High Court Of Madras
CIT vs. Sree Senhavalli Textiles (P) Ltd.
Section 32(1), Expln. 5
Asst. Year 1988-89
R. Jayasimha Babu & K. Raviraja Pandian, JJ.
Tax Case No. 2 of 1998
1st October, 2002
Counsel Appeared
J. Naresh Kumar, for the Revenue : None, for the Assessee
JUDGMENT
R. JAYASIMHA BABU, J :
The question referred to us at the instance of the Revenue is, “Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in upholding the order of the CIT(A) holding that the depreciation should not be allowed to the assessee since he has specifically withdrawn the claim for depreciation by filing revised return ?”
The assessment year is 1988-89. The Supreme Court in the case of CIT vs. Mahendra Mills (2000) 159 CTR (SC) 381 : (2000) 243 ITR 56 (SC), has held that if the revised return filed by the assessee is a valid return and the assessee has withdrawn the claim for depreciation that it had made in the original return, then the assessment based on the revised return without considering the claim for depreciation would be a proper assessment. The Court observed that the privilege of claiming depreciation cannot be converted into a disadvantage, and the option cannot become an obligation. Though after that judgment was rendered by the apex Court, Expln. 5 was inserted in s. 32(1) of the IT Act, 1961, by the Finance Act 2001, w.e.f. 1st April, 2002, declaring that “for the removal of doubts” the provisions of sub-s. (1) will apply whether or not the assessee claims deduction in respect of depreciation in computing his total income, that Explanation cannot be regarded as taking away the effect of the judgment of the Supreme Court for the years prior to the date of introduction of the Explanation. The law declared by the Supreme Court cannot be regarded as having merely raised doubts. The interpretation of the relevant provisions of the Act by the apex Court settles the law, and unless the subsequent amendment to the statute is expressly given retrospective effect, the law laid down by the apex Court will remain the binding law for the period prior to the amendment. The newly added Explanation takes effect only on and from 1st April, 2002, and will not be applicable for prior years.
For the asst. yr. 1988-89, no depreciation was required to be allowed if the same had not been claimed. If a claim made in the original return had been given up in the revised return, there was no obligation to consider the claim for depreciation. The Tribunal was therefore right in upholding the order of the CIT(A) who had held that the depreciation need not be allowed to the assessee as the assessee had specifically withdrawn the claim made earlier by filing a revised return.
The question is, therefore, answered against the Revenue.
[Citation : 259 ITR 77]
