INCOME TAX OFFICER v. SOUTHERN PETRO CHEMICAL INDUSTRIES CORPORATION LTD
[Citation -1984-LL-0525-3]

Citation 1984-LL-0525-3
Appellant Name INCOME TAX OFFICER
Respondent Name SOUTHERN PETRO CHEMICAL INDUSTRIES CORPORATION LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 25/05/1984
Assessment Year 1978-79
Judgment View Judgment
Keyword Tags unabsorbed investment allowance • unabsorbed development rebate • best judgment assessment • outstanding liabilities • depreciation allowance • computation of income • legislative intention • method of computation • income from business • statutory deduction • agricultural income • written down value • managing director • unabsorbed relief • judicial opinion • legal obligation • original return • wrong statement • business loss • rental income • rental method • wear and tear • special bench • bad debt
Bot Summary: To get out of the difficulty created by the filing of the revised return, a very serious objection to the order of the Commissioner is taken by pointing out that under section 139(5) of the Act, the revised return filed by the assessee should not have been considered as a valid return because there was nothing that the assessee had omitted to claim in the original return filed. Before the Madras High Court, though the assessee filed a return without claiming for the allowance of depreciation and on compulsion filed the particulars relating to depreciation, since the particulars are available before the ITO, the Madras High Court did not experience any difficulty in holding that the ITO was right in granting the depreciation allowance though not asked for by the assessee. The Special Bench held that it was settled law that when an assessee filed a revised return, he admits that the original return filed by him was not correct or complete and substituted the same by a revised return which, according to him, was correct and complete, that the effective return for the purpose of assessment was the return which was ultimately filed by the assessee and assessment had to be made on that basis. Section 34 does not state that the particulars should be furnished in the return and that too the assessee should do so on his own without any prompting by the officer.... Even though the earlier observation does appear in conflict with the later observations now quoted above, the allowance of depreciation was eventually upheld by the High Court because the prescribed particulars were furnished by the assessee, though under protest. There is another point which has to be borne in mind, namely, in the earlier part of the judgment, the High Court pointed out why the assessee was indulging in the self-denial of a statutory deduction available under the law was not clear, meaning thereby that were it clear to the High Court as to why the assessee was not claiming depreciation, the position would have been different. We are entirely in agreement with the departmental representative and in fact that is also the view expressed by the several High Courts in the country, more recently by the Gujarat High Court in the case of Monogram Mills Co. Ltd. But the point to be seen is if all the claims are made by an assessee, then the question of priority comes in which event, the assessee would not be permitted to change the priorities. We cannot understand the claim of the department that the assessee cannot refuse the allowance of depreciation and the department is empowered under the law to foist on the assessee the allowance.


appeal is filed by revenue against order of Commissioner (Appeals) allowing assessee's request not to allow depreciation. 2. assessee is public limited company manufacturing chemical fertilisers. assessee filed return on 14-12-1978 disclosing business loss of Rs. 26,38,48,778. This included current year's depreciation of Rs. 9,63,65,559. On 11-12-1980, before assessment of assessee was completed, revised return was filed claiming reduced loss of Rs. 16,74,83,219. In this revised return, current year's depreciation claimed in first return was withdrawn, as consequence of which loss claimed came down to above noted figure. In covering letter dated 9-12-1980 accompanying revised return, assessee-company explained that no claim for depreciation was made in revised return as assessee-company did not wish to claim depreciation and that assessment should be completed without considering depreciation. object in making this claim, which may appear on very face of it extraordinary, is to secure benefit of set off of unabsorbed development rebate of earlier years which is time-bound as against depreciation which could be carried forward till it is absorbed. In making this claim, assessee-company placed reliance upon Special Bench decision rendered by Bombay Bench 'A' of Tribunal in case of Someshwar Sahakari Sakhar Karkhana Ltd. v. ITO [1982] 1 SOT 81. ITO rejected assessee's request and completed assessment by allowing depreciation. According to ITO, claim of assessee was not acceptable because in order to arrive at correct profit of particular year, deduction towards depreciation for that year should necessarily be made and even if prescribed particulars were not furnished, ITO could gather same on his own and allow depreciation. Dealing with argument of assessee that while filing revised return, claim was withdrawn, ITO seemed to have thought that first revised return was not valid and even if it is valid, it did not take away right of ITO to look into depreciation particulars already filed along with original return. Reliance was placed upon decisions of Madhya Pradesh High Court in case of Sulemanji Ganibhai v. CIT [1980] 121 ITR 373 and of Allahabad High Court in case of Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477 and also some other decisions of Tribunal, Poona Bench. view taken by ITO was approved of by IAC also under section 144B of Income-tax Act, 1961 ('the Act'). 