The Commissioner Of Income Tax-10 v. M/S. Chemtex Engineering Of

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 5742 OF 2010 The Commissioner of Income Tax-10..Appellantversus M/s. Chemtex Engineering of India Ltd...Respondent -------- Mr. Vimal Gupta with Padma Divakar for the Appellant. Mr. F.V. Irani with Atul K. Jasani for the Respondent. ............. CORAM : J.P. DEVADHAR &M.S.SANKLECHA, JJ. DATE: 29[th] October, 2010 P.C. : 1According to the Revenue the following question of law arises out of the order dated 10.10.2006 passed by the ITAT. “ Whether on the facts and in the circumstance of the case and in law the Tribunal was right in setting aside the order of the Appellant Commissioner dated 14.02.2005 that was passed u/s. 263 of the Act which held that the Assessee Company, at the time of framing the original assessment on 17.02.2003, must claim 2The dispute in the present case is, while computing deduction under Section 80-O of the Income Tax Act, 1961 whether the assessing officer was bound to thrust depreciation on the assessee, even though the assessee had not claimed depreciation. 3In the assessment year in question i.e. A.Y.1993-94, the assessee had not claimed the depreciation while computing deduction under Section 80-O and the assessment order was passed accordingly without considering the depreciation allowable to the assessee. 4The CIT by invoking the jurisdiction under Section 263 of the Income Tax Act, 1961 passed an order holding that the assessment order was erroneous and prejudicial to the interest of revenue, as the Assessing Officer ought to have taken into consideration the depreciation while computing the deduction under Section 80-O of the Act. The Tribunal has set aside the order of the CIT on the ground that in view of various decisions of the Tribunal the decision taken by the A.O. was one of the possible view and therefore the CIT was not justified in invoking the jurisdiction under Section 263 of the Act. 5Counsel for the Revenue submitted that on the date of the passing of the original assessment order on 17.02.2003, the Judgment of this Court in the case of India Rayon Corporation Limited v/s. CIT, reported in 261 ITR page 98 (Bom) was available which was in favour of the revenue and therefore the Assessment order being erroneous and prejudicial to the interest of the revenue, the CIT was justified in invoking jurisdiction under Section 263 of the Act. 6 It is true that on the date of passing the original assessment order, this court had delivered its judgment in the case of Indian Rayon Corporation Ltd.(Supra). However, on the date on which the CIT invoked jurisdiction under Section 263 of the Act on 14.02.2005 the ITAT in its decision dated 10.02.2004 in the case of Plastiblends India Ltd v/s. ITO reported in (2005) 94 ITD 295 (Mum) had distinguished the judgment of this court in the case of Indian Rayon Corporation Ltd. (Supra) and held that the said decision would apply only in cases where depreciation has been claimed in computing business income and not in cases, where the assessee had not claimed depreciation. Thus, on the date on which the CIT invoked jurisdiction under Section 263, the issue stood answered in favour of the assessee as the assessee had not claimed depreciation. In such a case, it could not be said by the CIT that the assessment was erroneous or prejudicial to the interest of the revenue. In these circumstances, in our opinion, no fault can be found with the decision of ITAT in setting aside the order of CIT passed under Section 263 of the Act. 8Accordingly, we see no merit in the appeal and the same is hereby dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)