The Commissioner Of Income Tax vs M/S Jay Rapid Roller Ltd.
2010 Latest Caselaw 3939 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

                          ITA No.1107 & 1108 of 2006

%                                Judgment Delivered On: August 25, 2010

     (1)    ITA 1107 OF 2006

The Commissioner of Income Tax                           . . . Appellant
                  Through :                       Ms. Prem lata Bansal,


                                 VERSUS


M/s Jay Rapid Roller Ltd.                                . . .Respondent
                    Through:          Mr. Rajiv Bahl, Advocate for Official
                                      Liquidator

     (2)    ITA 1108 OF 2006

The Commissioner of Income Tax                           . . . Appellant
                  Through :                 Ms. Prem lata Bansal,

                                 VERSUS


M/s Jay Rapid Roller Ltd.                                . . Respondent
                    Through:          Mr. Rajiv Bahl, Advocate for Official
                                      Liquidator
CORAM :-

       THE HON'BLE MR. JUSTICE A.K. SIKRI
       THE HON'BLE MS. JUSTICE REVA KHETRAPAL

       1.     Whether Reporters of Local newspapers may be allowed
              to see the Judgment?
       2.     To be referred to the Reporter or not?
       3.     Whether the Judgment should be reported in the Digest?


A.K. SIKRI, J. (ORAL)

1. These two appeals relate to the assessment years 1997-98 and

1998-99 and arise out of common order dated 9th December, 2005

passed by the Income Tax Appellate Tribunal (hereinafter referred to

as „the Tribunal‟) dismissing the appeals of the revenue in respect of

both the assessment years.

2. In so far as the assessment year 1997-98 is concerned, the

issue relates to the depreciation allowance on certain assets which

was claimed by the assessee and allowed by the Tribunal, though the

Assessing Officer had disallowed the same on the ground that the

bills of purchase of these assets were not produced.

3. Following question of law is raised in this behalf:-

"Whether the Ld. ITAT was justified in law in allowing depreciation on fixed assets to the extent of Rs. 66.26 lacs despite the assessee failing to produce the requisite evidence in this regard before the Assessing Officer.?"

4. The order of the Assessing Officer reveals that the assessee

had made substantial claim for depreciation. The assessee was

required to produce the purchase vouchers to substantiate its claim.

The assessee could produce the vouchers for certain machineries

only and depreciation qua those machineries only was allowed.

However, in respect of factory building, plant and machinery and self

fabricated machinery, vouchers to the extent of Rs.41,19,260/-, Rs.

1,66,64,271/- and Rs.1,66,64,271/- respectively, could not be

produced by the assessee. For want of the vouchers, the Assessing

Officer disallowed depreciation on these assets to the extent of Rs.

87,52,367/-. We may note at this stage itself that in respect of the

same assets, the assessee had claim depreciation to the effect of Rs.

66,26,063/- in the assessment year 1998-99 as well and that was

also disallowed on the same ground.

5. The CIT (Appeals) as the first appellate authority, allowed the

depreciation upholding that the vouchers for all fresh purchases

during the relevant years were furnished to the Assessing Officer and

the balance addition was out of capital work in progress outstanding

in the books as on 31st March, 1996 under the head "fixed assets".

From the reading of the order of the Tribunal as well as that of the

CIT (A), it becomes clear that while accepting the contention of the

assessee, there is no discussion on the basis of which the two

authorities below came to the conclusion that the money was in fact

spent by the assessee in purchasing of those "fixed assets". There is

also no discussion as to how the two authorities below came to the

conclusion that these "fixed assets" were to be used in the

assessment year under consideration.

6. For this reason alone, we set aside the impugned orders

passed by the CIT (Appeal) as well as ITAT and remit back the case to

CIT (Appeals) to consider the aforesaid aspects in detail and pass

speaking orders.

7. Since the assessee is now in liquidation, before passing these

orders, notice shall be issued to the Official Liquidator attached to

the High Court of Delhi who is in possession of the all the relevant

records.

(A.K. SIKRI) JUDGE

(REVA KHETRAPAL) JUDGE August 25, 2010.

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