1988 P (PLP)

Nasrullah Awan for Applicant. G. M Qureshi for Respondent. Date of hearing: 16th March, 1988. AJMAL MIAN, J.-- By this common judgment we intend to dispose of two references which have been filed under, section 66(1) of the Income Tax Act. In I.T.R. No. 7 of 1979, the reference relates for the assessment years 1970-71 and 1971-72 and the respondents/assessees are Messrs Ellermen Line Ltd. whereas in I.T.R. No. 9 of 1979 the assessment year involved is 1969-70 and the respondents/ assessees are the City Line Limited. The applicant Department had sought the opinion of this Court on the following question: - "Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in setting aside the assessment order directing the Income Tax Officer to follow the second method of Rule 40 of he Income Tax Rules instead of any other method." It seems that respondents/ assessees were aggrieved by method of assessment adopted by the Income Tax. Officer. The respondents; assessees had-filed appeals before the learned Income Tax Appellate Tribunal which allowed the appeals and remanded the cases to the Income Tax Officer with the following directions:- "We would, therefore, direct that the Income 'fax Officer should re-compute income of the assessee in accordance with the second method of Rule 40 of the Income Tax Rules as it was being done in the earlier assessment year." The applicant department has impugned the above direction through the present references. In support of the above reference Mr. Nasarullah Awan learned counsel 'for the applicant department has contended that the respondents/ assessees were not entitled to claim any depreciation on the vessels chartered by them. However, we find that the finding of learned Income Tax Appellate Tribunal is that factually the respondents/ assessees had not claimed any depreciation on the vessels which were chartered and of which income was included for the purpose of assessment. However, it has been submitted by Mr. Awan that this finding is contrary to the factual position indicated by the record of the Income Tax Appellate Tribunal. In our view, it will be suffice to clarify that the Income Tax Officer while carrying out the direction of the Income Tax Appellate Tribunal would exclude any amount claimed by respondents/ assessees as depreciation in respect of the vessels, which were chartered, and not owned by them. As regards the method of computation in terms of second method of Rule 40, we may observe that the finding recorded by the Tribunal is that in the past also the assessments of the respondents/assessees were made on the above basis. The reference / has also been made by the Tribunal to its previous decision in I.T.A. No. 110 of 1958-59 etc. dated 26-7-1960. In our view no illegality has been committed by the learned Income Tax Tribunal in issuing of the above direction. Our answer accordingly to the above question is in the affirmative. With the above clarification the above references stand disposed of with no order as to costs. M.B.A./C-51/K Order accordingly.