M/S.chennai Petroleum Corporation Limited536, Anna Salai, Teynampet,Chennai – 600 018Pan:aaacm4392C v. The Deputy Commissioner Of Income Tax,Large Tax Payer Unit,Chennai – 600 101

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN M/s.Chennai Petroleum Corporation Limited536, Anna Salai, Teynampet,Chennai – 600 018PAN:AAACM4392C ..Appellant Versus The Deputy Commissioner of Income Tax,Large Tax Payer Unit,Chennai – 600 101 ..Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal, Madras 'B' Bench, dated 05.12.2017 made inI.T.A.No.1980/Mds/2011 relating to the Assessment Year 2004-05against the order passed by this court dated 9/7/2013 made in TC(A) No.358/2010 and against the appellate order and grounds ofDecision passed by the Commissioner of Income Tax(A) Large Taxpayer Unit II floor 1775, Jawaharlal Nehru Inner Ring Road, AnnaNagar Western Extension, Chennai 600 101 dated 14/9/2011 in ITANo.795/2006-2007/LTU(A) for the Assessment year 2004-2005 andagainst the Assessment order passed by the Assistantcommissioner of Income Tax, company Circle I(3) Chennai-34,dated 26/12/2006 made in GI No/PAN AAA CM 4392C/CX 2007 for theAssessment year 2004-2005. For Appellant: Mr.R.Vijayaraghavan for Mrs.Subburaya Aiyar Padmanabhan For Respondent : Mr.T.Ravikumar Senior Standing counsel JUDGMENT [Order of the Court was made by T.S.SIVAGNANAM, J.] This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity),challenging the order dated 05.12.2017 passed by the Income TaxAppellate Tribunal, Madras, 'B' Bench ('the Tribunal' forbrevity) in I.T.A.No.1980/Mds/2011 for the Assessment Year 2004-05. The following Substantial Questions of Law are framed forconsideration: “1. Whether the Tribunal was right in law inholding that the expenditure incurred towardsrevamping of vis-breaker unit which was abandoned isnot an allowable deduction under Section 37 of theAct? 2. Whether the Tribunal should have directed thegrant of depreciation on the repair charges incurredon Vis Breaker.3. Whether the Tribunal was right in law indisagreeing with the Order of the Third Member of theTribunal in the Assessee's own case for AY 1998-99 inITA No.1822/Mds/2006 dated 23.10.2009 & Hon'ble MadrasHigh Court decision in asseesse's own case for AY1998-99 in TCA 358 of 2010 regarding the claim ofdepreciation on gas sweetening plant?” 2. We have heard Mr.R.Vijayaraghavan, learned counsel forthe appellant / assessee and Mr.T.Ravikumar, learned SeniorStanding counsel appearing for the respondent / Revenue. 3. So far as the Substantial Question of Law No.3 isconcerned, the same issue was considered as the assessee's owncase for the Assessment Year 1998-99 in T.C.A.No.358 of 2010.The issue was decided in favour of the assessee. The SubstantialQuestions of Law framed for consideration in the said case wasalso identical to that of Question No.3 herein pertaining to theclaim for depreciation on gas sweetening plant. The operativeportion of the judgment reads as follows: “18. We are in entire agreement with the viewexpressed by the Bombay High Court in the decisionreported in (1971) 79 ITR 613 (Whittle Anderson Ltd Vs.Commissioner of Income Tax, Bombay City I.) followingthe decision reported in (1937) 5 ITR 626 (BhikajiVenkatesh Vs. Commissioner of Income-tax ) in the lightof the decision of this Court reported in 128 ITR 675(CIT Vs. Vayithiri Plantations Ltd).19. Even though learned Standing counsel appearingfor the Revenue contended that such decision related tothe case of development under Section 33 of the Income “18. We are in entire agreement with the viewexpressed by the Bombay High Court in the decisionreported in (1971) 79 ITR 613 (Whittle Anderson Ltd Vs.Commissioner of Income Tax, Bombay City I.) followingthe decision reported in (1937) 5 ITR 626 (BhikajiVenkatesh Vs. Commissioner of Income-tax ) in the lightof the decision of this Court reported in 128 ITR 675(CIT Vs. Vayithiri Plantations Ltd).19. Even though learned Standing counsel appearingfor the Revenue contended that such decision related tothe case of development under Section 33 of the Income Tax Act, yet, this Court referred to the decision underSection 32 of the Income Tax Act in the context of theexpression 'used for the purpose of business' asexplained in (1954) 25 ITR 265 (Liquidators of PursaLtd Vs CIT) and held that so long as the business wasgoing and the machinery got ready for use but due tocertain extraneous circumstances, the machinery couldnot be put to use, the said fact could not