M/S SHARAT KUMAR & COM.FAZILKA vs. COMMISSIONER OF INCOME TAX,PATIALA

ITR/8/2001HC Punjab & HaryanaPHHC01056216200129 January 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN3 pages
AI SummaryDismissed

What were the facts?

This case involves a reference under Section 256(1) of the Income Tax Act, 1961, to the High Court of Punjab and Haryana concerning assessment year 1990-91. The assessee, M/s Sharat Kumar & Co., dealt in Narma Cotton, Cotton Seed Oil, and Khal. The Assessing Officer made additions and disallowed deductions, including depreciation and car expenses of ₹81,724. The yield of cotton shown by the assessee (31.467%) was deemed low, and a 32% yield was applied. The Appellate Authority allowed depreciation and car expenses, and provided relief on the cotton yield addition. Both the assessee and the revenue appealed to the Tribunal, which upheld the Appellate Authority's order. The High Court is now considering the questions of law referred by the Tribunal.

What did the High Court hold?

The High Court held that the Tribunal was correct in disallowing depreciation on the car. The car was purchased on March 26, 1990, but petrol vouchers dated March 26 and March 28, 1990, were produced with a registration number issued later on May 10, 1990. The assessee failed to provide evidence of business use during the relevant period. Furthermore, in a subsequent year, the assessee accepted a disallowance of 1/4th depreciation and car expenses for personal use, indicating a pattern of personal usage. Regarding the cotton yield, the Tribunal's finding was sustained. The assessee did not provide a plausible explanation for the low yield compared to other dealers. While the Assessing Officer applied a 32% yield, the Appellate Authority reduced the addition. The High Court found no unreasonableness or arbitrariness in the authorities' findings, as they considered similarly situated dealers and duly appreciated the facts and evidence. Both questions were answered against the assessee.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee firm was not entitled to depreciation on a car (Section 32 of the Act)? Assessee's Contention: Not explicitly recorded for this issue. Revenue's Contention: Not explicitly recorded for this issue. 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in observing that the yield of Narma shown by private parties cannot be said to be comparable with the corresponding yield shown by government agencies (Section 143(3) of the Act)? Assessee's Contention: The assessee vaguely stated that other parties might be mixing Desi cotton, but this was not substantiated. Revenue's Contention: The revenue argued that the assessee failed to offer a plausible explanation for the low yield compared to other similarly situated dealers, whose yields were higher than 32%.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 32,Section 143(3)

AI-generated summary — verify with the full judgment below

ITR No. 8 of 2001 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITR No. 8 of 2001 Date of decision: 29.1.2020 M/s Sharat Kumar & Co. .. Applicant v. The Commissioner of Income-Tax Patiala .. Respondent CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Alok Mittal, Advocate for the applicant. Mr. Vivek Sethi, Senior Standing Counsel and Mr. Varun Issar, Junior Standing Counsel for the respondent. ... AVNEESH JHINGAN, J. In reference under Section 256(1) of the Income Tax Act, 1961 (for short, 'the Act'), following questions of law have been referred for opinion of this Court:

“1. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that assessee firm was not entitled to depreciation on car?

2.

Whether on the facts and in circumstances of the case the Income Tax Appellate Tribunal was right in law in observing that the yield of Narma shown by private parties cannot be said to be comparable with corresponding yield shown by government agencies?” MANOJ

The order continues below.

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