Andhra HC (Pre-Telangana)
Commissioner Of Income-Tax vs Jeyapore Sugars Co. Ltd. on 28 June, 1988
Equivalent citations: [1989]175ITR627(AP)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
JUDGMENT B.P. Jeevan Reddy, J.
1. Two questions are stated by the Income-tax Appellate Tribunal under section 256(1) of the Income-tax Act, 1961. They are as under :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the amount of Rs. 31,26,459 being excess levy sugar price collected by the assessee cannot be considered to be the income of the assessee-company ?
(2) Whether, on the facts and in the circumstances of the case, the Appellate tribunal was right in upholding the order of the commissioner of Income-tax (Appeals) directing the income-tax Officer to correlate the loss of Rs. 74,486 due to day to day fluctuation of exchange rate with reference to the specific items of machinery the deferred payment for which has resulted in the expenditure/loss and to treat the expenditure as addition to the cost of the relevant assets on proportionate basis, and to allow depreciation including extra shift allowance ?"
2. SO far as question No. (1) is concerned, it is stated by counsel for both the parties that it has to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue, following the decision of this court in CIT v. Chodavaram Co-operative Sugars Ltd. .
3. Coming to the second question, the relevant facts are : the assessee claimed deduction of two items, i.e., Rs. 40,296 and Rs. 5,883, as difference in exchange being the loss suffered on account of fluctuation in the bank rate of foreign exchange. The Income-tax Officer disallowed the said claim for deduction holding that they represented losses suffered by the company for the repayment of capital cost of the machinery purchased. On appeal, this opinion of the income-tax Officer was confirmed by the Commissioner of Income-tax (Appeals). At that stage, however, the assessee raised a new and alternative contention. It was argued that, in any event, the assessee is entitled to depreciation including extra sift allowance and development rebate in respect of the said items. Thereupon, the first appellate authority made the following order :
"The Income-tax Officer is directed to correlate this expenditure with reference to the specific items of machinery, the deferred payment facility for which has resulted in this expenditure and to treat the expenditure as additions to the cost of the relevant assets on a proportionate basis and to allow depreciation including extra shift allowance if the asset qualifies for the same."
4. The Tribunal has held, and in our opinion rightly, that the direction given by the Commissioner of Income-tax (Appeals) cannot be understood as holding that the assessee-company is entitled to depreciation including extra shift allowance or development rebate. What the first appellate authority has done is merely to remit the matter to the Income-tax Officer to decide whether the assessee is entitled to the allowances claimed by it. We agree with the understanding of the Tribunal. If so, it cannot be said that there was any error in the order of the tribunal on this aspect. The second question is accordingly answered in the affirmative. No costs. Advocate's fee Rs. 150.