TMI Blog2002 (1) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemicals Industries Ltd. [1994] 207 ITR 718. The Assessing Officer rejected the claim of the assessee and added back the said amount of Rs. 56,15,681 by following the reasonings for the assessment year 1991-92. However, the Assessing Officer stated that the learned CIT(A) in the appeal filed by the assessee had deleted the addition made by the Assessing Officer for the assessment year 1991-92 but the department had filed the appeal against the said order of learned CIT(A) before the Tribunal. Being aggrieved, the assessee filed appeal before the learned CIT(A). 3. The learned CIT(A) by following the decision of the Calcutta High Court in the case of Kanoria Chemicals Industries Ltd. allowed the claim of the assessee. Hence, the department is in appeal before the Tribunal. 4. During the course of hearing of the appeal, the learned D.R. justified the action of the Assessing Officer. However, the learned A.R. of the assessee submitted that the same very issue was considered by the Tribunal 'D' Bench, Calcutta in ITA No. 619/C/96 for the assessment year 1991-92 and the Tribunal by its order dated 28th November, 2000 dismissed the revenue's appeal and confirmed the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional High Court in the case of Century Enka Ltd. was not considered. Further, the jurisdictional High Court has considered the aforesaid issue in Century Enka Ltd.'s case which was decided on 30th May, 1991 i.e., subsequent to the decision in the case relied on by the learned A.R. of the assessee namely Kanoria Chemicals Industries Ltd.'s case which was decided on 28th May, 1991. The Bombay High Court has held in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 that when there are two different decisions of the same Court, it is advisable to follow the later decision of the Court. Accordingly, we respectfully following the later decision of the jurisdictional High Court in the case of Century Enka Ltd., held that the assessee is entitled for the incremental depreciation on the basis of the additional liability on actual payment and not on accrual basis. Accordingly, we restore the order of the Assessing Officer in disallowing the claim of the assessee by reversing the order of the learned CIT(A). Therefore, the ground of appeal is decided in favour of the department. 6. In the result, the appeal filed by the department is allowed. Per Shri S. Bandyopadhyay, A.M.-- I r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt views are possible, one which is in favour of the assessee is required to be taken. So far as the issue involved in the present case is concerned, the Hon'ble Calcutta High Court took diametrically opposite views in the cases of Century Enka Ltd. and Kanoria Chemicals Industries Ltd(supra), almost around the same point of time. 4. Again, in the case of Indian Aluminium Co. Ltd, I considered the detailed discussions made by the Hon'ble Supreme Court in the case of CIT v. Arvind Mills Ltd. [1992] 193 ITR 255, at page 262 of the said reported judgment, the Hon'ble Supreme Court discussed as below: "Under the definitions contained in section 32 read with section 43(1) and (6) of the Income-tax Act, the depreciation is to be allowed on the actual cost of the asset less all depreciation actually allowed in respect thereof in earlier years. Thus, where the cost of the asset subsequently goes up because of devaluation, whenever might have been the position in the earlier year, it is always upon to the assessee to insist, and for the Income-tax Officer to agree, that the written down value in the year in which the increased liability has arisen should be taken on the basis of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Calcutta High Court in the case of Kanoria Chemicals Industries Ltd. The Assessing Officer was directed to allow depreciation on the additional liability arising out of the difference in the rate of exchange. He accordingly directed the Assessing Officer to follow the order of the Hon'ble High Court in the present case and allow the depreciation and the other liability. 4. Aggrieved by the said order, the revenue came up in appeal before the Tribunal and it was submitted that the learned CIT(A) was not justified in allowing the claim. Relying on the decision of the Hon'ble Calcutta High Court in the case of Century Enka Ltd., it was submitted that such liability is to be taken only on the date of repayment of the loan obtained for the purpose of acquisition of any capital asset. The learned Judicial Member agreed with the revenue and reversed the order of the CIT(A) and restored that of the Assessing Officer observing as follows: "5. We have carefully considered the orders of the authorities below and the earlier order of the Tribunal dated 28th November, 2000. We have also considered the submissions of the learned representatives of the parties and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on the increased liability caused by fluctuation in the exchange rate. The Hon'ble Calcutta High Court also held in the said decision that there is no difference so far as the fact is concerned between actual devaluation and day-to-day fluctuation in the exchange rate. 3. Therefore, in the case of Indian Aluminium Co. Ltd., I decided the issue in favour of the assessee by following the direct judgment of the Hon'ble Calcutta High Court, in the case of Kanoria Chemicals Industries Ltd It is also a cardinal principal of Taxation Law that whenever two different views are possible, one which is in favour of the assessee is required to be taken. So far as the issue involved in the present case is concerned, the Hon'ble Calcutta High Court took diametrically opposite views in the cases of Century Enka Ltd. and Kanoria Chemicals Industries Ltd., almost around the same point of time. 4. Again, in the case of Indian Aluminium Co. Ltd., I considered the detailed discussions made by the Hon'ble Supreme Court in the case of Arvind Mills Ltd. [1992] 193 ITR 255. At page 262 of the said reported judgment, the Hon'ble Supreme Court discussed as below: 'Under the definitions containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to follow the later decision of the Court. Admittedly, the date of the order in the case of CenturyEnka Ltd. was 30-5-1991 and in the case of Kanoria Chemicals Industries Ltd. the date of the order is March 28,199 1. However, the decision in the case of Kanoria Chemicals Industries Ltd. whereas the decision in the case of Century Enka Ltd. The later decision in the case of Century Enka Ltd., did not consider the earlier decision in the case of Kanoria Chemicals Industries Ltd. and, therefore, it cannot be said that the earlier decision has been overruled by the Hon'ble High Court. In fact the Bench consists of the same Hon'ble Judges. Since the facts in the case of Kanoria Chemicals Industries Ltd. are exactly the same as in the case of the present assessee, the earlier decision is more appropriate and preferable. 8. The provisions of section 43A as it exist during the year, does not insist on actual payment but the liability due to increase or reduction as expressed in Indian currency for making payment towards the whole or part of the cost of the asset etc. is to be considered. In so far as actual payment is concerned, section 43(2) define the word "paid" in the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cidence of taxation." 10. On that basis it allowed the claim of the assessee at para 25.1 as follows: "25.1 From the facts of the present case it is seen that the method of accounting adopted by the assessee right from assessment year 1982-83 is mercantile system and it has been consistently claiming the losses suffered by it on account of fluctuation in foreign currency rates only on accrual basis. In fact in assessment years 1982-83 to 1986-87 the claim of the assessee was allowed by the Assessing Officer. Of course, upto assessment year 1981-82 the loss was claimed in the year in which the loans or part thereof were repaid. Thus, the assessee had changed its method of accounting from assessment year 1982-83 but the bona fides of the change were not doubted or disputed by the department. Further, the assessee has been consistent and definite in making entries in its account books in respect of the losses suffered on account of fluctuation in foreign currency rates. In the circumstances, the answer to question Nos. (i), (ii) and (iv) is in affirmative." 11. Having regard to the above, I am of the view that in the light of the law as it exist during the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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