DE NORA INDIA LIMITED Vs. CIT

JUDGEMENT

(1.) These two appeals filed by the assessee DENORA India Ltd. (earlier known as M/s Titanor Components Ltd.) under Section 260A of the Income Tax Act, 1961 ("Act" in short) relate to assessment years 1990-91 and 1991-92, wherein challenge has been made to the common order dated December 21,2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ("Tribunal" in short) in ITA No.1730/Delhi/1999 and ITA No.1356/Delhi/1995, whereby the Tribunal has dismissed the appeals of the appellant assessee on the question of determination of actual cost paid by the appellant to M/s Wimco Ltd. on acquisition of fixed assets.

(2.) The common substantial question of law which was framed vide order dated 15.09.2003 in these appeals is as under:-

(3.) The relevant facts necessary for the disposal of these appeals are that the appellant company was incorporated on 07.06.1989 for establishment of an industrial undertaking for manufacture of coated metal electrodes, cathodic protection systems and chloralkali cells. The appellant company on 30.11.1989 entered into an agreement with M/s Wimco Ltd. to purchase its metal anode division, a going concern, with all its assets, liabilities and obligation specified in the agreement of even date. The purchase price agreed and paid by the appellant assessee to M/s Wimco Ltd. was Rs.6,03,21,910/- to be paid in cash; the purchase price fixed was for acquisition of a running undertaking with all assets and liabilities. The first assessment year of the appellant company was assessment year 1990-91. The actual cost of fixed assets acquired was not examined by the Assessing Officer and assessment made was completed at "nil" income. The matter regarding determination of actual cost was considered for the first time by the Assessing Officer during the assessment year 1991-92. Relying upon surveyor's report, the value of the said assets was taken as Rs.3,50,37,238/-. We note that the said surveyor was appointed by the appellant company. The appellant company carried out the matter in appeal to the Commissioner of Income Tax (Appeals) [CIT(Appeals), for short] for both the assessment years 1990-91 and 1991-92. The CIT (Appeals) did not agree and held that the Assessing Officer had rightly computed the cost of fixed assets acquired at Rs.3,50,37,238/- as against Rs.6,10,02,641/- claimed by the assessee. He directed the Assessing Officer to make fresh assessment for the assessment year 1990-91 after considering the claim of depreciation of assets acquired from M/s Wimco Ltd. in the light of his findings in the assessment year 1991-92. Thereupon the Assessing Officer passed an appeal effect order under Section 143(3) read with Section 250 of the Act for the assessment year 1990-91 dated January 27, 1995, whereby he held that the actual cost of fixed assets acquired for the purpose of depreciation should be taken at Rs.3,50,37,328/- as per surveyor's report. On appeal, the CIT (Appeals) affirmed the said findings observing that the Assessing Officer merely followed the earlier order in appeal for the assessment year 1991-92. The appellant being aggrieved filed appeals before the Tribunal against the order of the CIT (Appeals) for the assessment year 1990-91 and 1991-92, which appeals were dismissed by a common impugned order December 21, 2001.