High Court Of Madras
OM Sindhoori Capital Investments Ltd. vs. JCIT
Section 43(1), Expln. 4A
Asst. Year 1996-97
Markandey Katju, C.J. & N.V. Balasubramanian, J.
Tax Case No. 72 of 2002
3rd December, 2004
Counsel Appeared :
P.P.S. Janarthana Raja for M/s Subbaraya Aiyar, Padmanabhan & Ramamani, for the Assessee : T. Ravi Kumar, for the Revenue
JUDGMENT
N.V. Balasubramanian, J. :
By order dt. 16th Sept., 2002, this Court admitted the above tax case appeal on the following questions of law :
“1. Whether, the Tribunal was right in holding that the provisions of Expln. 4A to s. 43(1) which came into force w.e.f. 1st Oct., 1996, would be applicable to prior period transaction which has taken place during August, 1995, relevant to the asst. yr. 1996-97 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the AO to adopt the WDV of the assets in the books of the transferor for computing the depreciation allowance in the hands of the appellant when the valuation report regarding the market value of the asset has not been disputed and the sale consideration has been accepted in the assessment of the transferor ?”
We are of the view that it will suffice to consider the first question. The assessment year involved is 1996-97 and the relevant previous year ended on 31st March, 1996. The Tribunal applied the provisions of s. 43(1), Expln. 4A to the assessment year in question and held that the assessee was not entitled to depreciation allowance as claimed by the assessee. It is pointed out by learned counsel for the assessee that Expln. 4A to s. 43(1) of the Act was inserted by the Finance (No. 2) Act, 1996, w.e.f. 1st Oct., 1996, and the said provision is not applicable for the assessment year in question. Learned counsel for the Revenue has not seriously disputed that Expln. 4A to s. 43(1) of the Act has no application to the assessment year in question.
Consequently we hold that the Tribunal was not correct in relying upon Expln. 4A to s. 43(1), which came into force only from 1st Oct., 1996, to the assessee’s case. It is axiomatic that the law governs the assessment is the law that is prevailing on 1st April of the assessment year in question, and since Expln. 4A to s. 43(1) of the Act came into force on 1st Oct., 1996, it has no application to the asst. yr. 1996-97. The Tribunal, in our view, has not applied the correct law and decided the question that arose before it. Both learned counsel agree the matter may be remitted to the Tribunal to consider afresh. Accordingly, the order of the Tribunal is set aside so far as it deals with the points that arise in the tax case appeal are concerned and the Tribunal is directed to consider the matter afresh in accordance with law.
Consequently, T.C.M.P. No. 15 of 2002 for stay is closed.
[Citation : 274 ITR 427]
