COMMR. OF INCOME TAX-I, CHD. vs. M/S REGIONAL COMPUTER CENTRE

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ITA/262/2005HC Punjab & HaryanaPHHC01069398200507 November 2006Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was right in confirming the order of the CIT(A) deleting the disallowance of depreciation. The Tribunal had relied on the Supreme Court's judgment in CIT vs. P.J. Chemicals Ltd. (1994) 210 ITR 830. The High Court found that the Revenue's counsel had not been able to show any reason why the Supreme Court's judgment was not applicable to the facts of the present case. Therefore, the High Court concluded that no substantial question of law arose for consideration. The appeal filed by the Revenue was dismissed.

What were the facts?

The appeal concerns the assessment year 1997-98. The assessee, M/s Regional Computer Centre, Chandigarh, purchased machinery using grant-in-aid received from various government and other organizations. The Assessing Officer disallowed depreciation on this machinery, holding that the assessee was not entitled to it due to the grant-in-aid funding. The Commissioner of Income Tax (Appeals) deleted this disallowance. The Income Tax Appellate Tribunal upheld the deletion, relying on the Supreme Court's decision in CIT vs. P.J. Chemicals Ltd. The Revenue has filed an appeal before the High Court against the Tribunal's order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the order of the CIT(A) deleting the disallowance of depreciation amounting to Rs.36,45,040/- on assets purchased out of grant-in-aid received from various organizations/government. Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the Tribunal's decision, which was upheld, was based on the Supreme Court judgment in CIT vs. P.J. Chemicals Ltd. Revenue's Contention: The Revenue argued that the assessee was not entitled to depreciation on the cost of machinery as it was purchased out of grant-in-aid. The Revenue's counsel was unable to demonstrate how the Supreme Court's judgment in CIT vs. P.J. Chemicals Ltd. was not applicable to the present case.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.A. No.262 of 2005 Date of Decision:7.11.2006 The Commissioner of Income Tax-I, Chandigarh .....Appellant Vs. M/s Regional Computer Centre, Chandigarh

.....Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Shri S.K.Garg Narwana, Advocate for the appellant. **** ADARSH KUMAR GOEL, J. The revenue has approached this Court by filing the present appeal raising the following substantial question of law arising out of order passed by the Income Tax Appellate Tribunal, Chandigarh Bench `A' (for short, `the Tribunal') in ITA No.615/Chandi/2000 dated 27.10.2004 in respect of assessment year 1997-98:- “Whether on facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(A) deleting the disallowance of the claim of depreciation to the extent of Rs.36,45,040/- on the asset which was purchased by the assessee out of grant-in-aid received from various organizations/government?” The assessee received grant-in-aid from various organisations of government and purchased machinery and the Assessing Officer held that the assessee was not entitled to depreciation on the cost of machinery as it had received grant-in-aid. The claim of the assessee was upheld by the Tribunal following the judgment of Hon'ble the Supreme Court in CIT Vs. P.J.Chemicals Ltd., (1994) 210 ITR 830 for the assessment year 1984-85 as well as for

I.T.A. No.262 of 2005 -2- other assessment years. Following the same, the Tribunal upheld the claim for depreciation for the assessment year in question. Since the Tribunal has followed the judgment of Hon'ble the Supreme Court and learned counsel for the revenue had not been able to show as to how the judgment of Hon'ble the Supreme Court in P.J. Chemicals Ltd. (supra) is not applicable to the present case, we are of the view that no substantial question of law arises. Accordingly, the appeal is dismissed.

( ADARSH KUMAR GOEL ) JUDGE November 7, 2006 ( RAJESH BINDAL ) renu JUDGE

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