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C.I.T. versus U.P.S.B.CORP. LTD.

High Court of Judicature at Allahabad

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C.I.T. v. U.P.S.B.Corp. Ltd. - INCOME TAX REFERENCE No. 16 of 1990 [2004] RD-AH 1769 (21 December 2004)


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Court No.37

I.T.R. No.16 of 1990

CIT, Lucknow v. M/s. U.P. Bridge Corporation, Ltd. Lucknow

Hon'ble R.K.Agrawal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, Allahabad  has referred the following question of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as the Act, for opinion to this Court.

" Whether on the facts and in the circumstances of the case the Tribunal was in law, justified in canceling the order of the Commissioner of Income-tax passed under Section 263 of the Income Tax Act, 1961?"

The Reference relates to the Assessment year 1980-81.

In the original assessment which was completed by the Inspecting Assistant Commissioner of Income Tax (Assessment) on 8th February, 1984 depreciation amounting to Rs. 1,00,87,060/- had been allowed to the respondent in respect of the entire plant and machinery. However, it was found that depreciation at the rate of 30% is admissible only for the machinery which is required for earth removing and not for other plant and machinery owned by the respondent. It has resulted in excess allowance of the depreciation as against depreciation amount of Rs. 57,90,996/-. Proceeding under Section 263(1) of the Act was initiated by the Commissioner of Income Tax who after considering the objection raised by the respondent had held that the depreciation has wrongly been allowed and the order being erroneous prejudicial to the interest of the Revenue set aside the assessment and directed the Assessing Authority to frame the assessment again. Feeling aggrieved by the aforesaid order the respondent preferred an appeal before the Tribunal. The Tribunal has allowed the appeal and has held that as the respondent had preferred an appeal before the Commissioner of Income-tax (Appeals) the assessment order stood merged by the order of the Commissioner of Income-tax (Appeals), therefore, the proceeding under Section 263 of the Act could not have been initiated.

We have heard Sri Shambhoo Chopra learned standing counsel for the Revenue. No body has appeared on behalf of the respondent-assessee.

In view of the decision of the Apex Court in the case of  Commissioner of Income Tax vs. Shri Arbuda Mills Ltd. [(1998) 231 ITR 50] the Commissioner of Income Tax has jurisdiction to take proceeding under Section 263 of the Act in respect of that part of the order which had been made subject matter of the appeal.

In this view of the matter, we answer the question referred to us in the negative i.e. in favour of the Revenue and against the assessee.  However, there shall be no order as to costs.




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