High Court Of Gujarat
CIT vs. Arvind Products Ltd.
Assessment Year: 1997-98
Section: 43(6)
D. A. Mehta And Ms. H. N. Devani, JJ.
Tax Appeal No. 454 Of 2009
March 9, 2010
JUDGMENT
D. A. Mehta, J. – In this tax appeal under section 260A of the Income-tax Act, 1961 (“the Act”), filed by the Revenue for the assessment year 1997-98, the following question of law stated to be substantial question of law has been proposed :
“Whether the Appellate Tribunal is right in law and on the facts in reversing the order passed by the Commissioner of Income-tax (Appeals) directing the Assessing Officer to allow the higher claim of depreciation to the assessee on the basis of the valuation of the assets submitted on September 22, 1998 ?”
2. The facts which are not in dispute. The respondent-assessee-company purchased a textile unit named “Ankur Textile” from Arvind Mills Ltd. with effect from May 18, 1996. After the acquisition of the undertaking in order to account various assets it its books of account, 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 September 22, 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 the absence of any revised return, the claim could not be processed.
3. The assessee carried the matter in appeal before the Commissioner (Appeals) who, vide order No. CIT(A) V/Jt.CIT(A)SR-1/48/00-01, dated September 20, 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 the merits.
4. In the second round, the Assessing Officer after calling for details from the assessee processed the claim for depreciation on the merits and came to the conclusion that the claim for depreciation as per the 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 the Commissioner (Appeals) but failed. Hence, the assessee filed a second appeal before the Tribunal. The Tribunal, vide the impugned order dated February 15, 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 September 22, 1998.
6. Assailing the aforesaid order, learned senior standing counsel appearing for the appellant-Revenue submitted that the Tribunal had committed an error in law in entertaining the appeal of the assessee in the light of the fact that the Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 (SC) 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 the absence of revised return, no relief could be granted even by the Tribunal. The second alternative contention was to the effect that the impugned order of the Tribunal did not record any finding on the merits of the controversy and, therefore, also the impugned order of the Tribunal gave rise to the substantive question of law.
6.1 Elaborating on the first two contentions, it was submitted that the Commissioner (Appeals) while passing the order dated September 20, 2000, could not have issued any direction to the Assessing Officer to entertain the claim on the merits as no revised return had been filed in the 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 the Tribunal in the appeal filed by the assessee, the only contention raised by the 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 Departmental representative on the other hand, submitted that the assessee has not originally claimed the depreciation on the basis of the valuation report. The claim of depreciation was revised subsequently, vide letter dated September 2, 1998, during the course of assessment proceedings. The Commissioner of Income-tax (Appeals) should not have directed the Assessing Officer 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 the Revenue had not raised any challenge on the merits of the claim before the Tribunal. Therefore, if the Tribunal did not record any finding on the 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 the facts is an incorrect statement. The findings recorded in the earlier part of paragraph 9 of the order of the 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 the merits by the Tribunal is without any substance.
10. In so far as the 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 the Commissioner (Appeals) on September 20, 2000, had not been challenged by the Revenue and, therefore, it attained finality. Even the subsequent order made by the Assessing Officer in the second round decides the claim on the merits only and, therefore also, it is not open to the Revenue to indirectly challenge the order of the Commissioner (Appeals) made on September 20, 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 the 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 the Tribunal give rise to any question of law, much less a substantial question of law.
14. The appeal is accordingly dismissed.
[Citation : 339 ITR 643]
