1998 (11) TMI 152 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing appeals.
2. Deduction for diminution in value of shares.
3. Deletion of appreciation in value of shares.
4. Claim of depreciation on assets for hire purchase business.
5. Deletion of interest under sections 217 and 234B.
6. Addition of depreciation adjusted in section 143(1)(a).

Issue-wise Detailed Analysis:

1. Delay in Filing Appeals:
The Revenue filed appeals with a delay of 12 days, citing oversight and involvement in other public duties. The Tribunal found the delay to be reasonable and not willful or negligent. Therefore, the delay was condoned, and the appeals were admitted.

2. Deduction for Diminution in Value of Shares (Assessment Year 1988-89):
The assessee claimed a deduction for the fall in market value of shares held as stock-in-trade. The Assessing Officer disallowed the claim, arguing that the shares were investments, not stock-in-trade. The Commissioner of Income-tax(A) allowed the claim, but the Tribunal found that the shares were shown as investments in the balance sheet and not passed through the Trading and Profit & Loss Account. The Tribunal concluded that the shares were investments, not stock-in-trade, and the loss was contingent. Hence, the deduction was disallowed, and the Revenue's appeal was allowed.

3. Deletion of Appreciation in Value of Shares (Assessment Year 1989-90):
The assessee disclosed an appreciation in the value of shares, which the Commissioner of Income-tax(A) deleted, considering the shares as stock-in-trade. The Tribunal reaffirmed that the shares were investments, not stock-in-trade, and thus, any valuation profit/loss was irrelevant for taxable income computation. The deletion of the appreciation amount was confirmed, and the Revenue's contention failed.

4. Claim of Depreciation on Assets for Hire Purchase Business:
- Assessment Year 1989-90: The assessee claimed depreciation on hire-purchase assets, which the Assessing Officer disallowed, citing a change in the method of accounting not reflected in the accounts. The Commissioner of Income-tax(A) allowed the claim, but the Tribunal found the change in accounting method and additional depreciation claim unproven. The disallowance of depreciation was justified, and the Revenue's appeal was allowed.
- Assessment Year 1990-91: The Assessing Officer disallowed the depreciation claim under section 143(1)(a), which the Commissioner of Income-tax(A) deleted, deeming it a debatable issue not suitable for prima facie adjustment. The Tribunal agreed and dismissed the Revenue's appeal.

5. Deletion of Interest Under Sections 217 and 234B:
- Section 217 (Assessment Year 1988-89): The Assessing Officer levied interest under section 217 for failure to estimate advance tax, which the Commissioner of Income-tax(A) deleted. The Tribunal ruled that the assessed tax includes income under section 115J, and the Commissioner was not justified in deleting the interest. The Revenue's appeal was allowed.
- Section 234B (Assessment Year 1989-90): The Tribunal held that the deletion of interest under section 234B by the Commissioner of Income-tax(A) was unjustified. The Revenue's appeal on this ground was allowed.

6. Addition of Depreciation Adjusted in Section 143(1)(a) (Assessment Year 1990-91):
The Assessing Officer added back depreciation disallowed under section 143(1)(a), which the Commissioner of Income-tax(A) deleted, considering it a debatable issue. The Tribunal upheld the Commissioner's decision, and the Revenue's appeal was dismissed.

Summary:
1. Assessment Year 1988-89: Appeals allowed for valuation loss on shares and deletion of interest under section 217.
2. Assessment Year 1989-90: Appeals partly allowed for depreciation on hire-purchase assets and interest under section 234B; appeal dismissed for appreciation on shares.
3. Assessment Year 1990-91: Appeal dismissed for the add-back of depreciation.