Bombay High Court
Commissioner Of Income-Tax vs S.H. Kelkar And Co. Pvt. Ltd. on 26 March, 1991
Equivalent citations: [1991]191ITR612(BOM)
JUDGMENT T.D Sugla, J.
1. In this departmental reference relating to the assessee's assessment for the assessment year 1973-74, the Income-tax Appellate Tribunal has referred to this court the following question of law under section 256(1) of the Income-tax Act, 1961, for opinion :
"Whether, on the facts and in the circumstances of the case, the assessee, for the accounting period relevant to the assessment year 1973-74, was entitled to depreciation allowance when the plant, machinery and building were utilised for research laboratory on which relief was duly allowed to it in earlier years under section 35 of the Income-tax Act, 1961 ?"
2. Fairly admitting that our court, in the case of CIT v. Hico Products Pvt. Ltd., [1991] 187 ITR 517, has held that the amendment of section 35(2)(iv) to the extent that it is retrospective is invalid in law, Shri Jetley, learned counsel for the Revenue, invited our attention to the Supreme Court decision in the case of CIT v. Indian Telephone Industries Ltd., in which depreciation on the cost of plant, machinery and building, etc., the cost of which was allowed in full as deduction in the earlier years was held to be not allowable in view of the subsequent amendment of section 35 of the Income-tax Act, 1961, with retrospective effect. In our judgment, however, that question had come before the Supreme Court in reference proceedings arising out of the orders of the income-tax authorities and that of the Income-tax Appellate Tribunal. The income-tax authorities and the Income-tax Appellate Tribunal could not certainly cosider the vires of the provisions of the Act. The Tribunal could not also refer such a question of law to the HIgh Court for opinion under section 256(1) of the Act. In the circumstances, neither before the High Court nor before the Supreme Court, the question whether retrospective amendment of section 35 was ultra vires the Act could come up for consideration. In the case before this court, this question was reaised by way of a writ petition. Our Court, having held the provisions of the amendment to be invalid in so far as they are retrospective in operation, even though the present matter has come up before us in reference, we have to proceed on the basis that the retrospective part of the amendment is invalid.
Accordingly, following the above judgment of our court, we answer the question in the affirmative and in favour of the assessee.
3. There will be no order as to costs.