3. Aggrieved by this decision, assessee appealed to Commissioner (Appeals) and reiterated its contention that assessee is free to claim depreciation or not to claim depreciation and if assessee chose not to claim depreciation, ITO cannot compel assessee to claim depreciation and allow it even if it is not desired and if claim was specifically withdrawn. When in revised return claim was withdrawn and specific request was made not to consider particulars already filed, it was not open to ITO to still look into original return filed for purpose of particulars. original return having become non est in law with filing of revised return, reliance placed upon by ITO on original return was totally illegal. To support this view, view taken by Special Bench of Tribunal, Bombay Bench 'A' is pressed into service. In support of view of revenue, ITO who was present before Commissioner (Appeals), in particular, relied upon decision of Madras High Court in case of Dasaprakash Bottling Co. v. CIT [1980] 122 ITR 9. Commissioner (Appeals) found that facts in present case were on all fours with facts in case before Special Bench of Tribunal, Bombay Bench 'A' which considered all those arguments and decisions relied upon. He held that depreciation allowance being statutory allowance for grant of which certain statutory requirements have to be fulfilled, if those requirements were not fulfilled, it was not open to ITO to deem them as having been fulfilled and allow depreciation. He also noted intention of Legislature in granting depreciation, development rebate, investment allowance as incentive with view to see that priority industries were encouraged and development of industries proceed in desired directions keeping in view general condition and welfare of society as whole. It is, therefore, necessary that those provisions should be viewed more liberally so that intention of Legislature reaches assessees and not defeated. It is against this view expressed by Commissioner (Appeals) that department has filed this appeal. 4. first contention of revenue is that Commissioner (Appeals) 4. first contention of revenue is that Commissioner (Appeals) w s not justified in ignoring decision of Madras High Court which, according to revenue, is direct decision in case of Dasaprakash Bottling Co.. As corollary to that argument, revenue contended that having regard to decision of Supreme Court in case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, allowance of depreciation is statutory deduction admissible under section 32 of Act and that ITO was bound by law to allow same even though assessee did not ask for it. Then comes third argument that having regard to ratio of decision in case of Monogram Mills Co. Ltd. v. CIT [1982] 135 ITR 122 (Guj.) and CIT v. Malwa Sugar Mills Co. Ltd. [1982] 134 ITR 56 (Cal.), allowance of current year's depreciation is first charge on profits and, consequently, that charge must be deducted in arriving at profits and, therefore, ITO's view in allowing depreciation should have been upheld by Commissioner (Appeals). To get out of difficulty created by filing of revised return, very serious objection to order of Commissioner (Appeals) is taken by pointing out that under section 139(5) of Act, revised return filed by assessee should not have been considered as valid return because there was nothing that assessee had omitted to claim in original return filed. Then there are several other points which we will deal with little later. learned departmental representative elaborating these points has taken great pains to explain to us how Commissioner (Appeals) had not appreciated import of decision of Madras High Court in case of Dasaprakash Bottling Co. and arrived at erroneous conclusions. He pointed out that Commissioner (Appeals) was wrong in following, Special Bench decision of Tribunal because that decision did not consider effect of decision of Madras High Court in Dasaprakash Bottling Co.'s case. His emphasis, as we understood from his elaborate arguments, is that statute fixed priorities for allowance of depreciation, development rebate and other time-bound reliefs. assessee cannot by seeking to withdraw claim for depreciation, alter priorities thereby gaining undue advantage which Legislature never intended to confer. He also laid stress on that part of grounds of appeal which related to validity of revised return filed by making pointed reference to decision of Supreme Court in case of Delhi Cloth & General Mills Co. Ltd. v. State of U.P. [1979] 118 ITR 277, where Supreme Court pointed out that if there is option given to assessee by statute, exercise of option in particular way does not amount to wrong statement made in return enabling assessee to revise it by taking advantage of provisions of section 139(5). 