This Court In Cit v. The Cbdt Has Now Issued Instruction

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 106 OF 2002 The Commissioner of Income Tax, City-II,Mumbai Vs.M/s National Peroxide Ltd. ..Appellant ..Respondent .... Mr. Suresh Kumar, Advocate for Appellant. ....CORAM : M.S. SANKLECHA & N.M. JAMDAR, JJ.DATED : 11 AUGUST 2015 P.C.: This appeal under Section 260A of the Income Tax Act, 1961 (the 'Act') challenges the order dated 27 June 2001 for theAssessment Year 1985-86. 2.The appeal was admitted on 23 April 2004 on the following substantial questions of law: “(A)Whether on the facts and circumstancesof the case and in law, the Tribunal was justified indirecting the Assessing Officer to allow depreciationand investment allowance on the plant andmachinery when the Assessee had not carried out S.S.DESHPANDE any manufacturing activity during the previous yearrelevant to the Assessment Year 1985-86? (B)Whether on the facts and circumstancesof the case and in law, the Tribunal was justified inholding that the provisions of Sec.37(3A) are notapplicable to the expenses incurred on repairs andtaxes of Motor Cars?” 3.It is an undisputed position that the disputed claim in theappeal is valued at Rs.9.88 lacs therefore follows that the tax effectin the present appeal is less than Rs.10 lacs. 4.This Court in CIT Vs. Vijaya Kavekar[1] while dealing withappeals filed by the revenue dismissed a pending appeal having lowtax effect i.e. less than Rs.10 lacs by pacing reliance upon CentralBoard of Direct Taxes (the 'CBDT') Instruction NO.3/2011. ThisCourt held that the circular/instruction issued by CBDT would applyto pending appeals. 5.The CBDT has now issued Instruction No.5/2014 wherein it has also been specifically provided that where the tax effect is less 1. 350 ITR 237 than Rs.10 lacs, the revenue should not file appeal unless it fallswithin exclusion clause provided therein. Nothing has been shownto us to indicate that the issue arising in the present appeal wouldfall within the exclusion clause under Instruction No.5/2014.Therefore we are inclined to dismiss this appeal. 6.However, Mr. Suresh Kumar, the learned Counsel for therevenue urges that the aforesaid two questions would have acascading effect and therefore in view of the decision of the ApexCourt in CIT Vs. Surya Herbal Ltd.[2], the present appeal should bedisposed of on merits. We find that the questions which arise forour consideration in the present appeal would not give rise to anycascading effect. So far as Question (A) is concerned, it seeks todisallow depreciation and investment allowance on the ground thatplant and machinery was not put to use during the relevantassessment year. This would not have any cascading effect as aquestion of depreciation and investment allowance would have tobe considered independently in each assessment year dependingupon the facts existing during the year under consideration. So far2. 350 ITR 300S.S.DESHPANDE3 / 4 as Question (B) is concerned, it is in respect of disallowance ofexpenses incurred on repairs and taxes in respect of motor cars.This again would depend on facts as existing from year to year andthe not answering the question would not have any cascading effect.In view of the fact that we are not considering the appeal on merits,the substantial questions of law as formulated are left open to bedecided in an appropriate case. 7.In view of the above, as the tax effect is less than Rs.10lacs, we dismiss the present appeal. No order as to costs. [N.M. JAMDAR, J][M.S. SANKLECHA, J.]