THE PR. COMMISSIONER OF INCOME TAX-I KANPUR V. M/S COMMERCIAL BODY BUILDERS

IAPL/246/2017

AI Insights

The case revolves around an appeal by the Pr. Commissioner of Income Tax-I Kanpur against the order of the Income Tax Appellate Tribunal, which quashed the reassessment proceedings for the assessment year 1999-2000. The primary legal issues included the validity of reassessment proceedings initiated based on an audit objection, the entitlement of the assessee to a higher rate of depreciation on transport vehicles, and the requirement of statutory approval under Section 151 of the Income Tax Act. The Tribunal's decision was supported by precedents and interpretations of relevant sections of the Income Tax Act, particularly concerning the authority required to approve reassessment and the conditions under which higher depreciation rates could be granted.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 726702 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 08-03-2018
• Assessment Year: misc
• Other Referred Cases: M/S. Larsen and Toubro Ltd., CIT Vs. Shaan Finance Pvt. Ltd., Commissioner of Income Tax Vs. SPL's Siddhartha Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUYASH AGRAWAL
• Assessee Lawyers: SHUBHAM AGRAWAL
• Keywords: Audit objection; Depreciation; Income Tax; Legal provisions; Reassessment
• Section: 32; 151(1); 151(2); 260-A

Judgement Text

"Court No. - 35 Case :- INCOME TAX APPEAL No. - 246 of 2017 Appellant :- The Pr. Commissioner Of Income Tax-I Kanpur Respondent :- M/S Commercial Body Builders Counsel for Appellant :- Shubham Agrawal Counsel for Respondent :- Suyash Agrawal Hon'ble Bharati Sapru,J. Hon'ble Harsh Kumar,J. Heard Shri Shubham Agrawal, learned counsel for the appellant and Shri R.R. Agrawal, learned Senior Counsel assisted by Shri Suyash Agrawal, learned counsel for the respondent-assessee. This appeal under Section 260-A of the Income Tax, 1961(hereinafter referred to as the 'Act') has been filed by the department against the order of the Income Tax Appellate Tribunal dated 13.04.2017 for the assessment year 1999-2000. The questions of law sought to be answered are as hereunder: (1) Whether the Income Tax Appellate Tribunal was justified in quashing the reassessment proceedings by holding that the reassessment proceedings cannot be initiated on the basis of Audit objection losing sight of the fact that the present reassessment proceedings have been initiated by the Assessing Officer on his reason to believe and not merely on the basis of Audit objection and hence the reassessment proceedings are valid in view of the decision of the Apex Court in the case of M/S. Larsen and Toubro Ltd. (supra)? (2) Whether the Income Tax Appellate Tribunal was justified in setting aside the reassessment proceedings and holding the assessee to be entitled for higher rate of depreciation on transport vehicle @ 40 per cent as per CBDT Circular No.652 dated 14.6.1993 which is not applicable to the assessee? (3) Whether the Income Tax Appellate Tribunal was justified in setting aside the reassessment proceedings on the erroneous appraisal of facts that statutory approval was required from the Joint Commissioner of Income Tax under Section 151(2) of the Act and in fact it has been taken from the Commissioner of Income Tax under Section 151(1) of the Act, while in the present case period of four years has elapsed at the time of issuance of the reassessment notice and hence the provision of section 151(1) of the Act would be applicable? In view of the decision of the Apex Court passed in S.L.P. (C) No.15786 of 2003 as well as the decision of this Court in the case of CIT Vs. Shaan Finance Pvt. Ltd. 231 ITR 308(SC), it is held that the assessee who is carrying on Non Banking Finance Company, in which the public is substantially interested, is entitled to higher rate of depreciation allowance under Section 32 of the Income Tax Act at 40% in respect of the commercial vehicles owned by it but leased out to a third party. A ground has been raised with regard to Section 151(2) of the Act also. In this case the approval had been taken from Commissioner of Income Tax while under the provision of Section 151(2) the approval had been taken from Joint Commissioner of Income Tax. However, upon reading of the provision it is clear that if the statute provides that a particular authority is to record his satisfaction then it is that authority alone who can act and no other authority. Learned counsel for the assessee has placed reliance upon a judgment of the Delhi High Court in the case of Commissioner of Income Tax Vs. SPL's Siddhartha Ltd. reported in [2012] 17 taxmann.com 138 (Delhi). We are in agreement with the said judgment. All the questions of law are therefore, answered in favour of the assessee and against the department. The appeal is accordingly dismissed. Order Date :- 8.3.2018 pks "