Tamil Nadu Cements Corporation Ltd Vs ITO (OSD) (Madras High Court)
Madras High Court has affirmed the authority of the Commissioner of Income Tax (CIT) to direct the recomputation of income for Tamil Nadu Cements Corporation Ltd., specifically concerning the set-off of business loss, unabsorbed depreciation, and investment allowance. The court, in its recent judgment, dismissed the company’s appeal, agreeing with the Income Tax Appellate Tribunal (ITAT) that the CIT had correctly exercised jurisdiction under Section 263 of the Income Tax Act, 1961.
The appellant, Tamil Nadu Cements Corporation Ltd., challenged an ITAT order dated March 30, 2012, which had upheld the CIT’s revisional order of March 30, 2007. The CIT’s order had directed the Assessing Officer (AO) to recompute the company’s income, arguing that the method previously used for claiming brought forward loss, unabsorbed depreciation, and investment allowance was incorrect.
The High Court considered three substantial questions of law, including the CIT’s jurisdiction under Section 263 and whether the revisional order was time-barred for assessment years from 1985-86 onwards. The court, aligning with the ITAT, ruled that the CIT indeed possessed the necessary jurisdiction. It noted that the CIT’s order was not a final assessment but merely a direction to the AO to recompute the figures in accordance with the law.