5. learned counsel for assessee, in his effort to distinguish Madras High Court decision in case of Dasaprakash Bottling Co., pointed out that that very decision in way helped assessee's case and not revenue's case. observation made by High Court by way of deriving support to its main conclusion cannot be taken to be ratio decidendi of that case bereft of facts that gave rise to that decision. Madras High Court decision is authority, according to him, for proposition that even if assessee did not file particulars of depreciation in beginning but filed them later under protest, ITO is not disempowered to took into them because his duty is to determine income statutorily for which purpose statutory deductions have to be allowed. That decision is not authority for proposition that when revised return was filed withdrawing claim for depreciation particularly pointing out that particulars filed originally should be ignored, ITO is still empowered to look into original return and basing upon these particulars furnished, allow claim of depreciation. This, according to him, is not ratio of decision and, therefore, reliance of revenue on that case is totally misplaced. Then, reference was made to another decision of Madras High Court in case of Hopeville Estate v. State of Tamil Nadu [1978] 112 ITR 861, where Madras High Court, dealing with allowance of depreciation on building under Tamil Nadu Agricultural Income- tax Act, 1955, held that if particulars were not furnished, revenue was entitled to disallow claim for depreciation by categorically pointing out that assessee was not eligible to obtain deduction of depreciation if particulars were not furnished. This being view of Madras High Court, it cannot be said that in Dasaprakash Bottling Co.'s case High Court sought to take opposite view and, therefore, that decision must be understood in context of facts obtaining in that case. That decision should be understood as laying down proposition that ITO can grant depreciation even if particulars are not furnished in discharge of statutory function of ascertaining statutory income. That does not mean that High Court laid down rule that ITO is bound to allow depreciation even if assessee did not want it. Another distinguishing feature pointed out was that in that decision, High Court pointed out as to why assessee did not wish to claim depreciation. Therefore, to case where reason as to why assessee was not claiming depreciation was available, decision rendered in case where reasons were not available, should not be applied. Then he pointed out to Circular No. 29-D (XIX-14) [F. No. 45/239/65-ITJ], dated 31-8-1965---TAXMANn's Direct Taxes Circulars Vol. 1, 1980 edn., p. 115 issued by CBDT where CBDT explained that in making ex parte assessments, depreciation need not be allowed, if it is statutory duty of ITO to allow depreciation, even if it is not claimed, then this Circular issued by CBDT is in direct conflict with that view. In any case, this Circular of CBDT should be taken as authority for proposition that ITO is not bound to grant depreciation if it is not claimed by assessee by furnishing required particulars and in view of decision of Supreme Court in case of K.P. Varghese v. ITO [1981] 131 ITR 597, this Circular is binding upon ITO, whatever may be view expressed by Madras High Court. Then arguments were addressed on validity of revised return filed under section 139(5) and effort was made to distinguish Supreme Court decision relied upon by departmental representative in Delhi Cloth & General Mills Co. Ltd.'s case by pointing out that decision rendered under U.P. Agricultural Income-tax Act, 1948, whose language is not in pari materia with language used under section 139(5) cannot be read as laying down rule applicable under income-tax proceedings also. 6. departmental representative, in reply, relying upon decision of Gujarat High Court in Monogram Mills Co. Ltd.'s case reiterated his claim that once priorities for allowance of depreciation, etc., were fixed under statute, whatever may be other consequences, that priority must be followed if violence is not to be done to statute. He pointed out that incentives granted under Act are different from depreciation which is expense represented by diminution of value of capital by wear and tear of assets for use of its business. That expense or loss of capital is to be differentiated from incentives given under statute. While expenses must be allowed, incentives can or cannot be allowed depending upon fulfilment of requirement in that behalf. By relying upon decision of Madras High Court in case of CIT v. B. Nagi Reddi [1983] 144 ITR 62, learned departmental representative submitted that when two decisions of same High Court holding two different views are available, later decision is to be followed, and, therefore, decision of Madras High Court in Hopeville Estate's case should not be preferred to judgment delivered in Dasaprakash Bottling Co.'s case, which is later in point of time. 7. We have to see whether ratio of decision of Madras High Court in Dasaprakash Bottling Co.'s case would apply to facts of case as contended for on behalf of revenue or whether decision of Special Bench of Tribunal, Bombay Bench 'A', applies as canvassed for on behalf of assessee. One difficulty in applying ratio of decision of Madras High Court is to see whether facts here are same as facts before Madras High Court. Before Madras High Court, though assessee filed return without claiming for allowance of depreciation and on compulsion filed particulars relating to depreciation, since particulars are available before