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TMI Blog2015 (3) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the business of manufacture and export of natural silk blended fabrics and spun silk/blended yarn. For the Assessment Year 2001-02 corresponding to the financial year ended on 31st March, 2001, the assessee filed the return of income declaring total income of Rs. 1,09,638,220/-. The assessee had two units which are Sedie and Filati. The assessee has exported from both the units. Filati Unit was eligible for claiming exemption under Section 10B of the Act, while the Seide Unit is a 100% EOU, which has exhausted its benefits under Section 10B. In the computation of income filed along with the return of income, the assessee claimed deduction under Section 80HHC for the exports made by the Seide Unit. While computing deductions under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Mahindra Mills reported in 243 ITR 56. 4. The assessing officer observed that the assessee has given full particulars of the opening of WDV so far as the additions during the year. The assessee had not given the rate of depreciation and the actual amount of depreciation and deducted the same from the profits. The Assessing Officer also observed that Explanation 5 to Section 32 of the Act is clarificatory in nature and also apply to the current year i.e., 2001-02. 5. Aggrieved by the said order, the assessee has preferred the appeal to the Commissioner of Income Tax (Appeals). The appellate authority held that the Explanation 5 to Section 32 of the Act was introduced w.e.f. 1.04.2002 and as such the assessing officer's ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has determined the loss in the 10B Unit there was no requirement for the assessee to reduce the turnover of the 10B Unit from the total turnover for the purposes of computing deduction under Section 88HHC. The two units claiming separate deductions and exemptions belong to the same assesseee and when one unit has incurred loss in calculating the total turnover, the gross total income under Section 80AB has to be considered and therefore gave the benefit to the assessee. Challenging these two findings, these appeals are filed. 9. The following substantial questions of law are framed for consideration: ITA No.50/2009: 1. Whether on the facts and circumstances of the case the Tribunal was right in holding that entire loss of Filat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ba) which clearly identifies those items which should be excluded from the total turnover and consequently recorded a perverse finding? 10. Identical questions as contained in substantial questions of law arose for consideration before this Court in ITA No.521/2007 decided on 19th December 2013. However, the Court was considering Section 80HHE which is in paramateria to Section 80HHC. After considering the arguments and relevant provisions, the said question was answered in favour of the assessee and against the revenue. Therefore, the order passed by the Tribunal is unsustainable and the said questions are answered in favour of the assessee and against the revenue. 11. In so far as allowing depreciation is concerned, it was held, Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to the provisions of section 34. Section 34 provides that deduction under Section 32 shall be allowed only if prescribed particulars have been furnished. We have seen rule 5AA of the Rules which though since deleted provided for the particulars required for the purpose of deduction under Section 32. Even in the absence of rule 5AA, the return of income in the form prescribed itself requires particulars to be furnished if the assessee claims depreciation. These particulars are required to be furnished in great detail. There is a circular of the Board dated August 31, 1965, which provides that depreciation could not be allowed where the required particulars have not been furnished by the assessee and no claim for the depreciation has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars are not furnished by the assessee, his claim for depreciation under Section 32 cannot be allowed. Section 29 is thus to be read with reference to other provisions of the Act. It is not in itself a complete code." 12. Therefore, the Apex Court was not merely interpreting Section 34. It was interpreting Sections 28 to 43A and the scheme of the Act and has made it very clear that the assessee is not bound to claim depreciation nor the revenue can grant depreciation even without his asking. If claiming depreciation is not in the interest of the assessee, Income Tax Officer has an obligation to advise him suitably. At any rate, this was the law as on that date in view of the judgment of the Apex Court. That probably the reason why it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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