THE COMMISSIONER OF INCOME TAX vs. P.S.I. DATA SYSTEMS (P)LIMITED

PDF · subscribers
ITR/306/1999HC KeralaKLHC01014274199919 September 2016Bench: HONOURABLE MRS. JUSTICE ANU SIVARAMAN,HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN3 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the assessee was entitled to depreciation under Section 32 of the Income Tax Act, 1961, as there was no dispute between the parties on this point. Regarding investment allowance under Section 32A, the Court found that the assessee's claim did not fall within the scope of the provision. Specifically, the assessee had not claimed investment allowance in respect of a ship, aircraft, or machinery/plant as specified in sub-section 1 of Section 32A. Furthermore, the claim did not relate to know-how as contemplated under sub-section 2 of Section 32A. Consequently, the Tribunal's decision to grant investment allowance under Section 32A was held to be unjustified on the facts and circumstances of the case. The IT Reference was answered accordingly.

What were the facts?

This Income Tax Reference (ITR) No. 306 of 1999 was filed by the Commissioner of Income Tax, Cochin, against P.S.I. Data Systems (P) Ltd. The reference arose from an order of the Income Tax Appellate Tribunal, Cochin Bench (RA 56/1993). The core of the dispute revolves around the assessee's eligibility for depreciation under Section 32 and investment allowance under Section 32A of the Income Tax Act, 1961. The parties agreed that the assessee was entitled to depreciation under Section 32. The contentious issue was the entitlement to investment allowance under Section 32A.

What were the issues?

1. Whether the assessee is entitled to depreciation under Section 32 of the Income Tax Act, 1961? (Question of law) 2. Whether the assessee is entitled to investment allowance under Section 32A of the Income Tax Act, 1961? (Question of mixed law and fact) Assessee's contentions: The assessee contended that it was entitled to depreciation under Section 32. The judgment does not explicitly record the assessee's arguments regarding Section 32A, but implies the Tribunal had found in its favour. Revenue's contentions: The Revenue, through its learned Senior Counsel, did not dispute the assessee's entitlement to depreciation under Section 32. However, the Revenue argued that the assessee was not entitled to investment allowance under Section 32A, as the assessee's claim did not pertain to a ship, aircraft, or machinery/plant specified under sub-section 1 of Section 32A, nor did it involve know-how as contemplated under sub-section 2 of Section 32A.

Which sections of the Income-tax Act were involved?

Section 32,Section 32A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 19TH DAY OF SEPTEMBER 2016/28TH BHADRA, 1938 ITR.No. 306 of 1999 ------------------- RA 56/1993 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH -------------- APPLICANT: ---------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC RESPONDENT(S): -------------- P.S.I.DATA SYSTEMS (P) LTD., KALOOR, KOCHI-17. BY ADV. SMT.PREETHA S.NAIR THIS INCOME TAX REFERENCE HAVING BEEN FINALLY HEARD ON 19-09-2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PJ

THOTTATHIL B.RADHAKRISHNAN & ANU SIVARAMAN, JJ. = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = I.T.R.No.306 of 1999 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 19th day of September, 2016 O R D E R Thottathil B.Radhakrishnan, J. 1.The issue raised in this reference is as to whether the assessee is entitled to depreciation under Section 32 and investment allowance under Section 32A of the Income Tax Act, 1961, hereinafter referred to as the 'Act'. 2.We have heard the learned Senior Counsel for the Income Tax Department and the learned counsel for the respondent- assessee. 3.There is no dispute between the parties that the assessee is entitled to the benefit of Section 32 and therefore, eligible for depreciation in terms of that provision of the Act. Onto the question as to whether the assessee was entitled to investment allowance in terms of Section 32A of the Act, the primary issue

I.T.R.306/99 2 that has to be focused and understood is that the assessee has no case that it is claiming investment allowance in respect of a ship or an aircraft or machinery or plant which would fall within the purview of sub-section 1 of Section 32A of the Act to claim investment allowance. It cannot relate to any machinery or plant specified in terms of sub-section 2 of Section 32A of the Act to bring in the component of know-how within the domain of Section 32A. Under such circumstances, it cannot but be held that on the facts and circumstances of the case, the Tribunal was not justified in holding that the assessee is entitled to investment allowance under Section 32A of the Act. This I.T.Reference is answered as above. sd/- Thottathil B.Radhakrishnan, Judge sd/- Anu Sivaraman, Judge

sj20/9 /True Copy/ P.A. to Judge

More judgments on Section 32

All 2,762 judgments and leading authorities on Section 32 →

Recent GST High Court judgments

Search GST case law →