The Commissioner of Income Tax II, V. Karl Agencies,

ITTA/269/2013

AI Insights

The case involves the Commissioner of Income Tax-II, Hyderabad as the appellant and Karl Agencies, Hyderabad as the respondent. The core issues pertained to the Tribunal's decisions on several tax-related matters including the allowance of depreciation, the treatment of hire receipts as income, and the handling of unexplained cash credits under Section 68 of the Income Tax Act. The Tribunal had previously ruled in favor of the respondent on these issues, which the appellant sought to challenge in the High Court. The High Court, however, found no substantial grounds to overturn the Tribunal's decisions, citing the adequacy of the material on record and the factual nature of the disputes.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719110 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 12-07-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: S R ASHOK
• Keywords: Depreciation; Fact Finding; Lease rental income; Unexplained cash credit
• Section: 32; 68

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH, HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. No. 269 of 2013 DATE: 12.07.2013 Between: Commissioner of Income Tax-II, Hyderabad. … Appellant And Karl Agencies, Hyderabad. … Respondent This court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. No. 269 of 2013 JUDGMENT: (Per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred and sought to be admitted on the following suggested questions of law. “(A) Whether on the facts and circumstances of the case, that the finding of the appellate Tribunal with regard to the purchase of vehicles by the assessee and lending on hire can be said to be based on material on record? (B) Whether on the facts and circumstances of the case, the appellate Tribunal is justified in holding that the depreciation u/s. 32 should be allowed on mere purchase of the asset within the relevant previous year, even if there is no material produced by the assessee to evidence user of the asset for business purposes? (C) Whether on the facts and circumstances of the case, the appellate Tribunal is justified in accepting the assessee’s plea that 50% of the amount paid by the hirer represents security deposit and hence cannot be considered as lease rental income, even in the absence of shred of evidence produced by the assessee? (D) Whether the appellate Tribunal is justified in deleting the addition made u/s. 68 of the Income Tax Act in respect of unexplained cash credit to a tune of Rs.1 lakh standing in the name of Mohd. Faisuddin? (E) Whether the findings recorded by the appellate Tribunal as regards the aforesaid questions can be said to be based on material on record?” We have heard Sri S.R. Ashok, learned senior counsel for the appellant and gone through the impugned judgment and order of the learned Tribunal. The learned Tribunal while deciding ground No.1 with regard to sustenance of disallowance of depreciation of Rs.3,68,689/- has relied on its earlier judgment of the assessee’s own case in ITA.No.1365/H/1983 and decided the issue, which reads as follows: “We follow the above decision of the ITAT and in the light of that allow depreciation on all the four trucks as the trucks were given to hirers on the same date when they were purchased and taken delivery. In other words the trucks were used for the purpose of assessee’s business.” It is not the case of the revenue that the earlier decision of the learned Tribunal in assessee’s own case, as quoted above, has been upset or any appeal has been preferred against it. While deciding ground No.2 with regard to sustenance of addition of 50% of hire receipts as income of the assessee, the learned Tribunal again has followed its earlier decision, wherein it is held as follows: “Under the circumstances, we are of the considered view that the assessee is liable to tax only in respect of the income part. The assessee has rightly shown 50% of the amount received as assessee has received 50% towards purchase price and 50% towards lease income. Under the circumstances, we are of the considered view that principal amount which is towards vehicle price is not income. Therefore, same is not liable to be taxed. The addition of Rs.2,62,583/- is deleted.” While deciding ground No.3 with regard to sustenance of addition of unexplained credit of Rs.1 lakh under Section 68 of the Act, the learned Tribunal on fact found that this credit of Rs.1 lakh was properly explained and therefore the addition was deleted. This fact finding cannot be upset by this Court in exercise of its jurisdiction under Section 260A of the Income Tax Act, 1961. The learned Tribunal has dealt with the revenue’s appeal and decided the matter. While deciding ground No.2 with regard to deletion of unaccounted income arising from bogus payment of Rs.6,35,047/-, the learned Tribunal came to the following fact finding. “We find that there is no dispute that during the year under consideration the assessee has not taken any deposits from the said 5 parties but has made repayment of deposits taking in the earlier years. It is also not in dispute that the repayment was made by cheques. The learned CIT(A) after examining the assessee’s submission and the remand report of the A.O. has held that under these circumstances the repayment cannot be said to be unaccounted payment on the part of the firm. Hence, it cannot be legally correct to assess this amount as unaccounted income of the firm. In the absence of any contrary material brought on record by the revenue against the aforesaid finding of the learned CIT(A) and keeping in view that the repayment was made by cheques, we are of the view that the learned CIT(A) was fully justified in deleting the addition made by the A.O.” In view of the aforesaid finding, this appeal cannot be admitted to decide the things otherwise, since it involves fact finding. Accordingly, we dismiss the appeal. ______________________ K.J. SENGUPTA, CJ _______________ G. ROHINI, J Date: 12.07.2013 ES "