Commissioner of Income Tax Vs. Synthetic Stones - Court Judgment

SooperKanoon Citationsooperkanoon.com/763340
SubjectDirect Taxation
CourtRajasthan High Court
Decided OnNov-29-1995
Case NumberIT Ref. No. 4 of 1992 29 November, 1995
Reported in(1999)157CTR(Raj)594
AppellantCommissioner of Income Tax
RespondentSynthetic Stones
Advocates: Sandeep Bhandawat, for the Revenue
Excerpt:
counsels: sandeep bhandawat, for the revenue head note: income tax business income--chargeabilitycash assistance catch note: in view of the reasons given in decision in cit v. saboo emery stones (1996) 220 itr 295 (raj) cash assistance received by assessee is liable to be taxed case law analysis: cit v. saboo emery stones (1996) 220 itr 295 (raj) followed. application: also to current assessment year. decision: in favour of revenue. deduction under s. 80hh--computationassessee also eligible for deduction under section 35b catch note: if one read section 80hh with section 80ab of the act then it is very much clear that for the purpose of determination of the relief under section 80hh of the act, the gross total income of the assessee has to be worked out after deducting unabsorbed loss and unabsorbed depreciation and the income eligible for deduction under section 80hh will be the net income as computed in accordance with the provisions of the act and not the gross income therefore, tribunal was not justified in holding that the deduction under section 80hh should be allowed before deducting deduction under section 35b of the act. held: if one read section 80hh with section 80ab of the act then it is very much clear that for the purpose of determination of the relief under section 80hh of the act, the gross total income of the assessee has to be worked out after deducting unabsorbed loss and unabsorbed depreciation and the income eligible for deduction under section 80hh will be the net income as computed in accordance with the provisions of the act and not the gross income therefore, tribunal was not justified in holding that the deduction under section 80hh should be allowed before deducting deduction under section 35b of the act. case law analysis: cit v. vishnu oil & dal mills (1996) 132 ctr (raj) 132 followed. application: not to current assessment year, however scope of provision of section 80ab as explained in this case is still hold good decision: in favour of revenue depreciation--actual costcomputation--subsidy catch note: in view of reasons given in cit v. ambica electrolytic capacitors (p) ltd. & ors. (1991) 191 itr 494 (raj) and cit v. p. j. chemicals ltd. (1994) 210 itr 830 (sc), while computing depreciation and relief under section 80j the cost of assets should not be reduced by the amount of subsidy received by the assessee. case law analysis: cit v. ambica electrolytic capacitors (p) ltd. & ors. (1991) itr 494 (raj); cit v. p. j. chemicals ltd. (1994) 210 itr 830 (sc) followed application: now provision itself is made clear by inserting explanation 10 in section 43 by the finance (no. 2) act 1998 and now subsidy will be reduced from actual cost decision: in favour of assessee in the high court rajasthan b.r. arora & b.j. shethna, jj. - in the high court rajasthan b.r. arora & b.j. shethna, jj.b.r. arora, j1. the tribunal, jaipur bench, jaipur, for the assessment year 1982-83, at the instance of the revenue, referred the following questions of law for the opinion of the high court under section 256(1) of the income tax act :whether on the facts and in the circumstances of the case the tribunal was legally justified in :(1) confirming the view taken by the commissioner (appeals) that cash assistance of rs. 79,328 is not liable to be taxed;(2) holding that while computing depreciation and relief under section 80j the cost of assets should not be reduced by the amount of subsidy received by the assessee; and(3) in holding that deduction under section 80hh should be allowed before deducting deduction under section 35b ?'2. the material facts, on the basis of which question no. (1) is to be decided are similar to the facts in d.b. it ref. no- 7 of 1990, cit v. saboo emery stones and the above-quoted question no. (1) is identical with the question which was for decision in d.b. it ref. no. 7 of 1990. for the same reasons given in cit v. saboo emery stones's case. (supra), this question is decided in favour of the revenue and against the, assessee and it is held that the cash assistance on rs. 79,323 is liable to be taxed.3. so far as question no. (2) is concerned, an identical question came up for consideration before division bench of this court in the case of cit v. ambica electrolytic capacitors (p) ltd. & ors. and before the hon'ble supreme court in the case of cit v. p. j. chemicals ltd. : [1994]210itr830(sc) . for the reasons given in the aforesaid judgments, question no. 2 is answered in favour of the assessee and against the revenue.4. as regards question no. 3, the identical question came up for consideration before us in cit v. vishnu oil & dal mills (d.b. it ref. no. 1 of 1991 decided on 13-11-1995) (1996) 132 ctr (raj) 132 in which we have answered this question as under :'if we read section 80hh with section 80ab of the act then it is very much clear that for the purpose of determination of the relief under section 80hh of the act, the gross total income of the assessee has to be worked out after deducting unabsorbed loss and unabsorbed depreciation and the income eligible for deduction under section 80hh will be the net income as computed in accordance with the provisions of the act and not the gross income. 'as such, in view of the decision given on identical question in vishnu oil mills' case (supra), question no. 3 is answered in favour of the revenue and against the assessee.5. consequently, the reference is answered as under :question no. 1 : question no. (1) is answered in favour of the revenue and against the assessee and it is held that the learned tribunal was not justified in confirming the view taken by the commissioner (appeals) that cash assistance of rs. 79,328 is not liable to be taxed.question no. 2 : question no. (2) is answered in favour of the assessee and against the revenue and it is held that the tribunal was justified in holding that while computing depreciation and relief under section 80j the cost of assets, should not be reduced by the amount of subsidy received by the assessee.question no. 3 : question no. (3) in answered in favour of the revenue and against the assessee and it is held that the learned tribunal was not justified in holding that the deduction under section 80hh should be allowed before deducting deduction under section 35b of the act.
Judgment:

