COMMISSIONER OF INCOME TAX Vs. ANOP UDAI WORKS

JUDGEMENT

(1.) THIS application under Section 256(2) of the IT Act, 1961 ('the Act') has been moved by the CIT, Jodhpur because the Tribunal, Jaipur Bench, Jaipur has refused the application made by the Department to refer the following as a question of law to this Court:

(2.) THE question aforesaid was proposed for reference in the background of the facts that the assessee M/s Anop Udai Works is a registered firm engaged in manufacture of sarees During the period relevant to the asst yr 1983 -84, the assessee debited an amount of Rs. 1,97,926 towards repairs and maintenance, and this included a sum of Rs. 1,31,305 which was claimed as terminal allowance by the assessee under Section 32(1)(iii) of the Act towards the alleged discarded copper rolls The Assessing Officer ('the AC) referred to the relevant entry in the account and posed a question in relation thereto that the rolls seem only to have been revalued and not discarded to which the assessee submitted a copy of rolls accounts and claimed the amount to be allowable under Section 32(1)(iii) of the Act The learned AO was not satisfied with the reply and observed that the rolls in question have neither been sold nor destroyed nor discarded The learned AO further observed that manufacturing process could not have been undertaken without such rolls, and the amount claimed by the assessee at Rs. 1,31,305 was the depreciated value of the existing rolls but no new rolls were purchased during the year under consideration The learned AO thus disallowed the claim made on the basis of alleged discard of rolls and considered it to be a case only of revaluation.

(3.) HOWEVER , the Tribunal, Jaipur Bench, Jaipur accepted the contention of the assessee with the observation that it was only the assessee who was competent to judge the utility or obsolescence of any equipment, and once the assessee decides that the rolls are no longer usable, they are said to be discarded even though, physically they might remain with the assessee, and terminal allowance has to be granted unless evidence was brought on record about they being used The Tribunal observed that merely because there was no new purchase of rolls, it cannot mean that written off rolls were used because the assessee was having with it the stock of usable rolls The consideration by the learned Tribunal in its judgment dt. 12th July, 1995 reads thus: