TMI Blog2017 (11) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... , but what we wish to reiterate is that it cannot be said that the aspect of applicability of 80HH of the Act was never in contemplation of any of the parties to this litigation. If the factual position is established that the Respondent-Assessee falls within the ambit of Section 80HH of the Act and has taken benefit of certain tax exemption, then question will arise whether law laid down by this Court in the case of Indian Rayons will be applicable to the Respondent-Assessee and its case regarding not claiming depreciation could stand. - Tax Appeal No. 7 of 2004 - - - Dated:- 1-11-2017 - N. M. Jamdar And Nutan D. Sardessai, JJ. For the Appellant : Ms Amira A. Razaq, Standing Counsel For the Respondents : Mr J. Supekar, Advocate JUDGMENT ( Per N. M. Jamdar J. ) 1. This Tax Appeal filed by the Revenue through the Commissioner of Income Tax, seeks to call in question the order by the Income Tax Appellate Tribunal, Panaji Bench on 27th January 2004 in ITA no.1113-4/PN/95. 2. The Assessee is a Company registered under the Companies Act, 1956. The Assessee-Company is engaged in the business of fabrication of automobiles parts. The Assessee filed its return on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation allowance when the same is not claimed by the assessee. On the other hand, learned Departmental Representative placed his reliance on the judgment of the Hon'ble Bombay High Court in the case of Indian Rayon Corporation Limited vs CIT (261 ITR 98). On carefully going through these judgments, we find that the judgment of Hon'ble Bombay High Court in Indian rayon's case (supra) does not come in conflict with the Hon'ble Supreme Court's judgment in the case of Mahendra Mills (supra) in as much as the issue there was computation of deduction under section 80HH and without disturbing the proposition laid down in Mahendra Mills case. The CIT(A) therefore rightly reversed the action of the Assessing Officer in this regard, and held that, as per the law then in force, the depreciation could not have been thrust on the assessee. In this view of the matter, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. With this reasoning, the Tribunal dismissed the appeal of the Revenue by Order dated 27th January 2004. Thereafter, the present Appeal has been filed by the Revenue under Section 260 of the Act. 5. The Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 has dismissed the Review Petition filed by the Revenue holding the same to be not maintainable against the order passed under the provisions of Section 260A of the Income Tax Act, 1961. 3. Before this Court, an affidavit has been filed by the Revenue explaining how the notional tax effect is far beyond the amount of ₹ 2,00,000/- (Rupees two lakh). Moreover, in Commissioner of Income Tax Vs. Meghalaya Steels Ltd., decided on 5th August, 2015, a view has been taken by this Court that the review would be available in respect of the orders passed under Section 260A of the Income Tax Act, 1961. 4. In view of the above, we allow the appeals and set aside both the orders dated 25th August, 2010 and 28th March, 2012 passed by the High Court in Tax Appeal No. 7 of 2004 and Civil Application (Review) No. 26 of 2010 respectively and request the High Court to decide the review petition and thereafter the appeal itself, if so required, on merits. We also make it clear that we have expressed no opinion on the merits of any of the contentions of the parties. C. A. NOS. 2013-2014 OF 2016 (@SLP(C) NOS. 10603-10604/2014] 5. Leave granted. 6. In view of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional substantial question of law is not in dispute. The reasons why we are indicated in the body of this decision hereinafter. 10. We, therefore, frame the additional question of law as under: Whether the Assessee can disclaim depreciation, when it has claimed special deduction under Section 80HH of Chapter VI-A of the Act 11. It is the contention of Ms Razaq for the Revenue that in the case of Indian Rayon Corporation Limited vs CIT 261 ITR 98, the Division Bench of this Court after interpreting the provisions of Section 80HH of the Act has categorically laid down that if an unit falls within the ambit of Section 80HH of the chapter VI A of the Income Tax Act and enjoys certain benefits from imposition of tax then it has no option not to claim depreciation. The reliance was also placed on the decision of the Full Bench of this Court in Plastiblends India Ltd. Vs Additional Commissioner of Income Tax [2009] 185 Taxman 187 (Bombay) and of the Apex Court in Plastiblends India Ltd. Vs Additional Commissioner of Income tax [2017] 86 taxmann.com 137 (SC). This is the main contention advanced by the Revenue before us. As a corollary, it was contended that this aspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the parties to this litigation. If the factual position is established that the Respondent-Assessee falls within the ambit of Section 80HH of the Act and has taken benefit of certain tax exemption, then question will arise whether law laid down by this Court in the case of Indian Rayons will be applicable to the Respondent-Assessee and its case regarding not claiming depreciation could stand. 14. The Division Bench of this Court in Indian Rayons has held as under : 10. The argument of the assessee is that in view of the Judgment of the Supreme Court in Mahendra Mill's case (supra), it is open to the assessee not to claim depreciation allowance under section 32 and consequently it is argued that 20% rate of deduction should be applied to ₹ 100 in the above illustrations, without taking into account the depreciation. We do not find any merit in this argument. The Scheme of section 4 and section 5 of the Income-Tax Act does indicate that income-tax is a tax in respect of income computed as per the provisions of the Act. There is a distinct dichotomy between cases of computation of normal income under the Act de hors Chapter VI-A and computation of taxable inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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