Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 1/6 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 16.03.2020 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE R.SURESH KUMAR T.C.A.No.5 of 2016 Commissioner of Income Tax Central I 108, Nungambakkam High Road, Chennai - 600034. ... Appellant Vs. M/s.Narmada Chemicals Pvt. Ltd., Now known as M/s.Power Chemicals P. Ltd. R.S.No.94/1, Semblambalayam Village, Kodadu PO, Pondicherry 605 110. PAN: AAB CN 2036 R ... Respondent Prayer : Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'A' Bench, Chennai dated 11.08.2015 in ITA.No.305/MDS/2015. For Appellant : Mr.T.R.Senthil Kumar Senior Standing Counsel For Respondent : Mrs.S.Sriniranjani For M/s.G.Baskar M.P.Senthilkumar http://www.judis.nic.in Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 2/6 JUDGMENT (Judgment of Court was delivered by DR.VINEET KOTHARI, J.) Both learned counsels submit that controversy involved in present case is covered by decision of this Court in case of CIT Vs. Kikani Exports (P.) Limited [2014] 369 ITR 500 (Madras) and in case of CIT Vs. ABT Limited, [2015] 370 ITR 159 (Madras). 2.The Appeal is admitted by Coordinate Bench of this Court on 19.01.2016 on following questions of law. "1.Whether return of income filed by assessee under Section 139(1) of Income Tax Act claiming depreciation can be treated as exercising of option before due date as prescribed in second proviso to Rule 5(1A) of Income Tax Rules? 2.Whether Appellate Tribunal and CIT(A) is right in going into merits of case when it held that reopening of assessment itself is bad in law?" 3.The relevant findings of learned Tribunal in para 5 of order dated 11th August 2015 are also quoted below for ready reference. http://www.judis.nic.in Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 3/6 "5.After hearing both sides, we find that Ld. CIT (A) had rightly decided issue by following decision of Chennai Bench of Tribunal cited herein above because in case of assessee claim was made in return of income as well as reflected in audit report filed along with return of income, therefore it would amount to exercise of option as required under Second proviso to Rule-5(1A) and accordingly depreciation @ 80% on windmill of assessee has to be allowed. Further Hon'ble Jurisdictional High Court in case of CIT Vs. ABT Ltd. reported in [2015] 370 ITR 159 (Mad.) has held as under:- "If assessee exercised option in terms of second proviso to rule 5(1A) of Income-tax Rules, 1962, at time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to exercise of option is required. Since returns were filed in accordance with section 139(1) of Income-tax Act, 1961, and form prescribed therein makes provision for exercising option in respect of claim of depreciation, no separate procedure is required." In these circumstances we do not find any reason to interfere with order of Ld. CIT (A). Accordingly, we hereby confirmed order of Ld. CIT (A)." 4.A Coordinate Bench of this Court in case of CIT Vs. Kikani Exports (P) Ltd. (supra) held in paras 20 and 21 as under: "20. reading of above-said decision of Bombay High Court makes it clear that if assessee exercised option in terms of second proviso to Rule 5(1A) of Income Tax Rules at time of furnishing of return of income, it will suffice and no separate letter or request or http://www.judis.nic.in Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 4/6 intimation with regard to of exercise of option is required. Since returns are filed in accordance with Section 139(1) of Income Tax Act and form prescribed therein make provision for exercising option in respect of claim of depreciation, no separate procedure is required, as contended by Department. We are in agreement with reasoning of Tribunal. 21. Accordingly, question of law is answered in favour of assessee and against Revenue." 5.Similarly in CIT Vs. ABT Ltd. (supra), another Bench of this Court held as under: "4.In above-said decision, this Court, following decision of Bombay High Court reported in 229 ITR 772 (CIT V. Vijaya Hirasa Kalamkar (HUF), held as follows: "20. reading of above-said decision of Bombay High Court makes it clear that if assessee exercised option in terms of second proviso to Rule 5(1A) of Income Tax Rules at time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to of exercise of option is required. Since returns are filed in accordance with Section 139(1) of Income Tax Act and form prescribed therein make provision for exercising option in respect of claim of depreciation, no separate procedure is required, as contended by Department. We are in agreement with reasoning of Tribunal. 21. Accordingly, question of law is answered in favour of assessee and against Revenue." http://www.judis.nic.in Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 5/6 5. Following above-said decision of this Court, substantial questions of law Nos.1 to 4 are answered in favour of assessee and against Revenue." 6.Since questions involved in present appeal are also same and matter is covered by two decisions of this Court, respectfully following same, we dispose of present Appeal filed by Revenue also in same terms and answer first question in favour of Assessee and against Revenue. In view of first question answered as above in favour of Assessee, second question does not require any answer. 7.Accordingly, this Tax Case Appeal is disposed of in same terms. No costs. (V.K. J.) (R.S.K. J.) 16.03.2020 Index: Yes/No Speaking Order : Yes/No Sgl http://www.judis.nic.in Judgment inTCA.No.5 of 2016 dated 16.03.2020 (Commissioner of Income Tax Vs. M/s.Narmada Chemicals Pvt. Ltd.) 6/6 DR.VINEET KOTHARI, J. AND R. SURESH KUMAR, J. Sgl To Income Tax Appellate Tribunal 'A' Bench, Chennai. T.C.A.No.5 of 2016 16.03.2020 http://www.judis.nic.in Commissioner of Income-tax Central I, Chennai v. Narmada Chemicals Pvt. Ltd., Now known as Power Chemicals P. Ltd