Court rules in favor of public company on power line ownership & depreciation, orders reconsideration.

The court ruled in favor of the petitioner, a public limited company, in a case involving ownership of a power line and eligibility for depreciation. The court quashed the Commissioner's order disallowing depreciation for the assessment year 1966-67, directing a reconsideration based on the petitioner's ownership contribution. Additionally, the court overturned the Commissioner's rejection of the condonation of delay in filing the revision application, emphasizing the need for sound judicial discretion. The court instructed the Commissioner to review the application on its merits, recognizing pursuing the appeal as a valid reason for the delay.

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Issues Involved:
1. Ownership of the power line and eligibility for depreciation.
2. Condonation of delay in filing the revision application.

Summary:

1. Ownership of the Power Line and Eligibility for Depreciation:
The petitioner, a public limited company, entered into an agreement with the Gujarat Electricity Board on September 23, 1959, to supply electric power to its cement plant. The petitioner contributed Rs. 3,00,600 for laying the service line, which was owned by the Board. For the assessment year 1965-66, the petitioner capitalized this amount and claimed depreciation at 10%, which was allowed by the Income-tax Officer. However, for the assessment year 1966-67, the claim for depreciation was disallowed on the grounds that the petitioner was not the owner of the power line. The Appellate Assistant Commissioner upheld this decision, and the petitioner withdrew its appeal before the Income-tax Appellate Tribunal.

2. Condonation of Delay in Filing the Revision Application:
The petitioner filed a revision application u/s 262 on December 26, 1972, seeking to treat the amount of Rs. 3,00,600 as revenue expenditure for the assessment year 1965-66 and requested condonation of delay. The Commissioner rejected the application for condonation of delay, stating there was no sufficient cause. The court examined the concept of "sufficient cause" as per section 264(3) and relevant Supreme Court decisions, emphasizing that judicial discretion must be exercised with vigilance, common-sense, and sound judgment. The court found that the Commissioner's refusal to condone the delay, despite recognizing that pursuing the appeal could be considered sufficient cause, was not a sound exercise of judicial discretion.

Judgment:
The court quashed the Commissioner's order dated March 29, 1975, and directed the Commissioner to proceed on the footing that there was sufficient cause for the delay and to dispose of the revision application on merits. The rule was made absolute with costs.

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