1990 (5) TMI 13 - HC - Income Tax

Summary

Issues involved: Jurisdiction of Commissioner of Income-tax u/s 263, Prejudicial nature of Income-tax Officer's order to Revenue

Jurisdiction of Commissioner of Income-tax u/s 263: The petitioner sought reference to the court on whether the Tribunal was correct in holding that the Commissioner of Income-tax had no jurisdiction to pass an order u/s 263. The Income-tax Officer allowed depreciation on cylinders, repair expenses, and did not tax security deposit amount. The Commissioner issued notice and passed an order u/s 263 deeming the Income-tax Officer's order as erroneous and prejudicial to Revenue's interests. The Tribunal, however, found the Commissioner's decision erroneous as depreciation was allowable for business use of cylinders, repair expenses were deductible, and security deposit did not belong to the assessee but to consumers, hence not a revenue receipt. The court upheld the Tribunal's conclusions, dismissing the petition as no question of law arose.

Prejudicial nature of Income-tax Officer's order to Revenue: The second question raised was whether the Tribunal was right in holding that the Income-tax Officer's order was not prejudicial to Revenue's interests. The Tribunal determined that the Income-tax Officer's decision to allow depreciation, repair expenses, and not tax the security deposit was correct based on the business activities of the assessee. The Tribunal concluded that these decisions were not prejudicial to Revenue. The court agreed with the Tribunal's findings, leading to the dismissal of the petition without costs.