ITO, Madras High Court did not experience any difficulty in holding that ITO was right in granting depreciation allowance though not asked for by assessee. But assessee before us, after filing original return withdrew claim for depreciation by filing revised return. Not only that, by specific request made in covering letter accompanying revised return, requested ITO to ignore prescribed particulars filed in original return and apropos to that request did not file prescribed particulars along with revised return. This fact made case before us different from Madras High Court case and identical with case before Special Bench of Tribunal. As here, there also, arguments were addressed that revised return should not be acted upon contending that that was not valid return filed within meaning of section 139(5). contention was, as we have noted earlier, that revised return can be filed under section 139(5) only if assessee discovers any wrong statement in return filed originally and claim for depreciation made originally and its withdrawal subsequently is only option. exercise of option even erroneously could not amount to wrong statement. This argument was not accepted by Special Bench there and was rejected. Special Bench held that it was settled law that when assessee filed revised return, he, in fact, admits that original return filed by him was not correct or complete and substituted same by revised return which, according to him, was correct and complete, that effective return for purpose of assessment was return which was ultimately filed by assessee and assessment had to be made on that basis. Special Bench's attention was invited to decision of Allahabad High Court in case of Dhampur Sugar Mills Ltd. v. CIT [1973] 90 ITR 236, where Allahabad High Court held that once revised return was filed, original return must be taken to have been withdrawn and substituted by revised return. argument similar to one addressed before us based upon Supreme Court decision in Delhi Cloth & General Mills Co. Ltd.'s case, does not appear to have been advanced before Special Bench. In case before Supreme Court in Delhi Cloth & General Mills Co. Ltd.'s case, assessee, company registered under Indian Companies Act, possessed agricultural farms, had to file its return of income under U.P. Agricultural Income-tax Act. Section 6(2) of U.P. Agricultural Income-tax Act provided two alternative methods of computation of agricultural income. One is rental method, i.e., multiple of annual rental income, and other, produce method subject to deductions. option is given to assessee to select one or other method depending upon advantage. Such option is required to be indicated in declaration in prescribed form to be submitted under rule 5 of U.P. Agricultural Income-tax Rules, 1949, along with return. For assessment year 1954-55, return of agricultural income was filed exercising option to be assessed on produce method. Subsequently, assessee filed revised return claiming some more deductions. assessing authority, however, served upon assessee notice to furnish return in prescribed form and verified in prescribed manner. There was requirement under U.P. Agricultural Income-tax Act that along with notice to furnish return of income provisional estimate of assessee's agricultural income should also be furnished. That estimate also was furnished by assessing authority estimating income on rental method which yielded far higher income than one disclosed by assessee. Subsequently, assessing authority served notice on assessee to produce evidence in support of its return. Sometime later, another notice was given stating that its income had escaped assessment calling upon assessee-company to file return of income. In response to this notice, assessee filed third return, this time selecting method of computation of income on rental method as against produce method adopted earlier. Then question arose whether it is open to assessee to change option. Several proceedings and interlocutory matters ensued and ultimately when matter reached Supreme Court, debate was as to whether assessee is entitled to change option once exercised. Supreme Court held that it is open to assessee to change option provided other conditions of U.P. Agricultural Income-tax Act are satisfied. It was argued before Supreme Court that it would not only be open to assessee to change option every year but even to change option during year by filing fresh return for same year and this argument was accepted by Supreme Court by observing that there was considerable force in this contention. With following observations Supreme Court did not agree with view of Division Bench of Allahabad High Court which held to contrary: ". . . In fact, rule 5 is obligatory and makes it incumbent upon assessee to file along with his return of income declaration in Form No. A.I.T.