C.I.T. PATIALA vs. INDS. CABLES INDIA LTD.

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ITR/104/1996HC Punjab & HaryanaPHHC01034902199628 June 2010Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryRemanded

What did the High Court hold?

Regarding question 2, the High Court answered it against the revenue and in favour of the assessee, as conceded by the revenue's counsel, citing the Supreme Court's decision in Allied Motors (P) Ltd. vs Commissioner of Income-Tax (1997) 224 ITR 677. For question 1, concerning depreciation on the tubewell, the High Court noted the assessee's submission that the disputed amount was only Rs. 2,900/-, the tax effect was meager, and the assessment year was over two decades old. The revenue did not dispute these facts. In view of the age of the assessment year, the High Court decided not to deal with this issue and returned the question unanswered. The reference was disposed of accordingly.

What were the facts?

This case involves a reference by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, to the High Court of Punjab and Haryana concerning an order dated July 17, 1995, in R.A. No. 274/CHANDI/95, pertaining to ITA No. 635/Chandi/90 for the assessment year 1987-88. The assessee is Industrial Cables (India) Limited, Rajpura, and the revenue is the Commissioner of Income Tax, Patiala. The dispute revolves around two questions of law referred to the High Court. The assessment year in question is 1987-88, making the case over two decades old at the time of the High Court's decision.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing depreciation on a tubewell at 15% instead of 5%, under Section 32 of the Income Tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction of sales-tax liability paid before the due date as specified in the first proviso to Section 43B, holding that the said proviso was applicable retrospectively? Contentions: Assessee: For question 1, the assessee argued that the cost of the tubewell was a mere Rs. 2,900/-, making the tax effect negligible, and the assessment year was 23 years old. Revenue: For question 2, the revenue's counsel conceded that the question should be answered against the revenue in light of the Supreme Court judgment in Allied Motors (P) Ltd. vs Commissioner of Income-Tax (1997) 224 ITR 677. No specific arguments were recorded for the revenue on question 1.

Which sections of the Income-tax Act were involved?

Section 32,Section 43B,Section 256(1)

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 104 of 1996 (O&M) Date of decision: 24.9.2010 Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Rajesh Bindal Present: Mr. Tejinder K. Joshi, Advocate for the petitioner. Mr. Pankaj Jain, Advocate, for the respondent. Rajesh Bindal, J. The Income Tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as “the Tribunal”) has referred the following questions of law for opinion of this Court under Section 256 (1) of the Income Tax Act, 1961 ( for short “the Act') arising out of order dated 17.7.1995 in R. A. No. 274/CHANDI/95 in I. T. A. No. 635/ Chandi/90, in respect of the assessment year 1987-88:- “1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing depreciation on tubewell @ 15% instead of 5%, u/s 32 of the Income Tax Act, 1961?

2.

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction of sales-tax liability paid before the due date as specified in the first proviso to section 43B, holding that the said proviso was applicable retrospectively?” As far as question no. 2 is concerned, learned counsel for the revenue fairly stated that the same is to be answered against the revenue in view of the judgment of Hon'ble the Supreme Court in Allied Motors (P) Ltd. vs Commissioner of Income-Tax (1997) 224 ITR 677. Accordingly, the question no. 2 is answered against the revenue and in favour of the assessee. As far as question no. 1 is concerned, learned counsel for assessee submitted that cost of the tubewell during the year in which the award of depreciation @ 15% instead of 5%, is sought to be disputed by the revenue was merely Rs. 2,900/-. Once the disputed amount is quite small, the tax effect would be even meager. The assessment year is 23 years old.

(2) The aforesaid fact is not denied by the learned counsel for the revenue. In view of the aforesaid facts and considering that the assessment year is more than two decades old, we do not proposed to deal with issue no. 2 and return the question unanswered. The reference is disposed of accordingly. (Rajesh Bindal) Judge 24.9.2010 (Adarsh Kumar Goel) vs Judge

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