TMI Blog2006 (10) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... the identical substantial questions of law are involved in all the above Tax Appeals, by this Judgment and Order, we are disposing of all the above ten Tax Appeals by this common judgment and order. 3. To understand the controversy, we are giving the brief factual background in the first appeal and even in the other Tax Appeals facts are identical excepting the amounts involved and the dates. As such we are not burdening the judgment with all those details regarding figures and dates. 4. As far as the first Tax Appeal No. 33 is concerned, the brief facts are : (a) The Appellant is a Private Limited Company engaged in the business of manufacturing industrial gases. The Appellant's industrial undertaking in an eligible unit under the provisions of section 80IA of the Act. Thus, the Appellant claimed deduction under section 80IA to the extent of it's profits amounting to Rs.12,72,571/-. The returns for the impugned Assessment Year was filed on 09/11/2000 and the income was shown at Nil. The Appellant in it's return of income by way of a note mentioned that it is not claiming the depreciation allowable under section 32 relying on the decision of the Apex Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all the above ten appeals, made the following propositions to substantiate his contentions : (i) In computing Gross Total Income under normal provisions of the Act, an assessee is entitled not to claim depreciation and if he does not claim, depreciation cannot be thrust upon him. ( CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd. [1989]177 ITR 443 (Bom) and CIT v.Mahendra Mills [2000] 243 ITR 56 (SC) based on the word "allowed "used in section 32(1). (ii) For applying the provisions of chapter VI-A, Gross Total income as computed above is the starting point section.80A(1) section.80I(A). (iii) It is only those profits which are included in such Gross Total Income which can be considered for relief under any provision of Chapter VI-A, (section. 80IA(1)) page. 447 of 177 ITR. (iv) Therefore, if assessee has not claimed depreciation at all depreciation cannot be deducted only for computing profits under a particular section of chapter VI-A. (v) But if the assessee has claimed depreciation in computing Gross Total Income but does not claim depreciation only for computing deduction under any provision of Chapter VI-A, it is not permissible ( Indian Rayon Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation of Section 32 of the said Act as well as Chapter VI-A of the said Act, ought not to be taken into account as the Court was only concerned with the aforesaid computation of depreciation. 8. Thereafter Mr. Inamdar referred to another judgment of the Bombay High Court in CIT v. Gannon Dunkerley and Co. Ltd. (Bom) [1995] 216 ITR 708 and the Judgment of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT (SC) [1978] 113 ITR 84, and contended that they have no application in the instant case. 9. Mr. Inamdar also pointed out that the recent judgment of the Special Bench of the Income Tax Appellate Tribunal in Vahid Paper Converters Ors. v. ITO [2007] 289 ITR (AT) 10 (Ahmedabad) ; [2006] 98 ITR 165 had not construed the judgments of the Supreme Court in CIT v. Mahendra Mills [2000] 243 ITR 56 as well as Bombay High Court judgment in CIT v. Someshwar Sahakari Sakhar Karkhana Ltd. [1989] 177 ITR 443 in the proper perspective, accordingly he contended the said judgment is not correct as per law. 10. Mr. Rivonkar, the learned counsel appearing on behalf of the respondent/Revenue strongly relied on a Division Bench judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking" is concerned, the profits and gains have got to be computed as per the provisions of Sections 29 to Section 43A of the said Act even if the assessee claims relief under Chapter VI-A of the said Act and. it is not open to the assessee to disclaim depreciation allowance. Finally the Division Bench has in no uncertain terms held that no one can "exclude depreciation allowance" when computing depreciation allowance for computing deductions under Chapter VI-A. Mr. Rivonkar pointed out that as far as Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) is concerned they were dealing with the issue of whether unabsorbed depreciation and development rebate are deductible or not in computing the profits under Section 80E of the said Act. In that context, the Supreme Court had observed and given a ruling. Similarly even in the case of CIT v. Gannon Dunkerley and Ltd. (Bom.) [1995] 216 ITR 708 the Bombay High Court was dealing with the issue whether to exclude unabsorbed depreciation and unabsorbed rebate while computing the total income, wherein the Division Bench has clearly held at page 710, as under : "Therefore while ascertaining the profits an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 29 to 43A of the said Act which includes section 32 i.e. before granting any deduction under Chapter VI-A, the depreciation under Section 32 of the Act will have to be granted and thereafter the deduction under Chapter VI-A can be granted. To put it in other words the assessee if claiming deduction under Section Chapter VI-A as a "newly established undertaking", will have to claim depreciation first and thereafter only the total income can be computed so as to enable the said undertaking to claim the benefit as a "newly established undertaking" under Chapter VI-A. 16. It may be also noted that both CIT v. Mahendra Mills [2000] 243 ITR 56 and CIT v. Someshwar Sahakari Sakhar Karkhana Ltd. [1989]177 ITR 445, were basically dealing with only in the context of depreciation under Section 32, and not in the context of benefits under Chapter VIA of the said Act. 17. The logic behind the deductibility of depreciation while computing the eligible profits for Chapter VI-A, is because if the depreciation is not reduced while computing the income, the assessee would claim deduction on gross amount of income and that would amount to making more deduction under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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