COMMISSIONER OF INCOME TAX Vs. CROMPTON GREAVES LTD

JUDGEMENT

(1.) THESE two references are at the instance of the Revenue. The following question is referred for the decision of this court :

(2.) IN INcome-tax Reference No. 21 of 1999, for the year 1989-90, the assessee filed a return showing a loss of Rs. 9,30,59,275. IN computing the loss, the Assessing Officer held that whether the assessee had claimed it or not depreciation was to be allowed as per the provisions of the INcome-tax Act and accordingly, he computed the depreciation allowance at Rs. 2,02,79,334 and carried forward the same to be set off against the income of the subsequent years/This was confirmed by the Commissioner (Appeals). IN further appeal, the Tribunal held that the Assessing Officer was not justified in allowing deduction by way of depreciation when the assessee had not made a claim. IN para. 4 of the order of the Tribunal it was noticed that after the amendment of Section 34(1) by the Taxation laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from April 1, 1986, it was not necessary for the assessee to furnish the prescribed particulars for claiming depreciation but still there was another implicit condition to be satisfied and that condition was that the assessee should have asked for it. The Tribunal also relied on the decision of the Bombay High Court in CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd. [1989] 177 ITR 443. A similar view was also expressed by the Central Board of Direct Taxes in Circular dated August 31, 1965. The Commissioner of INcome-tax, however, sought a reference of the question relying on the decision reported in Dasaprakash Bottling Co. v. CIT [1980] 122 ITR 9 (Mad) and Ascharajlal Ram Parkash v. CIT [1973] 90 ITR 477 (All).

(3.) IN the case of the assessee, for the assessment year 1986-87 the same question arose for consideration before this court and by judgment dated October 15, 1999, this court answered the question referred to it in favour of the assessee and against the Revenue, The said decision is reported in . This court held that Section 34(1) of the INcome-tax Act obliges the INcome-tax Officer to allow the deductions referred to in Section 32 only if the prescribed particulars have been furnished. The use of the words "allowed" and "allowance" in the provisions would appear to contemplate a claim or application by the assessee for the deduction therein provided for. IN the absence of any such claim or application by the assessee the assessing authorities would not be allowing a deduction. Thus, the provisions suggest that the assessee has the choice of seeking or not seeking allowance of deduction. This court also took notice of the fact that if the Legislature had intended that the INcome-tax Officer should give a deduction for depreciation whether or not the assessee wanted it, it would not have used such language in the provisions as to enable the assessee to frustrate the intention by the simple expediency of not furnishing prescribed particulars. The provisions, therefore, prescribe two pre-conditions to the allowance of a deduction for depreciation, the first being implicit that the assessee should have asked for it; the second which is explicit is that the prescribed particulars should have been furnished. IN the absence of either of these conditions fulfilled, the deduction cannot be allowed by the INcome-tax Officer. Various case law on the point has been referred to and it was after referring to the rival submissions made and after referring to a number of decisions on this point that this court finally held that unless asked for or applied for by the assessee the INcome-tax Officer cannot allow the depreciation allowances. Thus the question was answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Subsequently, the apex court in the case of CIT v. Mahendra Mills [2000] 243 ITR 56 considered the same question and held as follows (headnote) :