TMI Blog1996 (5) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of section 115J and observed that unabsorbed loss or unabsorbed depreciation, whichever is less, was to be deducted from the book profits of Rs. 19,09,097. He also referred to the Board's Circular No. 495, dated22-9-1987. He also observed that in the case of the assessee there was only brought forward unabsorbed depreciation with no brought forward unabsorbed loss. He, therefore, held that as there was no brought forward loss no deduction could be allowed as least of the two amounts was to be deducted from the book profits of the current year. He, therefore, held that the assessment order was erroneous insofar as it was prejudicial to the interests of the revenue. 2.1 The learned CIT gave an opportunity to the assessee on26-3-1991vide notice dated19-3-1991. The assessee filed written submissions. The learned CIT considered the written submissions and observed that according to the audited accounts submitted along with the return of income, the income as per profit and loss account was Rs. 19,09,097. He further observed from the audited report that the company had only unabsorbed depreciation and that there was no brought forward loss. He also observed that accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said years of Rs. 4,66,509, Rs. 8,78,333 and Rs. 62,04,642 and that the said net amounts, which in common parlance were called losses were less than the depreciation figures of Rs. 45,00,334, Rs. 69,98,196 and Rs. 94,81,334 respectively. It also observed that the lower of the two were obviously the figures of net losses and since two views were possible, the one favouring the assessee had to be preferred. It also observed that the case of the assessee was supported by the judgment of the Tribunal reported in Buttwelded Tools (P.) Ltd. v. Asstt. CIT [1991] 39 ITD 432 (Mad.) (SMC). The Tribunal, therefore, directed the Assessing Officer to deduct the amount of depreciation and on the resultant figure compute 30% of the profits under section 115J of the Income-tax Act for the assessment year 1989-90. The learned counsel submitted that the Tribunal has accepted the claim of the assessee in relation to assessment year 1989-90. He further submitted that though a reference has been made to the Hon'ble High Court of Punjab Haryana, the Tribunal should take a consistent view for the sake of judicial discipline. The learned counsel further invited our attention to the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 206 ITR 727, wherein the Hon'ble High Court has held at page 738 that "the decision of one High Court is neither binding precedent for another High Court nor for Courts or Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. "In view of the said decision the learned counsel reiterated that the decision of the Hon'ble Andhra Pradesh High Court reported in V. V. Trans-Investments (P.) Ltd./Surana Steels (P.) Ltd. has only persuasive value and that there was no direct decision of the Hon'ble Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct depreciation or loss, whichever is less, only when in a given year there is loss as well as depreciation. In such a case, the lesser of the amounts will be allowed to be deducted as per the provisions of the Income-tax Act. In case there is profit in a year, but after adjustment of depreciation, it results in loss, no adjustment in book profit under section 115J can be allowed. The fundamental difference between 'unabsorbed depreciation' and 'unabsorbed loss' has to be kept in mind before interpreting section 115J of the Act and the procedure adopted under the Companies Act for the purpose of declaring the net profits. The computation to be made for the purpose of declaring dividend under the Companies Act cannot be adopted for the purpose of computing taxable income under the provisions of Income-tax Act. For the purpose of section 115J of the Act, 'loss' does not include 'unabsorbed depreciation' ". It is also not in dispute that so far there is no other contrary judgment of any other High Court on this issue. There is also no decision of the Hon'ble Punjab and Haryana High Court relating to the interpretation of the provisions of section 115J. The learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en overruled by the decision of the Hon'ble Andhra Pradesh High Court reported in V. V. Trans-Investments (P.) Ltd./Dy. CIT v. Surana Steels (P.) Ltd.'s case. It is further observed that the order of the Tribunal in the case of the assessee for assessment year 1989-90 was made on31-1-1992, which was before the aforesaid decision of the Special Bench. Moreover the decision of the Hon'ble Bombay High Court reported in Thana Electricity Supply Ltd. 's case has laid down certain propositions in the context of "whose decision is binding on whom" while examining the provisions of article 141 of the Constitution and the principle of stare decisis vis-a-vis the decisions of Supreme Court and the binding effect of decision of one High Court over the other High Courts or Tribunals. In the process the Hon'ble Bombay High Court also examined its observations in its decision reported in Smt. Godavaridevi Saraf's case and held that the said observations were by way of obiter dicta. When we consider the aforesaid propositions laid down by the Hon'ble Bombay High Court and its abovementioned observations as also the decision of the Hon'ble Supreme Court in the case of Kamlakshi Finance Corpn. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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