Gujarat High Court
Synbiotics Ltd. vs Commissioner Of Income Tax on 24 August, 1992
Author: S.B. Majmudar
Bench: S.B. Majmudar
JUDGMENT S.B. Majmudar, J.
1. These proceedings arise out of the Order of reference made by the Tribunal in eight reference applications. The questions referred to us for our opinion read as under :
Asst. yr. 1969-70 At the instance of assessee "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that reopening of the proceedings under s. 147(b) of the IT Act, 1961 was not in excess of the ITO's jurisdiction ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that when the assessee had acquired capital asset without making any entry in the development rebate reserve account, it could not be held that this amounted to utilisation of development rebate reserve for acquiring any capital asset ?"
At the instance of the Revenue "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the transfer of development rebate reserve to the general reserve would not amount to the utilisation of the development rebate reserve for any of the prohibited purposes under sub-s. (3) of s. 34 of the Act ?
2. Whether the Tribunal was right in law in holding that the assessee was entitled to development rebate of Rs. 2,91,282 in the year under consideration ?
3. Whether the Tribunal was right in law in deleting the addition of development rebate of Rs. 2,10,256 relating to asst. yr. 1967-68 and Rs. 4,30,376 relating to asst. yr. 1968-69 which was added back by the ITO in the reopened assessment proceedings under s. 147(b) of the IT Act for asst. yr. 1969-70 ?"
Asst. yr. 1971-72 At the instance of the Assessee "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the disallowance of service line charges of Rs. 44,737 ?"
At the instance of the Revenue "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the transfer of development rebate reserve to the general reserve would not amount to utilisation of the development rebate reserve for any of the prohibited purposes under sub-s. (3) of s. 34 of the Act ?
2. Whether the Tribunal was right in law in holding that the assessee was entitled to development rebate of Rs. 5,18,175 in the year under consideration ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee would be entitled to depreciation of cost of the roads of Rs. 46,454 on the basis that the roads are 'building' ?"
Asst. yr. 1972-73 At the instance of the Assessee "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that when the assessee had acquired capital asset without making any entry in the development rebate reserve account, it could not be held that this amounted to utilisation of development rebate reserve for acquiring any capital asset ?"
At the instance of the Revenue "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the transfer of development rebate reserve to the general reserve would not amount to utilisation of the development rebate reserve for any of the prohibited purposes under sub-s. (3) of s. 34 of the Act ?
2. Whether the Tribunal was right in law in holding that the assessee was entitled to development rebate of Rs. 7,14,185 in the year under consideration ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee would be entitled to depreciation of cost of the roads of Rs. 2,206 on the basis that the roads are 'building' ?"
2. It becomes obvious that plurality of these questions flows from the plurality of the appeals decided by a common judgment of the Tribunal. There were in fact six appeals concerning asst. yrs. 1969-70, 1971-72 and 1972-73. As three appeals were taken out by the assessee, three cross appeals were taken out by the ITO. As these questions pertain to six appeals before the Tribunal, these references also are required to be registered as six references and not one reference as done by the office. We, therefore, direct that this group of references may be treated as IT Ref. Nos. 227/78, 227A/78, 227B/78, 227C/78, 227D/78 and 227E/78.
3. We shall deal with the referred questions seriatim. So far as the first referred question is concerned, it pertains to asst. yr. 1969-70. It is at the instance of the assessee. At the time of final hearing of these references, it was not pressed by the learned advocate for the assessee. It is, therefore, not answered. So far as question No. 2 for asst. yr. 1969-70 as referred to at the instance of the assessee is concerned, an identical question as question No. 5 is decided by us today in IT Ref. No. 8 of 1979 [since reported as CIT vs. Karamchand Premchand (P) Ltd. For the detailed reasons given therein, for answering that question in the negative, the present question No. 2 is also answered in the negative, that is, in favour of the assessee and against the Revenue.
4. So far as questions referred at the instance of the Revenue for this very assessment year are concerned, all the said three questions stand answered by our decision on question Nos. 1 and 2 in IT Ref. No. 8 of 1979 decided today. For the detailed reasons given therein, for answering these questions in favour of the assessee, all the aforesaid three questions at the instance of the Revenue, are answered in the affirmative, in favour of the assessee and against the Revenue.
5. That takes us to consideration of cross questions referred for our opinion, for the asst. yr. 1971-72. So far as the solitary question referred at the instance of the assessee is concerned, it will have to be answered in the negative, in favour of the assessee and against the Revenue as it is squarely covered by our answer to similar question No. 4 in IT Ref. No. 9 of 1979 decided today. For the detailed reasons given therein, the present question is also answered in the negative, in favour of the assessee and against the Revenue.
6. So far as question Nos. 1 and 2 at the instance of the Revenue for this very asst. yr. 1971-72 are concerned, they stand fully covered by our answers to questions Nos. 1 and 2 in IT Ref. No. 8 of 1979 (supra) decided today. For the detailed reasons given therein for answering these questions, the present questions are also decided in the affirmative, in favour of the assessee and against the Revenue.
7. So far as question No. 3 at the instance of Revenue for this assessment year, is concerned, it requires a typographical correction in the last line wherein word 'plant' is used. It should be corrected as 'building'. This is done by consent of the learned advocates of both the parties. So far as this corrected question is concerned, the claimed involved is about depreciation of the cost of roads. Roads are to be treated as building by a catena of decisions of this High Court and now authoritatively decided by the Supreme Court in CIT vs. Gwalior Rayon Silk Mfg. Pvt. Ltd. (1992) 196 ITR (SC). In view of this pronouncement of the Supreme Court, this question is answered in favour of the assessee and against the Revenue.
8. This leaves out consideration of cross-questions flowing from the judgment of the Tribunal concerning asst. yr. 1972-73. So far as first question of this group is concerned, it is at the instance of the assessee. This question is covered by our answer to identical question No. 5 in IT Ref. No. 8 of 1979 decided today. For the reasons given therein for answering this question No. 5, the present question is answered in the negative, in favour of the assessee and against the Revenue.
9. Going to the questions referred at the instance of the Revenue for this assessment year, it is found that question Nos. 1 and 2 are fully covered by our answer to question Nos. 1 and 2 in IT Ref. No. 8 of 1979 (supra) decided today. For the detailed reasons given therein for answering question Nos. 1 and 2, the present question Nos. 1 and 2 are also answered in the affirmative, in favour of the assessee and against the Revenue.
10. So far as the last question No. 3 is concerned, it raises an identical controversy as is raised by question No. 3 at the instance of Revenue in earlier asst. yr. 1971-72. We have already answered that question, following the Supreme Court decision in CIT vs. Gwalior Rayon Silk Mfg. Pvt. Ltd. (supra), in favour of the assessee. Consequently, this question is also answered in the affirmative, in favour of the assessee and against the Revenue.
11. References disposed of accordingly, with no order as to costs.