High Court Of Punjab & Haryana
CIT vs. Prakash Industries Ltd.
Section 260A, 115J
Asst. Year 1988-89, 1989-90
M.M. Kumar & Jitendra Chauhan, JJ.
IT Appeal Nos. 46 & 47 of 2003
28th April, 2010
Counsel Appeared :
Sanjeev Kaushik, for the Appellant : Sanjay Bansal with Ms. Harpreet Kaur, for the Respondent
JUDGMENT
M.M. KUMAR, J. :
Civil Misc. Nos. 8118 & 8121 CII of 2010 This order shall dispose of Civil Misc. No. 8118 CII of 2010 and Civil Misc. No. 8121 CII of 2010. Both these applications have been filed by the assessee with a prayer for disposal of IT Appeal Nos. 46 and 47 of 2003 pleading that for the asst. yr. 1990-91, the CIT(A), Rohtak has passed an order in respect asst. yr. 1990-91 on 4th Jan., 1999 in favour of the assessee and against the Revenue. According to the CIT(A), the AO committed an order by including the amount of deprecation of Rs. 2,73,87,218 for the purpose of ascertaining book profits. Accordingly, the CIT(A) directed the AO to exclude the same for the purposes of determination under s. 115J of the IT Act, 1961 (for brevity ‘the Act’). The submission made by the assessee- applicant is that the order passed on 4th Jan., 1999 (R. 2) has attained finality in respect of the asst. yr. 1990-91 as no appeal has been preferred by the Revenue before the Tribunal. On receipt of notice of the application, Mr. Sanjiv Kaushik, advocate has put in appearance on behalf of the non-applicant-appellant and could not controvert the averments made in the application. It has not been disputed that the order dt. 4th Jan., 1999 passed by the CIT(A) has attained finality in respect of the asst. yr. 1990-91.
Main appeal
2. Coming to the main appeal, it is pertinent to notice few facts in respect of the asst. yr. 1989-90. The assessee had filed return on 29th Dec., 1989 declaring the income (loss) of Rs. 2,27,31,201 and income under s. 115J of the Act amounting to Rs. 1,60,00,606. However, the return was revised on 22nd Feb., 1991 declaring a total income (loss) of Rs. 3,99,31,911 and income under s. 115J of the Act was declared as ‘nil’. The AO, however computed profit under s. 115J of the Act at Rs. 4,10,60,334. Accordingly, the AO worked out profit under s. 115J of the Act as under :
The AO did not accept the contention that depreciation could be provided as per schedule under the Act and ignored the revised return where revised commutation of profit under s. 115J of the Act was given. The AO held that it was incumbent upon the assessee to provide for depreciation as per requirement of Sch. XIV of the Companies Act. On appeal, the CIT(A) upheld the view taken by the AO.
3. On further appeal by the assessee, the Tribunal decided the issue in favour of the assessee by citing the judgment rendered by the Ahmedabad Bench of the Tribunal rendered in the case of Asstt. CIT vs. Bell Ceramics Ltd. (1999) 64 TTJ (Ahd) 771 : (1999) 69 ITD 156 (Ahd). The view of the Tribunal is discernible from para 17 of the order which reads thus : “We have considered the rival submissions and perused the record carefully. The issue involved in this ground is fully covered in favour of the assessee by the ratio of decision in the case of Asstt. CIT vs. Bell Ceramics Ltd. (1999) 64 TTJ (Ahd) 771 : (1999) 69 ITD 156 (Ahd) as facts of that case were identical. In that case the assessee had charged depreciation on straight line method in the printed copy of P&L a/c laid before annual general meeting but in the P&L a/c prepared for the purpose of s. 115J it had adopted WDV method for depreciation as provided for the IT Act.
The AO did not allow the assessee’s claim and worked out the book profit on the basis of printed copy of P&L a/c and CIT(A) allowed the relief to the assessee. The Bench considered all the facts and noted that first proviso to sub-s. (2) of s. 115JA was inserted by Finance (No. 2) Act, 1996 w.e.f. 1st April, 1997 which provided that method adopted for working out the depreciation while preparing P&L a/c shall be the same for the purpose of preparing the P&L a/c laid before the company on its annual general meeting in accordance with the provisions of the Companies Act. The Bench further observed that there was no such requirement under s. 115J(1A) of the Act and if assessee had adopted the method of working out the amount of depreciation differently for the purpose of s. 115J, there was no prohibition to restrain the assessee from doing so. It was also concluded that what was required under s. 115J(1A) of the Act is that every assessee, being a company, shall for the purpose of this section prepare its P&L a/c for the relevant previous year in accordance with the provisions of Parts II and III of Sch. VI of the Companies Act. There was no controversy before the Bench that assessee had not complied this requirement and accordingly the Bench concluded that there was no further requirement that the P&L a/c so prepared should be the same or similar to the P&L a/c placed before the annual general meeting of the company and allowed the claim of the assessee. Identical are the facts before us in the case of the assessee.”
4. The Revenue feeling aggrieved by the order of the Tribunal preferred two Appeals being IT Appeal No. 46 of 2003 in respect of asst. yr. 1989-90 and IT Appeal No. 47 of 2003 in respect of asst. yr. 1988-89 under s. 260A of the Act. The appeals were admitted on the following question of law :
“Whether on the facts and in the circumstances of the case, the Hon’ble Tribunal was right in law in rejecting the method adopted by the AO for working out the ‘book profit’ under s. 115J(1A) of the IT Act, 1961 as per requirement of s. 205 of the Companies Act, 1956 r/w Parts II and III of Sch. VI of Companies Act, 1956 and in allowing the WDV method adopted by the assessee for working out depreciation as against the straight line method adopted by the AO as per s. 350 of the Companies Act, 1956.”
Having heard the learned counsel for the parties and perusing the order of CIT(A) passed on 4th Jan., 1999 (R. 2) in respect of asst. yr. 1990-91, we are of the view that the principle of consistency would come in play. If in respect of asst. yr. 1990-91 the Revenue has accepted the order of the CIT(A) then it follows that in respect of the earlier year the same principle would apply in view of the decisions of Hon’ble the Supreme Court rendered in the cases of Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 193 ITR 321 (SC), Berger Paints India Ltd. vs. CIT (2004) 187 CTR (SC)193 : (2004) 266 ITR 99 (SC), CIT vs. J.K. Charitable Trust (2008) 220 CTR (SC) 105 : (2008) 15 DTR (SC) 41 : (2009) 1 SCC 196 and C.K. Gangadharan & Anr. vs. CIT (2008) 218 CTR (SC) 1 : (2008) 10 DTR (SC) 161 : (2008) 8 SCC 739. These decisions would guide us that once the Revenue has accepted the view of the CIT(A) in respect of the asst. yr. 1990-91 then it is not open to the Revenue to challenge the similar finding and deviate from its earlier stand.
Learned counsel for the Revenue has not controverted the aforesaid factual position. It appears that even on merits the question of law appears to be covered in favour of the assessee and against the Revenue by virtue of the judgment rendered in the case of Dy. CIT vs. Surat Textile Mills Ltd. (2010) 188 Taxman 158 (Guj).
For the reasons aforementioned the applications are allowed and the appeals are dismissed. The question of law is decided against the Revenue and in favour of the assessee.
A copy of this order be placed on the file of connected appeal.
[Citation : 324 ITR 391]
