2012 (7) TMI 1008 - HC - Income Tax

Summary

Issues involved: Assessment of depreciation based on sale invoice value, scope of Assessing Authority to determine actual market value of equipment.

In this case, the Respondent, an assessee, purchased bio gas and furnace with a stated value of &8377; 50,00,000/- each as per the sale invoice. The Assessing Authority, however, deemed the value inflated at &8377; 2,50,00,000/- and rejected the depreciation claim. The Commissioner of Income Tax upheld this decision, but the Tribunal set it aside, directing the Assessing Authority to re-examine the issue. The Tribunal emphasized the need to consider if the sale value in the invoice aligns with the actual market value, and highlighted the Supreme Court's stance on ownership and usage for depreciation claims. The Tribunal's decision allowed the assessee a fresh opportunity for assessment.

The State contended that the Tribunal's observations might bind the Assessing Officer to accept the invoice value as final, potentially limiting the scope to determine the actual market price. On the other hand, the Respondent's counsel argued that the Tribunal's directive did not restrict the Assessing Authority's discretion to assess the market price, emphasizing the importance of verification from the supplier to ascertain the accuracy of the sale price. The Respondent's counsel refuted the claim that the Tribunal's observations curtailed the Assessing Authority's discretion.

Upon hearing arguments from both sides, it was clarified that the remand was open, allowing the Assessing Authority the freedom to evaluate the sale value based on supplier materials and other relevant information. Consequently, the appeal was disposed of.