C.I.T. PATIALA vs. M/S RIETA BISCUTS CO. P LTD.
What did the High Court hold?
The High Court held that the Appellate Tribunal was right in law in allowing investment allowance on machinery leased out. The Court's decision was based on its separate judgment delivered on the same day in ITR No. 35 of 1991, which dealt with the assessee's case for the assessment year 1983-84. In that prior judgment, the Court had answered the issue against the revenue and in favour of the assessee. Since the circumstances for the assessment year 1984-85 were identical to those of 1983-84, the High Court applied the same reasoning. The principle established is that investment allowance is admissible on machinery leased out, provided other conditions are met, and the leasing activity does not disqualify the assessee from claiming the allowance. The reference was disposed of accordingly, with the question answered in favour of the assessee.
What were the facts?
The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, referred a question of law to the High Court of Punjab and Haryana concerning the assessment year 1984-85. The material facts were not detailed in the High Court's order, as it was noted that the ITAT's decision relied on its prior order for the assessment year 1983-84, and the circumstances for both years were identical. The dispute involved the allowance of investment allowance on machinery leased out by the assessee, M/s Rieta Biscuits Co. Pvt. Ltd., Patiala, against the Commissioner of Income-Tax, Patiala (the revenue).
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing investment allowance on machinery leased out? Assessee's Contentions: The judgment does not record specific contentions made by the assessee before the High Court. However, it is implied that the assessee supported the ITAT's decision to allow investment allowance. Revenue's Contentions: The judgment does not record specific contentions made by the revenue before the High Court. However, the reference of the question of law indicates that the revenue challenged the ITAT's decision allowing investment allowance on leased machinery.
AI-generated summary — verify with the full judgment below
I.T.R.
N o. 288 of 1995
-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.
N o. 288 of 1995
Date of decision: 17.8. 2007 The Commissioner of Income-Tax, Patiala ...Petitioner Versus M/S Rieta Biscuits Co. Pvt. Ltd., Patiala ...Respondent CORAM: HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate for the Petitioner
Mr. Akshay Bhan, Advocate for the respondent.
**** RAJESH BINDAL,J. Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short “the Tribunal), arising out of order passed in I.T.A.No. 647/Chandi/88 in respect of the assessment year 1984-85 :- Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing investment allowance on machinery leased out? Detailed facts are not required to be mentioned as it is noticed from the order of the Tribunal that while deciding the appeal, the order passed by it for the year 1983-84 was referred and relied upon. It is categorically noticed in the order that there is no change in the circumstances as existed in the year 1983-84 if compared with the assessment year in question. We have considered the issue in case of the assessee for the assessment year 1983-84 vide our separate judgment delivered today in ITR
I.T.R.
N o. 288 of 1995
-2- *** No. 35 of 1991 and have answered the same against the revenue and in favour of the assessee. For the reasons stated therein, the question referred is answered against the revenue and in favour of the assessee. The reference is disposed of accordingly. (Rajesh Bindal) Judge August 17, 2007 (M.M.Kumar) Pka Judge
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