Commissioner of Income Tax, V. M/s. S.V.Engineering Constructions,

ITTA/598/2013

AI Insights

The case involves an appeal by the Commissioner of Income Tax against M/s. S.V. Engineering Constructions concerning the assessment year 2007-2008. The core issue was the treatment of entry tax on vehicle purchases, which the Commissioner deemed capital in nature and should be added to the asset value, thus requiring disallowance. The Tribunal had previously set aside the Commissioner's order, finding it based on conjectures rather than facts. The High Court, after reviewing the Tribunal's decision and the facts of the case, agreed with the Tribunal's assessment and dismissed the appeal, emphasizing that the Commissioner had not adequately justified the revision of the Assessing Officer's decision under Section 263.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719039 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 17-12-2013
• Assessment Year: misc
• Other Referred Cases: Malabar Industrial Company Vs. CIT (243 ITR 83)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: B SARMA
• Keywords: Assessment Order; Capital expenditure; Entry Tax; Revenue expenditure; Jurisdictional Commissioner of Income Tax
• Section: 263

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE SEVENTEENTH DAY OF DECEMBER TWO THOUSAND AND THIRTEEN PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SEN GUPTA AND THE HON'BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No. 598 OF 2013 Between: Commissioner of Income Tax, Rajkamal Complex, Lakshmipuram Main Road, Guntur. ..... Appellant AND M/s. S.V. Engineering Constructions, No.1, Changrabagh Buildings, Dargamitta, Nellore .....Respondent The Court made the following : JUDGMENT: (per the Hon’ble the Chief Justice Sri K.J. Sengupta) This appeal is sought to be preferred against the judgment and order of the learned Tribunal dated 22.03.2013 in relation to the assessment year 2007-2008 on the following suggested questions of law: 1. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in setting aside the orders passed by the jurisdiction Commissioner of Income Tax under Sec.263 of the Income Tax Act, 1961 when the jurisdictional Commissioner of Income Tax found the subject assessment order as erroneous and prejudicial to the interest of the Revenue and liable to be revised more particularly in view of the fact that the amount of entry tax on purchase of vehicles being capital in nature which was to be added to the asset value, required to be disallowed? 2. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in holding that the conclusions arrived by the jurisdictional Commissioner of Income Tax is without any basis and without due appreciation of facts and reasons mentioned in the assessment order? 3. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in holding that the expenditure made towards entry tax is a revenue expenditure as it does not result in benefit of enduring nature when the said tax is capital in nature which was to be added to the assets value for claiming depreciation and required to be disallowed? We have heard Mr. B.Narasimha Sarma, learned counsel for the appellant and gone through the impugned judgment and order of the Tribunal. It appears that the Commissioner of Income Tax has exercised power under Sec.263 of the Income Tax Act, 1961 in relation to the assessment year 2007-2008 and on appreciation of facts of the case held that the payment of entry tax by the assessee is not revenue expenditure whereas, the Assessing Officer on appreciation of the facts, has held that it is a revenue expenditure. Learned Tribunal on appreciation of facts, held that conclusions of the Commissioner of Income Tax are based on surmises and conjectures. Moreover, it has also been noticed by the learned Tribunal that where there are two possible views and in the given set of facts one possible view is taken by the Assessing Officer, another possible view cannot be substituted in exercise of the jurisdiction under Sec.263 of the Income Tax Act. In this case, the Commissioner of Income Tax has done so. Moreover, it has also been held by the Hon’ble Supreme Court in Malabar Industrial Company Vs. CIT (243 ITR 83) that every loss of Revenue as a consequence of an order passed by the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. In view of the aforesaid discussion, we do not find any merit in the appeal. Accordingly, the appeal is dismissed. No order as to costs. As a sequel to the dismissal of the appeal, all the pending interim applications shall stand closed. ______________________ Kalyan Jyoti Sengupta, CJ. ______________ Sanjay Kumar, J. December 17, 2013 MAS "