Assessing Officer to allow
higher claim of depreciation to the assessee on the basis of the
valuation of the assets submitted on 22/09/1998?
2. The
facts which are not in dispute. The respondent assessee Company
purchased a textile unit named Ankur Textile from Arvind Mills
Limited with effect from 18th May, 1996. After the
acquisition of the undertaking in order to account various assets it
its books of accounts, the assessee obtained a valuation report and
recorded the value of each asset as per the value assigned to the
said asset in the valuation report. In the return of income
originally filed, the assessee Company claimed depreciation on the
written down value of these assets appearing in the tax records of
the seller on the date of sale. Vide letter dated 22nd
September, 1998, a revised claim of depreciation was made by the
assessee. The said claim was not entertained by the Assessing
Officer on the ground that in absence of any revised return, the
claim could not be processed.
3. The
assessee carried the matter in appeal before Commissioner (Appeals)
who vide order no. CIT(A) V/Jt.CIT(A)SR-1/48/00-01 dated 20th
September, 2000 partly allowed the appeal and restored two issues to
the file of the Assessing Officer, one of them being claim of revised
depreciation to be decided on merits.
4. In
the second round, the Assessing Officer after calling for details
from the assessee processed the claim for depreciation of merits and
came to the conclusion that the claim for depreciation as per
valuation report could not be accepted in view of Explanation 2 to
Section 43(6) of the Act.
5. The
assessee carried the matter in appeal before Commissioner (Appeals)
but failed. Hence, assessee filed Second Appeal before the Tribunal.
The Tribunal vide impugned order dated 15th February,
2008 held that the assessee was entitled to the claim of depreciation
and directed the Assessing Office to allow the depreciation on the
basis of the valuation of the assets submitted on 22nd
September, 1998.
6. Assailing
the aforesaid order, learned senior Standing Counsel appearing for
appellant Revenue submitted that the Tribunal had committed an error
in law in entertaining the appeal of the assessee in light of the
fact that Supreme Court in the case of Goetze (India) Ltd. vs.
Commissioner of Income-Tax, (2006)
284 ITR 323 has laid down that a claim for deduction
otherwise than by a revised return was not permissible. Alternative
submission was that if the Assessing Officer could not entertain the
claim in absence of revised return, no relief could be granted even
by the Tribunal. Second alternative contention was to the effect
that the impugned order of Tribunal did not record any finding on
merits of the controversy and, therefore, also the impugned order of
Tribunal gave rise to the substantive question of law.
6.1 Elaborating
on the first two contentions, it was submitted that Commissioner
(Appeals) while passing the order dated 20th September,
2000 could not have issued any direction to the Assessing Officer to
entertain the claim on merits as no revised return had been filed in
light of the judgment of the Apex Court in the case of Goetze (India)
Ltd. (supra).
7. As
can be seen from the impugned order of Tribunal in the appeal filed
by the assessee, the only contention raised by Revenue through its
departmental representative was based on the judgment of the Supreme
Court. The contention as recorded by the Tribunal reads as under:-
8.
The learned DR on the other hand, submitted that the assessee has
not originally claimed the depreciation on the basis of valuation
report. The claim of depreciation was revised subsequently vide
letter dated 02-09-98 during the course of assessment proceedings.
The CIT(A) should not have directed the AO to consider the revised
claim in view of the decision of the Hon’ble Supreme Court in the
case of GOETZE (INDIA) LTD. V CIT (2006) 284 ITR 323 (SC).
8. Hence,
it is apparent that Revenue had not raised any challenge on merits
of the claim before the Tribunal. Therefore, if the Tribunal did not
record any finding on merits by way of an elaborate discussion, no
fault can be found with the Tribunal.
9. However,
factually, the submission that the Tribunal has not recorded any
finding on facts is an incorrect statement. The findings recorded in
earlier part of paragraph No.9 of the order of Tribunal categorically
record that Explanation 2 to Section 43(6) of the Act will not apply
in the case of the assessee. This is preceded by narration of facts
and reasons as to why the said Explanation is not applicable. In the
circumstances, the submission that there is no finding on merits by
the Tribunal is without any substance.
10. Insofar
as applicability of the Supreme Court judgment is concerned, suffice
it to state that the approach of the Tribunal is correct in law. The
Tribunal has rightly noted that the order made by Commissioner
(Appeals) on 20th September, 2000 had not been challenged
by Revenue and, therefore, it attained finality. Even the subsequent
order made by the Assessing Officer in the second round decides the
claim on merits only and therefore also, it is not open to Revenue
to indirectly challenge the order of Commissioner (Appeals) made on
20th September, 2000 which had not been challenged till
this point of time. If such contention is accepted, it would give a
go bye to statutory period of limitation prescribed for preferring an
appeal and it is not possible to permit any side to raise an issue
which had attained finality, with the parties acting on the direction
made in the order at the relevant point of time.
11. It
is also necessary to note that the order of Apex Court in the case of
Goetze (India) Ltd. (supra) was only in relation to the power of the
Assessing Officer to entertain a claim for deduction otherwise than
by filing a revised return. The Apex Court has made it clear that
the issue in this case is limited to the power of the assessing
authority and does not impinge on the power of the Income Tax
Appellate Tribunal under Section 254 of the Income Tax Act, 1961.
12. In
the circumstances, the entire contention based on application of
decision in case of Goetze (India) Ltd. (supra) is misconceived in
law.
13. In
the circumstances, on none of the grounds pleaded or urged at the
time of hearing does the impugned order of Tribunal give rise to any
question of law, much less a substantial question of law.
14. The
appeal is accordingly dismissed.
(
D.A. Mehta, J. )
(
Harsha Devani, J. )
hki
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