Commissioner of Income-Tax V. Vallabh Glass Works Ltd.

ITR/242/1991

AI Insights

The case involves Vallabh Glass Works Ltd., a public limited company engaged in the glass industry, which claimed additional investment allowance and depreciation on the increased value of plant and machinery due to foreign exchange rate fluctuations for the assessment year 1976-77. Additionally, the company claimed a deduction under Section 80J of the Income-tax Act while calculating 'capital employed' on the value of work in progress and uninstalled machinery. The Income Tax Officer initially rejected these claims, but the CIT (Appeals) and subsequently the Tribunal upheld the company's claims. The Commissioner of Income-Tax then referred the matter to the High Court, which found in favor of the assessee based on precedents set by the Full Bench of the High Court and the Supreme Court.

• Counselvise Citation: [2003] 140 COUNSELVISE.COM (IT) 799452 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 18-09-2003
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. Gujarat State Fertilizers Co.Ltd., Commissioner of Income Tax Vs. Alcock Ashdown and Co.Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: MONA BHATT
• Keywords: Capital Employed; Deduction; Depreciation; Investment allowance; Foreign exchange rate fluctuation
• Section: 256(1); 80J

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 242 of 1991 For Approval and Signature: HON'BLE MR.JUSTICE D.H.WAGHELA and HON'BLE MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus VALLABH GLASS WORKS LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 242 of 1991 MRS MONA.M.BHATT for MR MANISH R BHATT for Applicant. SERVED BY RPAD - (N) for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE D.H.WAGHELA and HON'BLE MR.JUSTICE D.A.MEHTA Date of decision: 18/09/2003 ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE D.A.MEHTA) 1 This is a Reference at the instance of the Commissioner of Income Tax under Section 256(1) of the Income Tax Act, 1961 ('the Act' for short). The following two questions have been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Ahmedabad, Bench 'A': \"[1] Whether, the Appellate Tribunal is right in law in granting investment allowance and depreciation on the addition to plant and machinery on account of foreign exchange rate fluctuation ?\" [2] Whether, the Appellate Tribunal is right in law in allowing the claim of the assessee relating to granting of deduction under Section 80J of the Income-tax Act?\" 2 The assessment year is 1976-77 and the relevant accounting period is year ended 31.3.1976. The assessee, a Public Limited Company is engaged in Glass Industry and it claimed additional investment allowance and depreciation on the additional value of plant and machinery on account of foreign exchange rate fluctuation. The assessee Company also claimed deduction under Section 80J of the Act while working out \"capital employed\" on the value of the work in progress and uninstalled machinery. The Income Tax Officer rejected both the contentions. The assessee carried the matter in Appeal before the CIT (Appeal) who upheld both the claims of the assessee. 3 The department carried the matter in appeal before the Tribunal who confirmed the order of the CIT (Appeal). 4 Heard Mrs.Mona M.Bhatt, learned Standing Counsel for the applicant-revenue. It was fairly conceded by her that both the questions now stand concluded by a decision of this Court as well as Apex Court respectively. In relation to first question, it was pointed out that Full Bench decision of this Court in the case of Commissioner of Income Tax Vs. Gujarat State Fertilizers Co.Ltd., 259 ITR 526, has upheld the contention raised on behalf of the assessee. In so far as the second question is concerned, it was pointed out that the decision of the Apex Court in the case of Commissioner of Income Tax Vs. Alcock Ashdown and Co.Ltd., 224 ITR 353, has concluded the issue in favour of the assessee. 5 In light of the aforesaid submissions, it is not necessary for us to set out the facts in detail. Question No.1 referred to us is answered in the affirmative i.e. in favour of the assessee and against the revenue following the ratio of Full Bench decision of this Court. Question No.2 is also answered in the affirmative i.e. in favour of the assessee and against the revenue following the ratio of the decision of the Supreme Court. 6 The Reference stands disposed of accordingly. There shall be no order as to costs. (D.H.Waghela, J) (D.A.Mehta,J) m.m.bhatt "