Back
High Court Of Calcutta
Kalyan Jyoti Sengupta
KARAN CHAND THAPAR AND BROTHERS - Appellant
Versus
ASSISTANT COMMISSIONER OF INCOME-TAX - Respondent
W. P. 1371 Of 2002
Decided On : 10/15/2004
INCOME TAX - Assessment - Depreciation - Expenditure - Reassessment - Piecemeal assessment - Tribunal's direction - Jurisdiction of Assessing Officer - Income-tax Act, 1961 (11 of 1961), Secs. 143(2), 143(3), 147.
Fact of the Case:
The petitioner challenged the impugned notice issued by the Assessing Officer under Section 143(3) of the Income-tax Act, 1961, seeking to disallow depreciation claimed on electric meters and expenses incurred for foreign travel of the managing director. The petitioner had purchased electric meters from the Gujarat Electricity Board without taking physical delivery and leased them back to the Board for a period of 5 years. The Assessing Officer disallowed the depreciation claim and treated the rental income as notional income. On appeal, the Commissioner of Income-tax (Appeals) allowed depreciation on a part of the purchase price. The Tribunal set aside the decision on depreciation and directed the Assessing Officer to adjudicate the issue afresh after considering relevant material and documents.
Finding of the Court:
The court held that the impugned notice issued by the Assessing Officer was justified as it was in compliance with the Tribunal's direction to decide afresh the issue of depreciation and expenses on foreign travel. The court observed that the order passed by the Assessing Officer on February 12, 2002, did not relate to any decision on these issues and that the Assessing Officer was yet to hear the assessee on these matters. The court further held that the order dated February 12, 2002, substantially related to the reassessment under Section 147 of the Act in relation to the payment of sales tax.
Issues: Whether the Assessing Officer had the jurisdiction to issue the impugned notice after passing an order on February 12, 2002, which dealt with other issues and did not decide the issues of depreciation and foreign travel expenses.
Ratio Decidendi: The court relied on the principle of maintaining hierarchical discipline in quasi-judicial proceedings and held that the Assessing Officer was duty-bound to follow the direction of the Tribunal and decide the issues of depreciation and foreign travel expenses afresh. The court observed that the order dated February 12, 2002, did not relate to any decision on these issues and that the Assessing Officer was yet to hear the assessee on these matters. The court further held that the order dated February 12, 2002, substantially related to the reassessment under Section 147 of the Act in relation to the payment of sales tax.
Final Decision: The court dismissed the writ petition, holding that the Assessing Officer had not exceeded his jurisdiction or improperly exercised jurisdiction in issuing the impugned notice. The court directed the Assessing Officer to complete the rehearing pursuant to the Tribunal's direction within two months from the date of receipt of the order.
( 1 ) BY this writ application the petitioner challenged the impugned notice dated May 15, 2002, in relation to the assessment year 1994-95 under the Income-tax Act, 1961, (hereinafter referred to as "the said Act"), and also proceedings, notices and orders thereunder, issued by the Assistant Commissioner of Income-tax, Circle-V, Calcutta (hereinafter referred to as "the Assessing Officer"), asking the writ petitioner to show cause as to why depreciation claimed to the extent of Rs. 19,16,50,036 and also the amount of expenditure incurred for travel tour of the managing director should not be disallowed, as it does not fall within Explanation 3 to Section 43 of the said Act. The short facts, which have led to the filing of this application, are stated hereunder.
( 2 ) THE first petitioner during the financial year of 1994-95 purchased numerous electric meters on different dates from the Gujarat Electricity Board (hereinafter referred to in short as "the Electricity Board") at a total cost of Rs. 35,10,10,450. 63 without taking physical delivery of the same. The first writ petitioner thereafter by two separate lease agreements let the same on hire to the said seller (Electricity Board) for a period of 5 years at a total rent of Rs. 47. 54 crores. While filing the returns for the assessment year 1994-95, the petitioner claimed depreciation on the meters of purchase price of Rs. 35,10,10,450. 62. On May 19, 1997, regular assessment order under Section 143 (3) of the said Act was made. The Assessing Officer disallowed the claim of depreciation and further refused to accept the rental income for taxing, rather observed notional income by way of interest on the said sum of Rs. 35,10,10,450. 60. The amount of income was calculated at Rs. 4,39,31,807. Petitioner No. 1 preferred appeal against this order before the Commissioner of Income-tax (Appeals ). In the appeal the Commissioner of Income-tax (Appeals) called for the report of the Assessing Officer by an order. The appellate authority, thereafter, making various inquiries and considering the remand report made by the Assessing Officer allowed the petitioner's appeal partly and held, inter alia, that the depreciation was allowable on Rs. 11,38,27,600 which was the book value of the meters in the books of the said Electricity Board as per the remand report. The petitioner not being satisfied with the partial relief granted by the Commissioner of Income-tax (Appeals) preferred subsequent appeal to the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal" ). By an order dated December 31, 2001, the Tribunal set aside the decisions on the issue of depreciation on the meters and sent the same for fresh decision to the file of the Assessing Officer. The issue of expenses incurred on account of foreign travel undertaken by Mrs. J. Thapar was also directed to be heard after considering all relevant facts and materials. Incidentally, the Revenue also filed cross objections against the order of the Commissioner of Income-tax (Appeals) for the above relief granted by him. This was dismissed holding the same as being barred by limitation with no satisfactory explanation was given for the delay in filing the cross objection.
( 3 ) IN this context the relevant ordering portion of the learned Tribunal is required to be reproduced :"since the Assessing Officer has no occasion to appreciate the case from its proper perspective by taking into consideration or account the aforesaid material papers which are not before the authorities below, we find it proper to set aside this issue regarding disallowing the claim of depreciation to the extent of Rs. 23,71,72,400 out of Rs. 35,10,00,000 to the file of the Assessing Officer with the direction to readjudicate the matter afresh after examining and verifying the reliability and veracity of the aforesaid material papers and documents filed by the assessee before us. The Assessing Officer shall adjudicate the i
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
