COMMISSIONER OF INCOME TAX DEL vs. M/S BHUSHAN STEELS & STRIPS LT

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ITA/444/2005HC DelhiDLHC01059435200504 August 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH3 pages
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What did the High Court hold?

The High Court held that the assessee is entitled to depreciation on leased property, but sales tax exemption is a taxable trading receipt. Income from a captive power plant is to be reduced from taxable profits.

What were the facts?

The Revenue appealed against the ITAT's order concerning depreciation on leased property, taxability of sales tax exemption, and income from a captive power plant. The High Court framed three questions of law for these appeals.

What were the issues?

The key issues were the entitlement to depreciation on leased assets, the classification of sales tax exemption as capital or trading receipt, and the treatment of captive power plant income for tax calculation.

Which sections of the Income-tax Act were involved?

Section 32,Section 115JA

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$~R91, 92 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA Nos.444/2005 COMMISSIONER OF INCOME TAX DEL ..... Appellant Through: Mr. Rahul Chaudhary, Senior Standing Counsel with Mr.Sanjay Kumar Mishra, Junior Standing Counsel for Revenue. Versus M/S BHUSHAN STEELS & STRIPS LTD. ..... Respondent Through: Ms. Kavita Jha, Ms. Roopali Gupta, Advocates. WITH ITA Nos.458/2005 COMMISSIONER OF INCOME TAX DEL ..... Appellant Through: Mr. Rahul Chaudhary, Senior Standing Counsel with Mr.Sanjay Kumar Mishra, Junior Standing Counsel for Revenue. Versus M/S BHUSHAN STEELS & STRIPS LTD. ..... Respondent Through: Ms. Kavita Jha, Ms. Roopali Gupta, Advocates. CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATHIBA M. SINGH O R D E R % 04.08.2017

1.

These appeals by the Revenue are against the common order dated 5th January, 2005 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA Nos. 3501 & 2981/Del/2003 for Assessment Years (‘AY’s) 2000-2001 and ITA Nos. 3502 & 2982/Del/2003 for AY’s 2001-02. 2. By the order dated 25th May, 2006, this Court framed the following question of law in these appeals: “(i) Whether the ITAT was correct in law in holding that the respondent-assessee is entitled to depreciation under Section 32 of the Income Tax Act even when the assessee was not the owner of the property in question and was in possession thereof as a lessee during the year under consideration?

(ii) Whether the ITAT was correct in law in holding that the amount received by the assessee by way of exemption of sales tax payments was not a trading receipt but was a capital receipt, hence not liable to tax?

(ill) Whether the ITAT was correct in law and on the facts and circumstances of the case in holding that the income from captive power plant is to be reduced from the calculation of taxable profits u/s 115JA'?" 3. As far as Question (i) is concerned, it is covered in favour of the Assessee and against the Revenue by the decision of this Court in CIT v. Bhushan Steels & Strips Limited (2017) SCC OnLine Del 9061.

4.

As far as Question (ii) is concerned, it is covered in favour of the Revenue and against the Assessee by the same decision of this Court in CIT v. Bhushan Steels & Strips Limited (supra). 5. As far as Question (iii)3 is concerned, it stands covered in favour of the Assessee and against the Revenue by the decision of this Court in CIT v. DCM Shriram Consolidated Ltd. (2009) 322 ITR 486 (Del) which was further affirmed by the Supreme Court in CIT v. DCM Shriram Consolidated Ltd. (2014) 368 ITR 720 (SC). 6. The appeals are disposed of in the above terms. S.MURALIDHAR, J PRATHIBA M. SINGH, J AUGUST 04, 2017 j

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