CIT vs. ENCORP E-SERVICE LTD

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ITA - 287 / 2011HC Delhi17 February 20111 pages
For Petitioner: SANJEEV SABHARWAL
AI SummaryRemanded

What did the High Court hold?

The Tribunal set aside the Commissioner's order on most counts, except for the unverified unsecured loans. The Revenue appealed, arguing the Tribunal failed to address the lack of proper verification for certain claims.

What were the facts?

The Commissioner of Income Tax revised the assessment order on six counts, including discrepancies in interest income, excess depreciation, unverified unsecured loans, and improper verification of asset costs, commission, and terminal installation expenses. The assessee challenged this revision before the Tribunal.

What were the issues?

Whether the Tribunal adequately addressed the Assessing Officer's lack of proper verification for certain claims when setting aside the Commissioner's revisionary order.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . 17.02.2011 . Present: Mr. Sanjeev Sabharwal, Sr. Standing Counsel for the Revenue. . . . + ITA 287/2011 . The assessment order passed by the Assessing Officer in the case of the respondent/assessee pertaining to the assessment year 2004-05 was revised by the Commissioner of Income Tax in exercise of power under Section 263 of the Income- Tax Act on as many as on six counts which are as under:- ?(i) that as per the TDS certificate, the interest received was ` 18,26,962/- whereas in the Profit and Loss account the interest income of Rs, 9,86,911/- was credited. The difference of ` 8,40,051/- remains to be taxed, which has resulted in underassessment of income to the extent of ` 8.40 lakhs. . (ii) Depreciation on printers, modems and other accessories under the head computers was allowed @ 60% as against admissible rate of 25% resulting in the allowance of excess depreciation to the extent of ` 11,19,43,370/- . (iii) The genuineness of unsecured loans of ` 26,68,85,829/- was not verified by the assessing Officer. . (iv) It is not clear from the assessment records as to who the cost of assets transferred from the parent company Ms/ Apollo International Limited was determined for the purpose of claiming depreciation by the assessee company. . (v) Commission of ` 77,74, 920/- included in the direct expenses as claimed in the return was allowed in the assessment without any inquiry or verification. . (vi) Terminal installation expenses of ` 1,16,95,952/- included in that indirect expenses appear to be of capital nature which were allowed as revenue expenditure by the assessing Officer.? . This order of the Commissioner was challenged by the assessee before the Tribunal and vide impugned decision the Tribunal has set aside the order of the Commissioner except in respect of item no.(iii) above. In so far as item No. (i) and (ii) are concerned, there is no quarrel that the order of the AO was in accordance with law and, therefore, the Revenue has not pressed that in this appeal filed against the order of the impugned order of the Tribunal. However, it is the submission of Mr. Sabharwal, learned counsel appearing for the Revenue in respect of item No. (iv) to (vi) above, the commissioner had passed the order stating that there was no proper verification on these claims by the Assessing Officer and had thus remitted the case back to the AO for proper verification. The submission is that the Tribunal while setting aside the order qua item No. (iv) to (vi) has not dealt with this aspect at all. After reading the para 7 of the impugned order, prima facie we find that there is some substance in the submission of learned counsel for the Revenue and the matter needs consideration. Notice to respondent, returnable on 27th April, 2011. . A.K. SIKRI, J. . M.L. MEHTA, J. FEBRUARY 17, 2011skb . 20#

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