COMM. OF INCOME TAX vs. M/S KAUSHICO MACHINE TOOLS

. 149 1999 of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH --- -

. 149 1999 Income tax Appeal No of

: 26.8.2010 Date of decision

Commissioner of Income Tax Rohtak --- Appellant Versus / .

. . M s Kaushico Machine Tools Pvt Ltd --- Respondent : CORAM ’

.

HON BLE MR JUSTICE ADARSH KUMAR GOEL ’

.

HON BLE MR JUSTICE AJAY KUMAR MITTAL --- : Present .

, Ms Urvashi Dhugga Advocate

. for the appellant

- . None for the respondent assessee ---

, . AJAY KUMAR MITTAL J

260

-

, 1961 This appeal under Section A of the Income tax Act (

)

for short “the Act’” has been filed by the assessee against the order 22.3.1999,

, dated passed by the Income Tax Appellate Tribunal Delhi

. 149 1999 of , (

)

. 777/ /93, Bench “B” New Delhi in short “the Tribunal” in ITA No Del for

1990-91. the assessment year

,

50 The question herein is whether provisions of Section of

. the Act would apply to the case of the assessee or not

The assessee Company filed its return on for the 1990-91,

. 18,61,180/-. assessment year declaring an income of Rs Case

143(1)

of the assessee was processed under Section of the Act on 11.3.1991

.19,91,010/-.

at an income of Rs The assessing officer there after

143(3) 25.9.1992

framed assessment under Section on at an income of . 25,17,680/-

. 1,61,300/-

Rs making an addition of Rs on account of profit

earned by the assessee on the sale of machinery treating the same to

.

be short term capital gain As per the observations of the assessing ,

50

officer provisions of Section of the Act were not applicable in the

. case of the assessee as such no benefit was admissible The

- ( ) {

( ) }

Commissioner of Income tax Appeals in short “CIT A ” affirmed the

finding of the assessing officer and dismissed the assessee’s appeal

by order dated However both sides were aggrieved by the

. 149 1999 of ( ) , ,

order of the CIT A and thus two appeals were preferred before the ,

. Tribunal one by the assessee and other on behalf of the Revenue

The Tribunal held that the addition of the above amount

. ,

could not have been made Consequently the appeal of the assessee

was partly allowed whereas the one preferred by the revenue was ,

, ,

The Revenue has thus preferred the instant appeal

proposing the following substantial question of law for determination by ,

: this Court which can be perceived in the following manner “

-

Whether the Income tax Appellate Tribunal was right in law

in deleting the addition made on account of profit on sale of

fixed assets purchased and sold during the relevant

previous year itself even when the assets were not covered

50

under Section of the Act and the gains involved were

? short term gains only ”

We have heard learned counsel for the Revenue and

. perused the record

. 149 1999 of ( )

The assessing officer as well as the CIT A had come to

the conclusion that the assessee who had purchased certain

machinery in the year under consideration and had sold it during the

,

same year without using for the business purposes was not entitled to

50

. ,

deduction under Section of the Act However on appeal by the ,

assessee the Tribunal following its earlier order for the assessment 1989-90

, year in the case of the assessee allowed the appeal vide order -1. ,

Annexure A Accordingly the revenue was directed to place order of

1989-90

.

the Tribunal for the assessment year on record A perusal of

1989-90

the order of the Tribunal for the assessment year shows that

the Tribunal was therein considering the issue where the assessee had

purchased the machinery and after using it for some time sold it in the .

same year It was in those circumstances the assessee was held

50

. entitled to the benefit of the provisions of Section of the Act

Learned counsel for the Revenue submitted that the facts

,

and circumstances of the present case are different inasmuch as in

,

the case in hand the machinery which was purchased by the assessee

during the year under reference was sold in the same year without

. 149 1999 of putting it to use even for some time before it was sold According to

,

the learned counsel the assessee was not entitled to the deduction

32

under Section as no depreciation could be claimed by it in terms . ,

,

thereof Further according to the learned counsel once the benefit of

,

depreciation on the machinery was not admissible question of invoking

50

. the provisions of Section by the assessee did not arise

50

Section makes a special provision in the case of

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2(42 ), 48 depreciable assets over riding the provisions of Sections A and 49. 50

A plain reading of Section would spell out that once the capital

,

asset that has been transferred forms part of block of assets in respect

1961

1922 , of which depreciation has been allowed under the or the Act

, ,

the surplus if any computed under this provision will be treated as -

.

short term capital gains The essential ingredient for applicability of the

aforesaid provision is that the assessee must have claimed deduction

.

, on account of depreciation from the capital asset In other words

absence of deduction of depreciation from the value of the asset would

. disentitle an assessee to benefit of this provision

. 149 1999 of , From the perusal of the order of the Tribunal it is discerned

that the Tribunal has not recorded any finding with regard to the usage

. of the machinery which was sold during the year under consideration

,

In this view of the matter we consider it appropriate to remit the matter

to the Tribunal to look into it and dispose of the matter afresh after

examining the admissibility of depreciation on the machinery in . ,

question However it is clarified that in case it is found that the

, machinery was not put to use during the year under consideration

,

which was sold in the same year the assessee would not be entitled to

50

. the benefit of Section of the Act

The appeal is disposed of with the observations indicated . above (

) AJAY KUMAR MITTAL JUDGE (

) ADARSH KUMAR GOEL 26, 2010 August JUDGE * * rkmalik

. 149 1999 of . 149 1999 of