The Commissioner Of Income-Tax -5, Mumbai v. Garware – Wall Ropes Ltd

Ladda IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No. 5556 of 2010. The Commissioner of Income-tax -5, Mumbai ... Appellant. Versus Garware – wall Ropes Ltd ... Respondent. Mr Suresh Kumar for the appellant.Dr K. Shivram with Mr Ajay R Singh and Paras Savla for the respondent. CORAM : J.P. Devadhar & A.R. Joshi, JJ. DATE : 2 December, 2011. P.C. :- 1.Two questions of law are raised by the Revenue in this appeal which read thus :- (a) Whether, on the facts and in the circumstances of the case and in law the ITAT is right in not allowing the depreciation to be allowed in computing the gross total income before allowing the deduction under Chapter VIA, following the recent judgment of this Court in the case of Scoop Industries Pvt Ltd and others v. TIO and ors 289 ITR 195 (Bom) 2007 wherein it was held that if the assessee claimed any deduction under Chapter VIA as a newly established undertaking, it will have to claim depreciation first and thereafter only the total income is to be computed to enable it to claim the benefit of deduction? (b) Whether, on the facts and circumstances of the case and in law, the ITAT is correct in law in remanding the case back to the Assessing Officer with regard to the interest income following the judgment of Special Bench in case of Lalson Enterprises 89 ITD 25? Ladda 2.The assessment year involved herein is AY 2003-04. 3.Upto the assessment year 2002-03 the assessee had not claimed depreciation while computing deduction under Chapter VIA of the Income-tax Act, 1961. However, in the assessment year, in question, the assessee computed deduction under Chapter VIA after taking into account the depreciation allowable under the Act. The Assessing Officer was of the opinion that the depreciation has to be computed on the written down value of the asset computed in the earlier assessment years by thrusting depreciation upon the assessee. Admittedly, the depreciation thirsted upon the assessee in the earlier years have been deleted by the ITAT and those orders have attained finality. In these circumstances, the decision of the ITAT in holding that in the assessment year in question, the depreciation has to be computed on the written down value determined on the footing that depreciation was not thrusted upon the assessee in the earlier assessment orders cannot be faulted. Accordingly, the first question raised by the Revenue cannot be entertained. 4.As regards the second question is concerned, the ITAT has remanded the case back to the file of the Assessing Officer with direction to follow the Special Bench decision in the case of Lalson Enterprises (89 ITD 25). Since the ITAT has restored the issue to the file of the Assessing Officer, we are not inclined to entertain the second question. However, the Assessing Officer while giving the effect to the order of the ITAT and passing the fresh order shall take into consideration the judgment of this Court in the case of CIT vs. Asian Star Ltd (326 ITR 56) wherein the Special Bench decision in the case of Lalson Ladda Enterprises 89 ITD 25 has been considered. Accordingly, the second question also cannot be entertained. In the result, the appeal is dismissed with no order as to costs. (A.R.Joshi,J) (J.P.Devadhar,J.)