Rakesh Garg, J. - (1.) DELAY of 465 days in re -filing the appeal is condoned for the reasons stated in the application. The revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') against the order of the Tribunal, Chandigarh Bench 'A', Chandigarh, passed in ITA No. 282/Chd/2002, dated 5 -8 -2005 for the assessment year 1998 -99 raising the following substantial question of law: Whether on the facts and law, the Hon'ble Tribunal was legally justified to ignore Clause (b) of Section 41(2) of Income Tax Act, when the entire machinery of an independent unit No. 1 as owned and used by the respondent for business and depreciation allowed to it under Section 32 of Income Tax Act, was sold in the previous year ?
(2.) THE respondent assessee is a company which filed its return of Income Tax for the assessment year 1998 -99 on 30 -11 -1998 declaring total income of Rs. 16,83,090. The assessment was completed on 29 -3 -2001 under Section 143(3) of the Act on a total income of Rs. 39,37,200. While completing the assessment, the assessing officer made an addition of Rs. 25,76,119 by treating the difference between the sale price of Rs. 29,80,000 of entire machinery installed at unit No. 1 of the factory premises of the respondent company and the WDV of the said machinery as on 1 -4 -1997 at Rs. 4,11,811 by invoking the provisions of Section 41(2) of the Income Tax Act, 1961 read with amended provisions of Sections 50 and 50A of the Act. The assessee filed an appeal before the Commissioner (Appeals) against the order of the assessing officer dated 29 -3 -2001. The Commissioner (Appeals), Ludhiana vide his order dated 25 -1 -2002 allowed the appeal of the assessee and deleted the addition of Rs. 25,76,119 by holding that: 1. Section 41(2) was not applicable to the facts of this case as it was applicable only to plant and machinery engaged in generation and distribution of power. 2. Effect of the insertion of Section 50A of Income Tax Act, was to make special provisions for computation of the cost of acquisition in the case of depreciable assets referred to in Section 32(1)(i) of the Act. 3. Section 50 of the Act was not applicable to the facts of the case as the block of the assets existed at the opening as well as at the closing of the financial year.
(3.) FEELING aggrieved by the aforesaid order, the revenue filed an appeal before the Tribunal, Chandigarh. The said appeal has been dismissed by the Tribunal as it did not find any infirmity in the order of the learned Commissioner (Appeals), vide its order dated 50 -8 -2005.;