In the High Court Rajasthan B.R. Arora & B.J. Shethna, JJ.

B.R. Arora, J

1. The Tribunal, Jaipur Bench, Jaipur, for the assessment year 1982-83, at the instance of the revenue, referred the following questions of law for the opinion of the High Court under section 256(1) of the Income Tax Act :

Whether on the facts and in the circumstances of the case the Tribunal was legally justified in :

(1) confirming the view taken by the Commissioner (Appeals) that cash assistance of Rs. 79,328 is not liable to be taxed;

(2) holding that while computing depreciation and relief under section 80J the cost of assets should not be reduced by the amount of subsidy received by the assessee; and

(3) in holding that deduction under section 80HH should be allowed before deducting deduction under section 35B ?'

2. The material facts, on the basis of which question No. (1) is to be decided are similar to the facts in D.B. IT Ref. No- 7 of 1990, CIT v. Saboo Emery Stones and the above-quoted question No. (1) is identical with the question which was for decision in D.B. IT Ref. No. 7 of 1990. For the same reasons given in CIT v. Saboo Emery Stones's case. (supra), this question is decided in favour of the revenue and against the, assessee and it is held that the cash assistance on Rs. 79,323 is liable to be taxed.

3. So far as question No. (2) is concerned, an identical question came up for consideration before Division Bench of this court in the case of CIT v. Ambica Electrolytic Capacitors (P) Ltd. & Ors. and before the Hon'ble Supreme Court in the case of CIT v. P. J. Chemicals Ltd. : [1994]210ITR830(SC) . For the reasons given in the aforesaid judgments, question No. 2 is answered in favour of the assessee and against the Revenue.

4. As regards question No. 3, the identical question came up for consideration before us in CIT v. Vishnu Oil & Dal Mills (D.B. IT Ref. No. 1 of 1991 decided on 13-11-1995) (1996) 132 CTR (Raj) 132 in which we have answered this question as under :

'If we read section 80HH with section 80AB of the Act then it is very much clear that for the purpose of determination of the relief under section 80HH of the Act, the gross total income of the assessee has to be worked out after deducting unabsorbed loss and unabsorbed depreciation and the income eligible for deduction under section 80HH will be the net income as computed in accordance with the provisions of the Act and not the gross income. '

As such, in view of the decision given on identical question in Vishnu Oil Mills' case (supra), question No. 3 is answered in favour of the revenue and against the assessee.

5. Consequently, the reference is answered as under :

Question No. 1 : Question No. (1) is answered in favour of the revenue and against the assessee and it is held that the learned Tribunal was not justified in confirming the view taken by the Commissioner (Appeals) that cash assistance of Rs. 79,328 is not liable to be taxed.

Question No. 2 : Question No. (2) is answered in favour of the assessee and against the Revenue and it is held that the Tribunal was justified in holding that while computing depreciation and relief under section 80J the cost of assets, should not be reduced by the amount of subsidy received by the assessee.

Question No. 3 : Question No. (3) in answered in favour of the revenue and against the assessee and it is held that the learned Tribunal was not justified in holding that the deduction under section 80HH should be allowed before deducting deduction under section 35B of the Act.