Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to depreciation on assets transferred to it by the Government without a registered deed of conveyance ?

High Court Of Madras

CIT vs. Pallavan Transport Corporation Ltd.

Sections 32(1), 36(1)(iii), 37(1)

Asst. Year 1978-79

R. Jayasimha Babu & N.V. Balasubramanian, JJ.

T.C. No. 1740 of 1986

20th April, 1998

Counsel Appeared

C.V. Rajan, for the Revenue : R. Meenakshisundaram, for the Assessee

JUDGMENT

R. JAYASIMHA BABU, J. :

Four questions have been referred to us at the instance of the Revenue arising out of the assessment of the respondent’s income for the asst. yr. 1978-79. The questions referred to us are :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to depreciation on assets transferred to it by the Government without a registered deed of conveyance ?”

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to the deduction in respect of contribution to insurance fund and whether such a contribution should be treated as a contingent liability ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to the deduction of the initial contribution to the insurance fund ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to be deduction of the interest on the loan taken from the Tamil Nadu Government ?”

A Questions similar to the first question was considered by this Court in the case of CIT vs. Tamil Nadu Small Industries Development Corporation Ltd. (1991) 91 CTR (Mad) 32 : (1991) 190 ITR 655 (Mad) : TC 27R.250 and the question was answered in favour of the assessee. The same answer is required to be given to the first question referred to us. Accordingly, the first question is answered in favour of the assessee.

Question similar to the second and third questions, were considered by this Court in another case involving the same assessee in the case of CIT vs. Pallavan Transport Corporation Ltd. (1997) 137 CTR (Mad) 609 : (1998) 230 ITR 288 (Mad) : TC S16.1758. The question therein were answered in favour of the Revenue and the same answer is required to be given for this assessment year also. These two questions, namely, the second and third questions, are answered in favour of the Revenue.

The question similar to the fourth question was considered by this Court in another case of the assessee in Taxcase No. 140 of 1985, decided on 21st Aug., 1996, and it was held by the Court that though the assessee was not entitled to the deduction under s. 36(1) of the Act, it claim for such deduction under s. 37 of the Act was required to be considered and this Court remitted the matter of the Tribunal. A similar course is to be adopted for this assessment year also. The Tribunal is directed to consider the claim of the assessee for deduction of the amount paid as interest on the loan obtained from the Tamil Nadu Government under s. 37 of the Act. Parties to bear their respective costs.

[Citation : 247 ITR 607]

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