The Commissioner Of Income Taxchennai v. M/S.aircel Limitedno.327, Anna Salaichennai-600 006

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.3.2007 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN T.C.(A) No.241 of 2007 The Commissioner of Income TaxChennai..Appellant Vs. M/s.Aircel LimitedNo.327, Anna SalaiChennai-600 006. ..Respondent Appeal under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Madras 'A' Bench dated22.9.2006 made in ITA No.955/Mds/2006 for the assessment year 2000-01against the order of Commissioner of Income Tax (A) III Chennai - 34 inI.T.A.No.390/2005-06/A-III, dated 16.01.2006 and against the order of theAssistant Commissioner of Income Tax, Company Circle-I(1) Chennai inPAN/GIR.No.AAACS 4449J/AX5-021 dated 28.07.2005 For Appellant: Mr.J.Narayanaswamy, Jr. Standing Counsel (IT)J U D G M E N T(Delivered by P.D.DINAKARAN,J.) This appeal is directed against the order of the Income-tax AppellateTribunal dated 22.9.2006 made in ITA No.955/Mds/2006 for the assessmentyear 2000-01, raising the following substantial questions of law: "1. Whether in the facts and circumstances of the case, theTribunal was right in holding that the assessee has an option notto claim depreciation in any particular year? 2. Whether in the facts and circumstances of the case, the SupremeCourt's ruling in the case of Commissioner of Income Tax v.Mahendra Mills, [2003] 243 ITR 56 would be applicable to theassessment years after the omission of Section 34(1) of the IncomeTax Act and Rule 5AA of the Income Tax Rules? and https://hcservices.ecourts.gov.in/hcservices/ 3. Whether in the facts and circumstances of the case, explanation5 to Section 32 of the Income Tax Act should be read to haveretrospective operation, since it only explains the law as itstood?" 2.1. The Revenue is the appellant. The assessee is a company engagedin the business of providing cellular mobile telephony service. For theassessment year 2000-01, even though the assessee did not claimdepreciation, the Assessing Officer, allowed the depreciation to an extentof Rs.36,91,12,722/-, holding that allowing depreciation is mandatory. 2.2. On appeal by the assessee, the Commissioner of Income Tax(Appeals), allowed the appeal in favour of the assessee and directed theAssessing Officer not to allow any depreciation for the assessment year2000-01. 2.3. On appeal by the Revenue, the Tribunal following the decision ofthe Apex Court in Commissioner of Income Tax v. Mahendra Mills, [2003] 243ITR 56 held that depreciation cannot be forced upon the assessee and whereassessee had not claimed depreciation, the same should not be granted. 3. The learned standing Counsel for the Revenue fairly concedes thatthe issues are squarely covered against the Revenue by the decision of theApex Court in Commissioner of Income Tax v. Mahendra Mills, [2003] 243 ITR56, which was followed by this Court in CIT v. Sree Senha Valli Textils P.Ltd., [2003] 259 ITR 77. 4. In Commissioner of Income Tax v. Mahendra Mills, [2003] 243 ITR56, the Apex Court held that: "The language of the provisions of Section 32 and 34 of the IncomeTax Act, is specific and admits of no ambiguity. Section 32 allowsdepreciation as deduction subject to the provisions of Section 34.Section 34 provides that deduction under Section 32 shall beallowed only if the prescribed particulars have been furnished.Rule 5AA of the Income Tax Rules, since deleted, provided for theparticulars required for the purpose of deduction under Section 32.Even in the absence of Rule 5AA, the return of income in the formprescribed itself requires particulars to be furnished if theassessee claims depreciation. ... The provision for claim of depreciation is certainly for thebenefit of the assessee. If he does not wish to avail of thatbenefit for some reason, the benefit cannot be forced upon him." (emphasis supplied) The provision for claim of depreciation is certainly for thebenefit of the assessee. If he does not wish to avail of thatbenefit for some reason, the benefit cannot be forced upon him." (emphasis supplied) 5. The said decision of the Apex Court was also followed by thisCourt in CIT v. Sree Senha Valli Textils P. Ltd., [2003] 259 ITR 77. 6. In view of the law as enunciated from the decisions referred tosupra, it is clear that depreciation cannot be forced upon the assessee,when the assessee does not wish to avail of that benefit for some reason,particularly when the provision for claim of depreciation is for thebenefit of the assessee. Finding no substantial question of law arising for our consideration,this appeal is dismissed. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarsasiTo:1.The Assistant Registrar,Income Tax Appellate TribunalMadras Bench "A", Chennai.Rajaji Bhavan, III Floor, Besant Nagar, Chennai - 90.2.The Commissioner of IncomeTax (Appeals)-III, Chennai.3.The Commissioner of Income Tax, Chennai.4.The Assistant Commissioner of Income Tax, Company Circle I(1) Chennai. 1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.15673. T.C.(A) No.241 of 2007 HPR(CO)RVL 22.03.2007 https://hcservices.ecourts.gov.in/hcservices/