ASSI.COMMISSIONER OF INCOME TAX CIRCLE vs. M/S K.N.OIL INDUSTRIES MAHASAMUND

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ITA/16/2006HC ChhattisgarhCGHC01001874200629 November 2010Author: HON'BLE SHRI JUSTICE DHIRENDRA MISHRA,HON'BLE SHRI JUSTICE RANGNATH CHANDRAKAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the assessee's counsel submitted that the tax effect in the case was negligible as the assessment was completed at a loss. The assessee further relied on a previous judgment of the High Court in Deputy Commissioner of Income Tax Vs. M/s Patrakar Prakashan Pvt. Ltd., Raipur, and Instructions No. 2/2005 dated 24th October, 2005, which stipulated a minimum monetary limit for filing appeals before the High Court. The Revenue did not dispute the fact that the assessment was completed at a loss. Therefore, considering the submissions of both parties and the aforementioned judgment and instructions, the High Court found it unnecessary to delve into the merits of the case and dismissed the appeal on the ground of having no tax effect.

What were the facts?

The assessee, M/s K.N. Oil Industries, Mahasamund, filed its return of income for the assessment year 2001-02 showing a loss of Rs. 3,29,55,690. The Assessing Officer (AO) disallowed Rs. 40,98,563 for under-valuation of closing stock and Rs. 26,46,521 for depreciation under Section 32(1) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) dismissed the assessee's appeal. However, the Income Tax Appellate Tribunal (Tribunal) allowed the assessee's second appeal, deleting the disallowances made by the AO. The Revenue appealed this order to the High Court under Section 260A of the Act.

What were the issues?

1. Whether the appeal filed by the Revenue before the High Court is maintainable given the assessment was completed at a loss and the tax effect was below the prescribed monetary limit for appeals. The assessee argued that the appeal is not maintainable because the assessment was completed at a loss, and the tax effect was below the minimum monetary limit of Rs. 4 lac for filing appeals before the High Court, as per Instructions No. 2/2005 dated 24th October, 2005. The assessee relied on the High Court's judgment in I.T.A. No. 94/2000, Deputy Commissioner of Income Tax Vs. M/s Patrakar Prakashan Pvt. Ltd., Raipur. The Revenue did not dispute the fact that the assessment was completed at a loss.

Which sections of the Income-tax Act were involved?

Section 260A,Section 32(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
^^ -l^::^' ^ <" IN THE HIGH COURT OF JUDICATURE CHHATTISGARH ATBILASPUR Income Tax Appeal No Di"sionBench ^g^i^ ,. /^ /200- .^flJ^ "y ant R^spondent ^Assistant Commissioner of Income Tax Circle2- 1 Raipur yM/s K.N.Oil Industries, Mahasamund. Income Tax apDeal u/s 260 A oflncome Tax Act 1961 •~^-^ L^ HIGH COURT OF CHHATTISGARH AT BILASPUR D.B. HON'BLE SHRI DHJRENDRA MISHRA. & HON'BLESHRrR.N.CHANDRAKAR.JJ hicome Tax Appeal No. 16 of 2006 Appellant (Revenue) Respondent (Assessee) Versus Assistant Commissioner of Income Tax, Circle 2-1 Raipur. M/s K.N. Oil Indusfries, Mahasamund Present: Shri Rajeev Shrivastava, Standing Counsel for the appellant. Shri Neelabh Dubey, counsel for the respondent.

ORAL ORDER (Passed on 30tn November, 2010) PerDhirendra M/shra. J The appellant/revenue has preferred the instant appeal under Section 260A of the Income Tax Act, 1961 (Jn short "the Act") against the order \. of the Income Tax Appellate Tribunal, Nagpur (in short "Tribunal") on the substantial questions of law mentioned in the Memo of Appeal (from para1.1 to 1.10).

2.

Briefly stated, facts of the case, as mentioned in the impugned order, are that the assessee filed^ return of income showing ioss of Rs.3,29,55,690/- on 30th October, 2001 along with audited copy of balance sheet, manufacturing, trading and profit & loss account. The AO disallowed Rs.40,98,563/- being under valuation of the closing stock. He further disailowed Rs.26,46,521/- under the provisions of Section 32(1) of the Act towards depreciation. Being aggrieved by the order of the AO, the assessee preferred an appeal before the Commissioner, Income Tax (Appeals), which was dismissed and the order of AO was affirmed. However, the second appeal preferred by the assessee has been allowed by the Tribunal and disatlowance of the above sum by the AO has been deleted.

3.

At the outset, learned counsel for the respondent/assessee submits that from perusal of thp order passed by the Tribunal, it would be evident that for the purposes of tax effect, it is a toss case. Relying upon the judgment of this Court dated 19th October, 2010 delivered in I.T.A.No.94/2000, Deputy Commissioner of Income Tax Vs^/s^ 1.^

Patrakar Prafsashan Pvt. Ltd., Raipur, it is argued fnarii is not in dispute that the assessment in the instant case was completed at loss, whereas at the relevant time the minimum monetary timit for filing appeal before the High Court was fixed at Rs. 4 lac, as per Instructions No.2/2005 dated 24th October, 2005. 4. The above fact is not disputed by learned counsel appearing for the appellant/revenue.

5.

Thus, considering the submission of learned counsel for the parties. and in view of the law laict down by this Court in M/s Patrakar Prakashan Pvt. Ltd. (supra) and atso considering the Instructions No. 2/2005 dated 24th October, 2005, we do not deem it necessary to go into the merits of the case and, accordingly, dismiss the appeal for having no tax effect as jndjsputably the assessment was completed at Joss. DHHtENDRA MISHRA s Judge K R.N. Chandrakar Judge

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