THE COMMISSIONER OF INCOME TAX V. M/S MITTAL STEELS LTD

ITA/1019/2008

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Deputy Commissioner of Income Tax against M/s Mittal Steels Ltd. The appellants challenged the order of the ITAT, Bangalore, which had reversed the findings of the Assessing Officer regarding the lease rentals and depreciation claimed by the respondent. The Assessing Officer had initially deemed these claims as bogus, asserting that the assets were non-existent. However, subsequent reports and findings by the First Appellate Authority and the Tribunal contradicted the Assessing Officer's conclusions, leading to the dismissal of the appeal by the High Court.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 733409 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-10-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI; JINITA CHATTERJEE; V K GURUNATHAN
• Assessee Lawyers: JEEVAN NEERALGI
• Keywords: Appellate Authority; Assessing Officer; Bogus assets; Depreciation; Income tax appeal; Lease rentals; Tribunal
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 13th DAY OF OCTOBER, 2014 PRESENT THE HON' BLE MR. JUSTICE N.KUMAR AND THE HON' BLE MR. JUSTICE B. MANOHAR Income Tax Appeal No.1019/2008 BETWEEN: 1.THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE C R BUILDING QUEENS ROAD BANGALORE 2.THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(2) C.R. BUILDING QUEENS ROAD BANGALORE ... APPELLANTS (BY SRI JEEVAN J. NEERALGI, ADVOCATE) AND: M/S MITTAL STEELS LTD., WHITEFIELD ROAD, MAHADEVAPURA BANGALORE. ... RESPONDENT (BY SRI S PARTHASARATHI, ADVOCATE A/W JINITA CHATTERJEE AND SRI V.K. GURUNATHAN, ADVOCATES) … This Income Tax Appeal is filed under Section 260-A of Income Tax Act, 1961 praying to formulate 2 the substantial questions of law and to allow the appeal and set aside the Order dated 11-06-2008 passed by the ITAT, Bangalore in IT(SS)A No. 12/Bang/2007 and confirm the order passed by the Deputy Commissioner of Income Tax , Circle-2(2), Bangalore. This Income Tax Appeal coming on for Hearing this day, N. Kumar J., delivered the following: JUDGMENT The revenue has preferred this appeal challenging the order passed by the Tribunal. 2. This appeal is admitted to consider the following substantial questions of law: “1. Whether the Appellate Authorities were correct in reversing the finding of the Assessing Officer that the lease rentals was claimed on bogus assets and was a mere finance transaction without taking into consideration the material/statements relied on by the Assessing Officer and consequently recorded a perverse finding? 2. Whether the Appellate Authorities were correct in reversing the finding of the Assessing Officer that the lease rentals 3 was claimed on bogus assets and consequently no depreciation is allowable on these assets?” 3. We have gone through the order passed by the Assessing Authority, First Appellate Authority and the Tribunal. 4. The assessee challenged the order passed by the Assessing Authority who held that the claim of lease rentals is bogus and the claim of depreciation of machinery is also bogus as no machinery exists. In appeal, the First Appellate Authority sought for remand report. Not one but four reports were submitted by the Assessing Authority. The said reports run counter to the findings recorded by the Assessing Authority originally. The basis for the order of the Assessing Authority was that the assessee had not received chilled steel rolls whereas it was found that it had received MS Rolls. The factual error is committed by the Assessing Authority. In so far as 4 depreciation claimed for the machinery, the material on record shows that the machinery was available in the factory premises which the Assessing Authority was not able to understand. Therefore, the First Appellate Authority on the basis of the remand report submitted by the Assessing Authority held that the assessee has taken M.S. rolls on lease and they are also the requisite machinery. The claim for deduction of lease rentals and depreciation was fully justified and accordingly, the findings of the Assessing Authority was set aside. Before the Tribunal again on re-appreciation of the entire material on record, the order of the Appellate Authority was confirmed. 5. The question whether the assessee took M.S. rolls on lease and whether he had machineries on which he claimed depreciation was purely a question of fact. Based on the remand report submitted by the Assessing Authority, a 5 finding of fact has been recorded in favour of the assessee and against the revenue. In those circumstances, we do no find any substantial question of law that arise for consideration in this appeal though the aforesaid two questions are framed, they do not constitute a substantial question of law. 6. In that view of the matter, we do no see any merit in this appeal. Accordingly, the appeal is dismissed without answering the questions of law which are framed which do not constitute substantial question of law. Sd/- Judge Sd/- Judge Nsu/- "