Ms. Hindustan Newsprint Ltd. Vs ACIT (Kerala High Court)
In the present case, the Tribunal had permitted devaluation with respect to the items in which the committee had recommended 100% devaluation confining the actual devaluation to 80%. The Tribunal disallowed 20% of the claim finding it to be the scrap value of the devalued items. With respect to the other items, the committee had recommended only 50% devaluation. We have to notice that the committee was appointed by the Board of Directors and consisted of Senior Executives of the Company itself. It is also seen from the annual report that a technical evaluation was conducted and it was thus that 313 items were found to be devalued to 50% of their value. The Tribunal’s findings that the committee’s recommendations were without any basis cannot hence be accepted. The Committee of officers based on the technical evaluation had recommended devaluation at 50% finding the 313 items of stocks and spares to be of some use in the business of the Company or possible of earning 50% of the cost price in the market being second hand stores and spares. When the devaluation of 100% obsolete items were allowed to the extent of 80%, we do not find any plausible reason for declining the devaluation to an extent of 50% claimed on the basis of a technical evaluation and recommendation made by a committee of officers appointed by the Board. In such circumstances, we reverse the order of the Tribunal and allow the claim made of 50% devaluation with respect to the 313 items. The questions of law are answered in favour of the assessee and against the Revenue.
