THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) SURAT vs. M/S COMED CHEMICALS LTD

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TAXAP/470/2018HC GujaratGJHC24025302201809 May 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in relation to the first issue concerning the deletion of the addition of Rs. 61,70,295. The CIT(A) had deleted the addition based on the assessee possessing sufficient interest-free funds. The Tribunal further supported this deletion by reasoning that the assessee's decision to invest in the sister concern was driven by business considerations. Regarding the second issue, the Tribunal noted that the assessee had claimed depreciation at 15%, while the AO allowed only 10%. However, it was observed that in a previous year, the assessee's claim for 15% depreciation was accepted by the CIT(A) and the Tribunal, and the Revenue had not challenged that decision in further appeal. Consequently, the Tax Appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue is in appeal against the order of the Income Tax Appellate Tribunal (ITAT) dated June 12, 2017. The appeal concerns two issues. The first issue relates to an addition of Rs. 61,70,295 made by the Assessing Officer (AO) on account of an investment of Rs. 5 crores in a sister concern, which was deleted by the Commissioner of Income Tax (Appeals) [CIT(A)] and upheld by the ITAT. The second issue pertains to the rate of depreciation claimed by the assessee. The assessee is M/s Comed Chemicals Ltd. The assessment year(s) are not explicitly stated for the specific issues but are implied to be under review by the ITAT.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was right in deleting the entire addition to the tune of Rs. 61,70,295 made on account of investment of Rs. 5 crores in a sister concern? Assessee's Contention (implied by ITAT's reasoning): The deletion of the addition was justified. The CIT(A) deleted the addition on the ground that the assessee had sufficient interest-free funds. The Tribunal upheld this view, adding that the assessee's decision was actuated by business considerations. Revenue's Contention (implied by the appeal): The AO was correct in making the addition of Rs. 61,70,295 on account of the investment in the sister concern. 2. Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was right regarding the rate of depreciation? Assessee's Contention (implied by ITAT's reasoning): The assessee was entitled to claim depreciation at the rate of 15%. In a prior year, the assessee's claim of 15% depreciation was accepted by the CIT(A)/Tribunal, and the Revenue did not pursue the matter further. Revenue's Contention (implied by the appeal): The AO was correct in granting depreciation at the rate of 10%, not 15%.

AI-generated summary — verify with the full judgment below

C/TAXAP/470/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 470 of 2018 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) SURAT Versus M/S COMED CHEMICALS LTD ========================================================== Appearance: MR M.R. BHATT SR. ADVOCATE WITH MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 09/05/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The Revenue is in appeal against the judgment of   the   Income   Tax   Appellate   Tribunal   dated 12.06.2017   raising   the   following   substantial question of law for our consideration; Whether   on   facts   and   circumstances   of   the case and in law, the Appellate Tribunal was right in deleting the entire addition to the tune   of   Rs.61,70,295/­   made   on   account   of investment of Rs.5 crores in sister concern ? 2. The first question pertains to addition made by the Assessing Officer in view of the interest free   loan   given   by   the   assessee   to   a   sister Page 1 of 2

C/TAXAP/470/2018 ORDER concern.     The   CIT(A)   deleted   the   same   on   the ground that the assessee had sufficient interest free funds. The Tribunal upheld such view giving additional   reason   that   the   decision   of   the assessee was actuated by business considerations. No question of law  arises. 3. The   second   issue   pertains   to   the   rate   of depreciation.   The   assessee   claimed   depreciation at the rate of 15%. The Assessing Officer granted depreciation at the rate of 10%. From the record, we   notice   that   in   the   earlier   year,   the assessee's claim of depreciation at the rate of 15% was accepted by the CIT(A) / Tribunal. The Revenue   had   not   carried   such   issue   in   further appeal. 4. In the result, the Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) PRAVIN KARUNAN Page 2 of 2

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