---2 indicating his option under section 6(1) of Act and as such exercise of such option including change of option indicated in declaration filed along with subsequent return or fresh return or revised return will be valid provided return itself is validly submitted. In this view of matter it is not possible to accept view of Division Bench of High Court that if once option is exercised by assessee by filing requisite declaration along with his return for particular year he will have no right to change his option by filing fresh return or revised return before assessment is made for that year. " Supreme Court elsewhere also held in that case that except in regard t o best judgment assessment, there is nothing sacrosanct about particular option previously exercised by assessee and he need not be held bound by it provided he changes option by filing subsequent or fresh or revised return in accordance with applicable provisions contained in section 15 of U.P. Agricultural Income-tax Act, object being to determine his true 15 of U.P. Agricultural Income-tax Act, object being to determine his true agricultural income for relevant previous year. This decision is, therefore, as we see it, authority for proposition that revised option could be filed along with each of fresh returns filed and wrong statement in earlier return does not mean selection of wrong option by assessee, and not authority for proposition canvassed for on behalf of assessee. It, therefore, means that if assessee discovers wrong statement made in return filed originally, it is open to him to rectify that mistake by filing revised return under provisions of section 139(5) of 1961 Act. Section 139(5) postulates filing of revised return at any time before assessment is made if person having furnished return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein. claim put up by assessee in original return for depreciation, when it did not want to avail of it, is undoubtedly and unmistakably wrong statement insofar as assessee- company is concerned. It is, therefore, entitled to correct it by filing revised return. Therefore, it cannot be said that revised return filed by assessee in this case withdrawing claim for depreciation is invalid return suggesting that withdrawal of claim for depreciation is exercise of option given to assessee and wrong exercise of option did not amount to wrong statement made in original return. We have endeavoured to show how basis for this argument, namely, Supreme Court decision in Delhi Cloth & General Mills Co. Ltd.'s case does not help revenue's case. 8. Once we come to conclusion that revised return is valid return, it is undisputed fact that revised return completely effaces and obliterates original return filed and it is totally in substitution thereof and it is that return that has to be taken into account for purpose of making assessment. This is settled law and we do not have to refer to any authorities on subject. 9. Now it is to be seen whether filing of revised return withdrawing claim for depreciation makes any difference for application of rule laid down by Madras High Court in case of Dasaprakash Bottling Co. If effect of filing revised return is to obliterate return filed along with all statements accompanying that return, then there are no prescribed particulars before ITO to allow depreciation because along with revised return, assessee did not furnish prescribed particulars. question then would be whether ITO could look into those particulars. In our opinion, it is not open to him to look into those particulars at all once revised return is held to be valid, genuine and legal document. next question would be whether ITO would be entitled to grant depreciation even if particulars are not furnished. There is specific injunction against grant of depreciation unless prescribed particulars are furnished by assessee. 10. allowance of depreciation under section 32 is made subject to provisions of section 34 of Act. Section 34 provided in specific terms that no depreciation shall be allowed unless prescribed particulars have been furnished. It is clear mandate and legislative intention not to allow depreciation unless prescribed particulars are furnished. It is not as if legislative intention is not considered by Madras High Court in case of Dasaprakash Bottling Co. . We find, on reading of judgment, that Madras High Court observed that reading section 32 and section 34 together, allowance of depreciation is available to assessee in all cases and I T O can disallow claim if assessee did not furnish prescribed particulars. But, Madras High Court observed that it would be open to ITO to grant depreciation even if assessee had not furnished prescribed particulars as computation of income under Act is computation of real and proper statutory income and that income could be arrived at only after allowing deductions available under law. This observation, in our opinion, does not mean that ITO shall grant depreciation to assessee even if prescribed particulars were not furnished. way in which it is expressed in report would only show that High Court's anxiety is to remind ITOs their legal obligation to grant depreciation even if prescribed particulars are not furnished by assessee. That is why observation opens with words 'it would be open to officer to grant depreciation'. When it is said that it is open to ITO to grant depreciation even if assessee had not furnished prescribed particulars, it would also mean that ITO could, in suitable cases, refuse to grant depreciation allowance also. However, in that case High Court upheld action of department in granting depreciation only because prescribed particulars were furnished by assessee though under protest. This is evident from following observations made by Madras High Court in Dasaprakash Bottling Co.'s case in last part of its judgment: " . . . In present case, it has also to be remembered that, though figures have not been furnished in return as such, still figures were furnished by assessee