DEPUTY COMMISSIONER OF INCOME TAX vs. SARABJEET SINGH CHHATWAL

TAXC/71/2010HC ChhattisgarhCGHC01001288201002 May 2013Author: HON'BLE THE CHIEF JUSTICE,HON'BLE SHRI JUSTICE PRITINKER DIWAKER5 pages
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What were the facts?

The assessee, Sarabjeet Singh Chhatwal, a mining and transportation contractor, entered into an agreement with South Eastern Coalfields Limited (SECL) on April 24, 2004, for overburden removal and soil transportation. For Assessment Years (AY) 2004-05 and 2005-06, the assessee claimed 40% depreciation on tippers used in this work, citing Appendix-1 under Rule 5 Part III(3)(ii) of the Income Tax Rules. The Assessing Officer (AO) allowed only 25% depreciation under Rule 5 Appendix-1 Part III(1). The Commissioner of Income Tax (Appeals) upheld the AO's orders. The Income Tax Appellate Tribunal (ITAT) dismissed the assessee's appeal for AY 2004-05 but allowed it for AY 2005-06, relying on a High Court decision. Two appeals were filed before the High Court: Tax Case No. 101 of 2010 by the assessee for AY 2004-05, and Tax Case No. 71 of 2010 by the Department for AY 2005-06.

What did the High Court hold?

The High Court held that tippers are covered under the term 'motor lorry' in Rule 5 Appendix-1 Part III(3)(ii) of the Income Tax Rules, as a lorry is a generic term for a vehicle used to carry heavy loads. This interpretation aligns with the decision of the Punjab & Haryana High Court in CIT vs. Rakesh Jain. Furthermore, relying on the Bombay High Court's decision in CIT vs. SC Thakur and Brothers, and this Court's own decision in CIT vs. Rajesh Kumar Murarka (which involved a similar contract with SECL), the Court found that the higher rate of depreciation is admissible even when the motor lorry is used in the assessee's own business of transportation of goods. Therefore, the assessee is entitled to the benefit of Appendix-1 Part III(3)(ii) and 40% depreciation on tippers. Consequently, Tax Case No. 101 of 2010 filed by the assessee is allowed, setting aside the orders of the Tribunal and lower authorities. Tax Case No. 71 of 2010 filed by the Department is dismissed, upholding the Tribunal's order for AY 2005-06. No issue was expressly left undecided.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. **Tax Case No. 101 of 2010 (Assessee's appeal):** Whether, in the facts and circumstances of the case, the Appellant was entitled to depreciation of 40% or 25% on tippers, turning on the interpretation of Rule 5 Appendix-1 of the Income Tax Rules. 2. **Tax Case No. 71 of 2010 (Department's appeal):** a. Whether the ITAT, Bilaspur was justified in allowing relief to the assessee despite no change in the nature of work and receipts from the previous year where higher depreciation was disallowed. b. Whether the ITAT, Bilaspur was justified in allowing the higher rate of depreciation despite the fact that the assessee's business was not of running trucks on hire. **Contentions:** * **Revenue (Department):** * Tippers are not covered under Rule 5 Appendix-1 Part III(3)(ii) of the Rules. * The assessee is covered under Rule 5 Part III(1) of the Rules, not Part III(3)(ii), and is therefore entitled to only 25% depreciation. * **Assessee:** The assessee argued for entitlement to 40% depreciation, relying on Appendix-1 under Rule 5 Part III(3)(ii) of the Income Tax Rules. The judgment does not explicitly record the assessee's arguments beyond this claim and reliance on precedents.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF JUDICATURE AT BILASPUR, CHHATTISGARH TAXCASENO. ^ | /2010 L ^.^l' .^ ^' 9 A,ppellant <^ *°K ^ ^ $ T^-" ^- Versus peputy Commissioner of Income Tax, Circle, Korba, Chhattisgarh Sarabjeet Singh Chhatwal, Proprietor: M/s Surendra Singh Chhatwal & Company, Power House Raod, Korba, Chhattisgarh INCOMEJIAX APPEAL UNDER SECTION 260-A OF THE INCOME TAX, 1961 ^.-.-^^: .__„

r}^ HIGH COURT OF CHHATTISGARH AT BILASPUR CORAM: HON'BLE SHRI YATINDRA SINGH, C.J. HON'BLE SHRI PRITINKER DIWAKER, J. Appellant Respondent Appellant 1 TaxCaseNo.101 of 2010 Sarabjeet Singh Chhatwal, Korba VERSUS Commissjoner of Income Tax, Bilaspur 2 TaxCaseNo.71 of 2010 Deputy Commissioner of Income Tax, Circle Korba, Chhattisgarh VERSUS Sarabjeet Singh Chhatwal, Korba Respondent Appeals under Section 260A of the Income Tax Act 1961a Appearance: Shri Anand Dadariya, counsel forthe Department. Shri SR Rao and Shri MK Sinha, counsel for the Assessee. JUDGEMENT (3rd May, 2013)

1.

These two appeals under section 260A of the Income Tax Act, 1961 (the Act) are against the orders of the different Benches of Income Tax Appellate Tribunal (the Tribunal) in respect of the Assessment Years (AY) 2004-05 and 2

The order continues below.

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