Commissioner Of Income Tax, Hisar v. Jindal Steel & Power Ltd., Delhi Road, Hisar

In the High Court of Punjab and Haryanaat Chandigarh ITA No. 544 of 2006 Date of Decision: 02 .09. 2008 Commissioner of Income Tax, Hisar .....Appellant Versus Jindal Steel & Power Ltd., Delhi Road, Hisar...... Respondent Coram:Hon'ble Mr. Justice Adarsh Kumar GoelHon'ble Mr. Justice Ajay Tewari 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present:Mr.Sanjeev Kaushik, Addl. Advocate General, Haryanafor the appellant. Ajay Tewari, J. **** This is an appeal under Section 260-A of the Income Tax Act,1961( hereinafter referred to as 'the Act') by the revenue against the orderdated 31.03.2006 passed by the Income Tax Appellate Tribunal, DelhiBench 'H', New Delhi passed in ITA No. 3663(Del.)/2005 for theassessment year 2000-2001, proposing following substantial questions oflaw:- i) Whether on the facts and circumstances of the case, theHon'ble ITAT can ignore the compliance to statutoryprovisions of exercising option to adopt WDV method inplace of straight line method prescribed under the statutoryprovisions on the assets used for power generation?Hon'ble ITAT can ignore the compliance to statutoryprovisions of exercising option to adopt WDV method inplace of straight line method prescribed under the statutoryprovisions on the assets used for power generation? ii)Whether on the facts and circumstances of the case, theexamination of the claim of deduction claimed by theassessee company by the Assessing Officer is fettered withthe finding of the Auditor of the Company?examination of the claim of deduction claimed by theassessee company by the Assessing Officer is fettered withthe finding of the Auditor of the Company? iii)Whether on the facts and circumstances of the case, theHon'ble ITAT is correct in deleting the disallowance madeby the AO pertaining to the exaggerated profit of captivepower generating unit by claiming higher rate than the costprice or the market price charged by it on the supply ofpower made by it to 3[rd] party i.e. State Electricity Board?”Hon'ble ITAT is correct in deleting the disallowance madeby the AO pertaining to the exaggerated profit of captivepower generating unit by claiming higher rate than the costprice or the market price charged by it on the supply ofpower made by it to 3[rd] party i.e. State Electricity Board?” At the very outset we may record that the counsel for therevenue has very fairly stated that question No.3 stands covered against therevenue and we hold as such accordingly. As regards the other issues it may be noticed that the assesseeclaimed depreciation on Written Down Value which was disallowed by the Assessing Officer on the ground that the assessee had not opted for the sameas per proviso to sub Rule (1A) of Rule 5 of the Income Tax Rules, 1962which is quoted herein below:- “Provided further that the undertaking specified in clause(i) of sub-section (1) of Section 32 of the Act may,instead of the depreciation specified in Appendix IA, athis option, be allowed depreciation under sub-rule (1)read with Appendix I, if such option is exercised beforethe due date for furnishing the return of income undersub-section (1) of Section 139 of theAct,....................................................................................” In appeal the learned Appellate Authority upheld the same. In second appeal the learned Tribunal accepted the appeal on the question ofpermission to claim depreciation on WDV basis holding as follows:- “It is seen that no particular format or procedure has beenlaid down in the second proviso in relation to exercise of “Provided further that the undertaking specified in clause(i) of sub-section (1) of Section 32 of the Act may,instead of the depreciation specified in Appendix IA, athis option, be allowed depreciation under sub-rule (1)read with Appendix I, if such option is exercised beforethe due date for furnishing the return of income undersub-section (1) of Section 139 of theAct,....................................................................................” In appeal the learned Appellate Authority upheld the same. In second appeal the learned Tribunal accepted the appeal on the question ofpermission to claim depreciation on WDV basis holding as follows:- “It is seen that no particular format or procedure has beenlaid down in the second proviso in relation to exercise of option by an assessee. Second proviso only says thatoption is to be exercised before the due date forfurnishing the return of income u/s 139(1) for theassessment year 1998-99 in respect of power generatingundertaking then existing and for the assessment year inwhich a new undertaking begins to generate power. Thecase of the assessee is that it began to generate powerduring the previous year relevant to assessment year1999-2000. As per Annexure-D annexed to thecomputation of income chargeable to tax filed along withthe return of income for assessment year 1999-2000, theassessee had claimed depreciation in accordance withsub-rule (1) read with appendix I. Thereafter theassessee's return of income was processed u/s 143(1) on29.09.2000 and no adjustment in that behalf was made bythe Assessing Officer. According to the learned counselfor the assessee the return of income filed before the duedate of furnishing the return u/s 139(1) for assessmentyear 1999-2000, made proper compliance to therequirements of the second proviso to Rule 5(1A) ofIncome Tax Rules. On consideration of the matter weaccept this argument.” We find no perversity in this reasoning and questions No. 1and 2 cannot be held to be substantial questions of law. In this view of the matter, the appeal is dismissed. (AJAY TEWARI)JUDGE (ADARSH KUMAR GOEL)JUDGE