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13.5.2004 passed in ITA No. 124/Bang/2003 for
the Assessment Year 1994-95, praying that this
Hon'ble Court may be pleased to: W i
i.formulate the substantial questions 65 fléwg _
stated therein u
ii. allow the appeal and set aside"t;eporéerJ"
passed by the Income Tax Appe1late.Trihunal,
Bangalore Bench in ITA. No;124/Bang/2OU3':dtfQi
13.5.2004 confirming the order passed by they
Commissioner of Income FTax(Appeals)<I,
Bangalore and confirm the order passed by the
Asst.Commnr.,of Income Tax, ucompany Circle-
4(l),Ban9alore etc. k h it' uh hii
THIS APPEAL comruc ox Fog asaains THIS
DAY, MANJUNATH J, flELIVERED_THE FOLLOWING:
5h; ~JsnsMsN:*i
The irefienuei has "come Hnp in 'this appeal
challenging they concurrent findings of the
order passed by the Commissioner of Income Tax
Vhiappealsqyg which "has been confirmed by the
1IncomeifpTaxy@ Appellate Tribunal in ITA
No{i;4/saga/2003 dt.13.5.2004.
2@N:The facts of this case are as
&'"hherennder: .
'WI
The respondent~assessee is engaged in the
manufacture and sale of Indian made foreign
liquor. For the assessment year 1994-95 the
assessee filed a return of income declaring a
loss of Rs.4,65,540/–. The matter was takenfljfl
up for scrutiny assessment. Juuring the coarse»
of scrutiny, “the Assessingk Officer *g¢:iée&?T
that for the year ending ‘Si 3,i§§§{ Wthe
assessee had not carried #6 the manufgcggring
activities and that the.hu§;uess’eas closed on
account of the”iocaI”prohiem§dLIffié assessee
had claimed_ the ddepreciation on the assets
amounting” to fRsa2}b3.536/” on plant and
__machinery. RThe_ Assessing Officer had not
Vfigranted, the “depreciation. on the ground that
the assessee had not carried on the business
actifiityugdxhccordingly, the order passed by
“Assessing Officer on 31.1.1997. On an
,Mm “Qppeai, the Commissioner of Income Tax
.hV*,A’VKhfipeals), came to be conclusion that the
‘§’>/”
~…a V
assessee was forcibly closed his business
activities on account of local problems.
Consequently, he allowed the appeal by this
order dt.16.lG.2002. Being aggrieved by thé.
same, the revenue filed an Appeal before the fi
Income Tax Appellate Tribunal;=.which “appeal fl
came to be rejected by the Tribunal confirming ”
the order passed by the Cofimissioner_ef income
Tax (Appeals). Challenging the legality and
correctness of the same} tHe’p;eg¢fit appeal is
filed raising the following duestions of law:
1) Whether,i the “Appellate Authorities were
correct in*holding that the Assessee would
be entitled to claim depreciation as well
as hexpenditure under Section 32 and
.:pSectionE37 of the Act respectively, even
“_’whenT’ad&ittedly no business activity is
Aaarriedl on by the Assessee during the
current assessment year.
V ‘Whether the Appellate Authorities were
ibcorrect in holding that if there is a lull
fin the business activity or the same is
§§/
likely to be continued in future, the
business can be deemed to have been
continued and all expenditurg;W
depreciation can be allowed and the i5ss¥h~
accumulated loss should be permitted to he_ v
Carried forward.
3. We have heard -the counsel ‘£9: ~Ehe
parties.
4. The main contention=of the appellants
counsel before _us .is;_since’1the business
activities of the assessee had been closed for
the relevantyassessment year, the assessee was
not entitled to claim depreciation as well as
expenditure ‘under}ssettions–32 and 37 of ‘the
a%Incofie,1ax Act, -To —– support his arguments, he
v5hasT:eliedgu§on the Judgment of the Supreme
co’u;_;£ in 7i.:.§66 ITR Page 1 (COMMISSIONER or
<1Ncom_TAx VS.LAI-IORE ELECTRIC SUPPLY COMPANY
R<."iTD?f Relying upon this Judgment, he requests
.'mu:the Court to set aside the order passed by the
£32"
(1
Commissioner of Income Tax (Appeals), as well
as the Tribunal.
%w _.
5. Per contra, Ma. E$RQB$&$$fi, tthe
learned counsel appearing for the respondentkp,
assessee contends that the facts in@¢1véa’;5*
the present case are different :;¢m*¢h§=c§§§_T
involved in LAHORE sI.;s_.cTRIr:_,7– sup:-fix” ‘L’fpI’i
According to him, the aforesaid Judgment has
no application to the facts and circumstances
of the present case, ‘in order to substantiate
the same, he contends that the assessee had no
intentiQnrto cl@§é its business. Business was
closed on account of the local problems not on
. V §’:V-;-y/ y
. account of shefdispute between the employer
dgand*employees, Considering the problems in the
locality not only the business of the assessee
[but also the business of others were closed
land later on the same has been revived and it
‘eis functioning. He further contends that if
dgthe business had been closed not on account of
1″?’
4
the negligence or attributable to the
assessee, the revenue cannot contend that the
if ” r”‘*;,,.,. ,
assessee had closed its business, htere£¢%épg”_
it cannot claim: depreciation, ;”= in vitheg
circumstances, he requests ;the Rcourtbftogw
dismiss the appeal.
6. Having heard theh counsel_ for the
parties, we are view that the Questions of law
raised in this” appeal; aged fiéinbé answered
against the rewenue for the following reasons:
It .i; .§agg%;pn diapers ,that the assessee
was carrying on the business in manufacturing
the Indian Vfiadelfiforeign liquor and the
»_activities of the assessee is continued even
Y¥t§¢a¥I ‘The business premises of the assessee
isu.situa£ed} in Punjab. On account of the
‘ riots and other activities in the place, where
nthe*§actory of the assessee is situated, the
‘ assessee was forced to close down the activity
‘i,till the peace was restored in the locality.
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