stand in theway of granting relief under Section 32 of the Act. 20. As far as the decision of this Court reportedin 260 ITR 655 (CIT Vs. Maps Tours and Travels) isconcerned, if under law, there is a prohibition on theassessee to put the cars on roads for want ofregistration, considering such prohibition, the claimof the assessee under Section 32 of the Income Tax Actcould not be granted. Thus the above said decision hasto be seen in the light of the facts and circumstancesof the case; hence, the same would not be of anyassistance to the assessee. In fact, learned Standingcounsel appearing for the Revenue fairly stated beforethis Court that in the decisions reported in (2009) 311ITR 202 (Commissioner of Income Tax Vs. SouthernPetrochemical Industries Corporation Ltd.,) and (2008)301 ITR 255 (Commissioner of Income Tax Vs. SouthernPetrochemical Industries Corporation Ltd.,), this Courthad considered the grant of depreciation even to stand-by machinery. When that being the case, we do not findany justifiable ground to disturb the reasoning of themajority members of the Income Tax Appellate Tribunal.21. Under the stated circumstances, on theadmitted case that business was a going concern and themachinery could not be put to use due to raw materialpaucity, we reject the Revenue's contention, thereby,confirm the majority view of the Income Tax AppellateTribunal.” 4. Accordingly, the Substantial Question of Law No.3 isdecided in favour of the assessee by following theaforementioned decision. So far as the Substantial Question ofLaw No.1 is concerned, we have noted the findings recorded bythe Tribunal. We have perused the findings recorded by theTribunal and find that the Tribunal rightly reverse the orderpassed by the Commissioner of Income Tax ['CIT(A)' for brevity]on this aspect. The Tribunal took note of the decision of theHon'ble Supreme Court of India and arrived a finding against theassessee, We find no grounds to interfere with the said finding.Accordingly, the Substantial Question of law No.1 is answeredagainst the assessee. With regard to Substantial Question of lawNo.2 is concerned, having held that the deduction is notallowable under Section 37 of the Act with regard to theexpenditure incurred for revamping of vis-breaker Unit. The Tribunal ought to have considered the claim for consideration atvis-breaker Unit. Though there is a reference made to the saidsubmission of the assessee, We find that there is no specificfinding rendered by the Tribunal on that record. That apart, Wefind that such a claim for depreciation was not made by theassessee before the Assessing Officer or before the CIT(A) as analternate submission and it was raised only before the Tribunal.Therefore, We are inclined to grant liberty to the assessee toraise that issue before the Assessing Officer which can beconsidered in accordance with law. Tribunal ought to have considered the claim for consideration atvis-breaker Unit. Though there is a reference made to the saidsubmission of the assessee, We find that there is no specificfinding rendered by the Tribunal on that record. That apart, Wefind that such a claim for depreciation was not made by theassessee before the Assessing Officer or before the CIT(A) as analternate submission and it was raised only before the Tribunal.Therefore, We are inclined to grant liberty to the assessee toraise that issue before the Assessing Officer which can beconsidered in accordance with law. 5. In the light of the above decision, the Tax Case Appealis partly allowed. Substantial Question of Law No.1 is answeredagainst the assessee. Substantial Question of Law No.2 isremanded to the Assessing Officer for the limited purpose ofconsidering the claim for grant of depreciation on repaircharges incurred on vis-breaker unit and Substantial Question ofLaw No.3 is answered in favour of the assessee, following thejudgment of the Hon'ble Division Bench in the assessee's owncase in T.C.A.No.358 of 2010 dated 09.07.2013. No costs.Consequently, connected miscellaneous petition is closed. Sd/- Assistant Registrar //True Copy// To Sub Assistant Registrar 1. The Income Tax Appellate Tribunal, 'B' Bench, Chennai. 2. The Commissioner of Income Tax(a) Large Tax Payer Unit, II floor, 1775, Jawaharlal Nehru Inner ring Road, Anna Nagar, Western Extension, Chennai-101. 3. The Assistant Commissioner of Income Tax, Company circle I(3), Chennai-34.+1cc to Mr.T.Ravikumar, Advocate, S.R.No.34008 T.C.A.No.522 of 2018 EV(CO)RV(06/11/2020)