2011 (11) TMI 96 - HC - Income Tax

Jurisdiction of Tribunal- Power to consider the matters not raised before the tribunal- Held that - High Court may decide an issue, which is not determined by the Appellate Tribunal. The word determined means that the issue is not dealt with, though it was raised before the Tribunal. The word determined presupposes an issue was raised or argued but there is failure of the Tribunal to decide or adjudicated the same. - Though issue had not been raised before the lower authorities, but the Tribunal allowed the assessee to raise the said issue and had decided the said question. The Supreme Court in Commissioner of Income-Tax, Madras Versus Mahalakshmi Textile Mills Limited (1967 -TMI - 5045 - SUPREME Court) noticed that the Appellate Tribunal was competent to pass such orders on the appeal as it thinks fit as empowered and mandated by Section 33(4) of the Indian Income Tax Act, 1922. It was held that the Tribunal had not exceeded its jurisdiction. - Decided in favour of assessee.

Summary

Issues Involved:
1. Depreciation claim - 100% vs. 10%
2. Nature of construction - temporary sheds vs. office building
3. Capital vs. revenue expenditure determination

Depreciation Claim - 100% vs. 10%:
The case involved a dispute over the depreciation claim, where the appellant sought 100% depreciation amounting to Rs.41,37,577 for sheds constructed. The Assessing Officer (AO) allowed depreciation at 10% considering the construction as an office building. The appellant argued that the sheds were temporary and essential for business operations. The Commissioner of Income Tax (CIT) upheld the AO's decision for the Kolkata Regional Office-1 construction but directed 100% depreciation for two other temporary shed constructions. The Tribunal found the nature of construction to be permanent, disallowing 100% depreciation, and ruled in favor of prescribed schedule depreciation.

Nature of Construction - Temporary Sheds vs. Office Building:
The Tribunal analyzed the construction's nature, emphasizing that the structures were not temporary sheds as claimed by the appellant. The appellant attempted to draw parallels with a previous assessment year where temporary structures were involved. However, the Tribunal noted significant expenses like sanitary items, water tanks, and roof tiles, indicating a permanent nature different from temporary sheds. The Tribunal's decision was based on the specific facts and findings of the case, concluding that the construction was not temporary, justifying the prescribed schedule depreciation.

Capital vs. Revenue Expenditure Determination:
The appellant contended that the expenditure on sheds was revenue, not capital expenditure, a point not raised before the Tribunal. The appellant relied on a precedent to argue that the Tribunal should have addressed the issue even if not raised earlier. However, the High Court clarified that issues not raised or decided by the Tribunal cannot be introduced in appeals under Section 260A of the Income Tax Act. The Court highlighted that the question of capital vs. revenue expenditure required a detailed examination of facts and principles, which was not part of the Tribunal's considerations. Ultimately, the Court dismissed the appeal, emphasizing that the Tribunal's decision was based on the nature of construction and not on the capital vs. revenue expenditure distinction.

This detailed analysis of the judgment covers the issues involved in the case, providing insights into the depreciation claim, nature of construction, and the determination of capital vs. revenue expenditure.