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2017 (10) TMI 421 - HC - Income TaxCharge of Surtax - Deduction of the amount of depreciation differential from the capital - whether Tribunal erroneously held that the judgment of this Court in Zenith Steel Pipes (1976 (7) TMI 9 - BOMBAY High Court) concludes the issue? - Held that:- Mr. Malhotra is right in his contention that merely because a coordinate Bench has distinguished a judgment of this Court in Zenith Steel Pipes (supra), we must not remit the questions back to the Tribunal. Firstly he would submit that the coordinate Bench was sitting at Madras. The Tribunal's coordinate Bench at Madras was bound by the judgment and order of the jurisdictional High Court. The jurisdictional High Court for that Tribunal is not this Court, but High Court of Madras, at Madras. Secondly, in that case, the Tribunal found on facts that the issue of Companies (Profits) Surtax Act, 1964 levying additional tax on the total income of a company in the manner stipulated by the Act, was brought in issue by the assessee. The assessee argued that Surtax is charged over and above the statutory deductions. The First Schedule to the Act contains the rules for computing the chargeable profits and Second Schedule contains rules for computing the capital base of the company. The Tribunal found that in the case before it, these conditions have not been satisfied. In the case before the Tribunal in respect of differential, there is no reserve credited by the board of directors through a conscious overt act, nor is there any crediting of amount to any reserve by a conscious overt act on the part of board of directors. Of course, a large amount has been allowed in the income tax proceedings as and by way of depreciation. But the other two conditions were not satisfied. That is why the Tribunal found that there was no need to reduce the capital base by differential. It is these facts of the matter which enabled the coordinate Bench of the Tribunal at Madras to observe that true it is that in the case of Zenith Steel Pipes (supra) this Court has taken a view which supports the revenue, but the contentions advanced before the Tribunal's coordinate Bench at Madras and considered by it, were not advanced before the Bombay High Court. It is in these circumstances that the coordinate Bench of the Tribunal distinguished it. We do not see how in the abstract and dehors the factual backdrop Mr.Seth can rely upon the view of the coordinate Bench of the Tribunal. As far as the Income Tax Appellate Tribunal, Mumbai Bench is concerned, it was bound by the judgment of this Court in Zenith Steel Pipes (supra) and when it applies with full force to the facts also. In our view, therefore, none of the contentions of Mr. Seth can be accepted. The questions which have been forwarded for our opinion by the Tribunal are answered against the assessee and in favour of revenue
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