1 ITEM NO.8 COURT NO.6 SECTION XII SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s). 19495/2012 (Arising out of impugned final judgment and order dated 08-08-2011 in TCA No. 162/2005 passed by High Court Of Judicature At Madras) C.I.T-IV,COIBATORE Petitioner(s) VERSUS M/S SHIVA DISTILLERIES LTD. Respondent(s) Date : 30-08-2017 This petition was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ASHOK BHUSHAN For Petitioner(s) Mr. Maninder Singh, ASG Mr. Radha Krishnan, Sr. Adv. Mr. T.N. Razdan, Adv. Mr. T.M. Singh, Adv. Ms. Anil Katiyar, AOR For Respondent(s) Mr. Arvind Datar, Sr. Adv. Ms. Radha Rangaswamy, AOR UPON hearing counsel Court made following ORDER following two main issues arise for consideration in this petition: 1.Whether High Court was right in holding that assessee is entitled to depreciation in respect of new textile unit or entire transitional period of 21 Signature Not Verified months treating business as extension of earlier business of trading in yarn, when new Digitally signed by ASHWANI KUMAR Date: 2017.08.31 18:08:50 IST Reason: textile unit started commercial production only from 15.02.1989, and depreciation is applicable in ratio of 2:21. 2.Whether proviso of Section 3 of Act is applicable 2 on facts of case. Insofar as first issue is concerned, it arose because of reason that assessee herein originally had his accounts made up from 01.07.1987 to 30.06.1989. However, on account of amendment brought forth to Section 3 of Income Tax Act, 1961 ('the Act') by Direct Tax Laws (Amendment) Act, 1989 making it effective from 01.04.1989, assessee had to close its accounts by 31.03.1989. In this manner, from 01.07.1987 to 31.03.1989, period of 21 months was covered as previous year relevant to Assessment Year 1989-90 for which return was filed by assessee. assessee claimed depreciation on assets for aforesaid period of 21 months as previous year . claim of assessee was allowed originally by Assessing Officer. However, Commissioner of Income Tax, in exercise of his jurisdiction under Section 263 of Act, revised order of assessment as regards depreciation claimed by assessee, which was granted at enhanced rate by applying fraction of 21/12 as per Rule 5 of X Schedule of Act. This order was challenged by assessee by filing appeal before Income Tax Appellate Tribunal ('ITAT'), which was allowed, and order of ITAT has been upheld by High Court as well. Without going into legality of matter, it comes on record that assessment is tax neutral inasmuch as if depreciation is allowed at lesser rate in year in question it would be more in subsequent years. It is also matter of record that since respondent is company incorporated under 3 Companies Act, 1956, rate of tax remains same during all these years. In fact, Mr. Arvind P. Datar, learned senior counsel appearing on behalf of respondent, had given chart, showing these calculations to learned counsel for Department. same is examined by Department at appropriate level and vide communication dated 10.03.2017 addressed to Income Tax Officer (L & R), Supreme Court Cell-I, aforesaid aspect has been confirmed. In view thereof, it may not even necessary to deal with matter on merits. Special Leave Petition is dismissed. Pending application(s), if any, stands disposed of accordingly. (ASHWANI KUMAR) (MADHU NARULA) COURT MASTER COURT MASTER CIT-IV, Coibatore v. Shiva Distilleries Ltd