2011 (1) TMI 1164 - HC - Income Tax

Whether Tribunal is right in law and on facts in confirming the order passed by the CIT (A) deleting the addition made on account of purchase of Crane and allowing depreciation on the same - assessee had never claimed the cost of the crane in the return nor had it debited the expenses to the profit and loss account, and as such the question of disallowing the same and adding the same to the income would not arise Held that - in the absence of any evidence to indicate that the purchase was bogus or that the crane in fact did not exist, the question of disallowing the deprecation in respect of the same also would not arise. When the assessee had conclusively proved the purchase and existence of the crane, and had not debited the expenses to the profit and loss account, no addition could have been made in respect of the purchase price nor could have depreciation been disallowed in respect thereof, Tribunal justified in deleting the addition as well as disallowance of depreciation

Summary

Issues:
- Challenge to the order of the Income Tax Appellate Tribunal under section 260A of the Income Tax Act 1961.
- Correct appreciation of facts in confirming additions related to purchases from various traders.
- Deletion of addition on account of inflation in purchase cost.
- Confirmation of addition in respect of cash withdrawals.
- Disallowance and depreciation on the purchase of a crane.

Analysis:

The case involved a challenge to the order of the Income Tax Appellate Tribunal under section 260A of the Income Tax Act 1961. The appellant revenue contested various issues related to the correctness of the Tribunal's decision regarding additions made in relation to purchases from different traders. The Tribunal had confirmed additions to the extent of 25% only out of the total additions made in certain cases. The Commissioner (Appeals) had initially disallowed 20% of the cash withdrawals, which was later enhanced to 25% by the Tribunal based on estimates and previous decisions.

Regarding the deletion of an addition on account of inflation in purchase cost, the Assessing Officer had disallowed an amount on payments made to Metal and Machine Trading Co. The Commissioner (Appeals) found that the purchases were made at prevailing market rates and there was no actual inflation, leading to the deletion of the addition. The Tribunal concurred with these findings, and the decision was based on concurrent factual findings without any legal infirmity.

In relation to the disallowance and depreciation on the purchase of a crane, the Assessing Officer had made an addition based on technicalities. However, the Commissioner (Appeals) and the Tribunal found that the crane purchase was genuine, registered, and used for business purposes. As the purchase was not claimed in the return and no evidence suggested it was bogus, the addition and disallowance of depreciation were unwarranted. The Tribunal's decision to delete the addition and allow depreciation was upheld as legally and factually correct.

In conclusion, the High Court dismissed the appeal as there was no substantial question of law arising from the Tribunal's decision. The judgments of the Commissioner (Appeals) and the Tribunal were based on factual assessments and did not exhibit any legal infirmities warranting interference.