and fact that it was done under protest is of no significance as far as requirements of section 34 are concerned. Section 34 does not state that particulars should be furnished in return and that too assessee should do so on his own without any prompting by officer. . . . " Even though earlier observation does appear in conflict with later observations now quoted above, allowance of depreciation was eventually upheld by High Court because prescribed particulars were furnished by assessee, though under protest. position would have been entirely different, as seen from judgment of Madras High Court, if prescribed particulars were not at all furnished by assessee. There is another point which has to be borne in mind, namely, in earlier part of judgment, High Court pointed out why assessee was indulging in self-denial of statutory deduction available under law was not clear, meaning thereby that were it clear to High Court as to why assessee was not claiming depreciation, position would have been different. Here, in case before us, assessee clearly stated that it did not want current year's depreciation as it wants benefit of other time-bound reliefs like unabsorbed development rebate, unabsorbed investment allowance, unabsorbed relief under section 80J of Act, etc., which would not be available if depreciation is allowed first. 11. Here, we may deal with argument raised by departmental representative that if this claim of assessee is permitted, it would disturb priorities fixed by statute for allowance of depreciation and other allowances referred to in sections 32A, 33, 33B of Act, etc. We are entirely in agreement with departmental representative and in fact that is also view expressed by several High Courts in country, more recently by Gujarat High Court in case of Monogram Mills Co. Ltd.. But point to be seen is if all claims are made by assessee, then question of priority comes in which event, assessee would not be permitted to change priorities. But if some claims are left over, that would not alter priorities fixed under Act. In order to preserve and conform to all priorities fixed under Act, department cannot foist upon assessee claim it does not seek. For variety of reasons, one of which assessee has now stated, assessee may not take advantage of deduction provided for under Act. That does not mean ITO should force assessee to claim. If that is law then, in our view, it becomes impossible for ITO to make assessment and it is also very impracticable. Take case of assessee who does not claim bad debt or interest on borrowed capital or repairs to buildings or salaries to managing director or commission payments or outstanding liabilities or rents, rates and taxes. If law is that ITO should allow all permissible deductions under Act whether claimed or not, would it mean that ITO should go about enquiring into affairs of assessee, find out allowances which he has failed to claim and then allow? Will it not put impossible burden on ITO? What law says is that income from business shall be computed in accordance with provisions contained in sections 30 to 43A of Act, which means that if claims referred to in those sections are made by assessee, ITO shall examine and allow. It does not mean that ITO should suo motu go about and find out claims that could be made by assessee but not made and then allow them. We do not think it is proper understanding of law or functioning of Act. If so, how do we proceed about residuary allowances allowable under section 37? What applies to section 32 must also apply to section 37. Is it possible for ITO to find out what are admissible deductions under section 37 and allow them? Should not allowance of claim, therefore, depend upon claim by assessee and furnish necessary particulars in support thereof? If law is that ITO should allow expenditure like depreciation even if not claimed, as in present case, how can he proceed to allow expenditure, if allowance is subject to satisfaction of certain legal requirements, which assessee alone could furnish? assessee, when required to submit information does not comply, what should ITO do? Should he allow expenditure, though legal requirements are not satisfied, or should he disallow? In former case, he is acting against law; and in latter, he assesses not real income and acts against present contention. Thus, stalemate is reached. only course then open to him, is to complete assessment ex parte for non- compliance with notice issued for supply of information. Even so, what will he do? Again same stalemate. This eventuality makes us believe firmly that law is to allow expenditure only when claimed and on satisfaction of all legal requirements. That is why Madras High Court very aptly and advisedly observed that section 32 is enabling provision. So too are other provisions, relating to allowance of other categories of expenditure. It is by allowing all categories of expenditure necessary to carry on business, that real income should be arrived at. If assessee does not claim permissible allowance, he must be left to his fate. insistence by ITO to allow depreciation may look like adhering to law, but time-bound reliefs only become illusory in this process, and certainly that cannot be said to be intention of Parliament in enacting those benevolent provisions. future may or may not bring in profits so as to allow time-bound reliefs. Thus, provisions in sections 32 to 43A and other provisions are enabling provisions to allow those deductions wherever they occur, if claimed by assessee, or furnishing of necessary particulars, which are in nature of evidence to justify those claims. Madras High Court decision is to be understood that way and also as proposition that even if there is remissness on part of assessees to furnish particulars, ITO can in suitable cases, ignore that requirement and yet allow claim in performance of his statutory function of arriving at real income and not to force allowances on unwilling assessee. We cannot, therefore, understand claim of department that assessee cannot refuse allowance of depreciation and department is empowered under law to foist on assessee allowance. We also do not think that Madras High Court has laid down such proposition. To repeat, Madras High Court allowed claim of assessee because prescribed particulars were furnished, at same time pointing out that it is open to ITO to allow depreciation even if particulars were not furnished, more by way of concession because it is statutory duty of ITO to compute real income. As we have noticed earlier, Special Bench of Tribunal, dealing with identical facts, held that it is not open to department to force relief on assessee, more particularly when prescribed particulars were not available. That is also case where revised return was filed as in present case before us. Special Bench also laid down there that allowance of depreciation is not in nature of unconditional benefit granted by law. It is benefit coupled with condition and, therefore, it should be open to assessee to claim or not claim benefit. In this connection, we may also refer to CBDT Circular No. 29- D(XIX-14) [F. No. 45/239/65-ITJ], dated 31-1-1965 which was specifically on question of estimate of net profits and allowability of depreciation allowance. In para 3, following instructions were issued: " Even where best judgment is made, above procedure should be adopted provided required particulars have been furnished by assessee. In cases where required particulars have not been furnished by assessee and no claim for depreciation has been made in return, Income-tax Officer should estimate income without allowing depreciation allowance. In such cases, estimate of net profit would be naturally higher than otherwise and fact that estimate has been made without considering depreciation allowance may be clearly brought out in assessment order. In such case, written down value of depreciable assets would continue to be same as at end of preceding year as no depreciation would actually be allowed in assessment year. " It will be seen from above that where required particulars are not furnished by assessee and no claim for depreciation has been made in return, ITO should estimate income without allowing depreciation allowance and written down value of depreciable assets would be same as at end of preceding year as no depreciation was actually allowed in assessment year. It is not shown to us that circular had been withdrawn. If this is understanding of provisions of income-tax law by highest authority under Act entrusted with duty of administration of t h e income-tax law in country, how it could be argued on behalf of department that ITO should allow depreciation when no particulars were furnished and no claim for it was made? It would be contrary to instructions given by CBDT. circular of CBDT is binding on department and spirit of circular should have been applied by department in this case spirit of circular should have been applied by department in this case as pointed out by Supreme Court in K.P. Varghese's case even if it is bound to be against provisions of law. 12. We also do not find much force in argument of learned departmental representative that latter decision given by Madras High Court should be followed meaning thereby that decision in case of Dasaprakash Bottling Co. should be preferred to earlier decision given by Madras High Court in Hopeville Estate's case. We do not think there is any conflict between these two decisions and we do not have to make attempt to reconcile them. It is now settled that when there is conflict of judicial opinion, latter decision in point of time should be followed. But Madras High Court has been consistent in its view that depreciation could be allowed only if prescribed particulars are furnished. Insofar as this point is concerned, both Hopeville Estate's case and Dasaprakash Bottling Co.'s case, do not conflict with each other. 13. Special Bench has summarised its decision at end of its judgment and laid down four propositions which were also noticed by Commissioner (Appeals) and referred to in his order. Following, with respect, those propositions, with which we agree, we hold that view expressed by Commissioner (Appeals) is correct and rational and should be endorsed. We direct accordingly. 14. In view of our decision on this question, we do not think it necessary to consider decision of Supreme Court in case of Kedarnath Jute Mfg. Co. Ltd. because there is nothing in common with that decision of Supreme Court and contention before us. other conclusions reached by Commissioner (Appeals) as consequence of allowing assessee's claim, are also upheld. 15 to 20. [These paras are not reproduced here as they involve minor issues.] *** INCOME TAX OFFICER v. SOUTHERN PETRO CHEMICAL INDUSTRIES CORPORATION LTD.
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