Madras High Court
Gvn Enterprises Private Limited vs The Deputy Commissioner Of Income Tax on 3 September, 2024
Author: R. Suresh Kumar
Bench: R. Suresh Kumar, C. Saravanan
W.A.No.674 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.09.2024
CORAM
THE HON'BLE Mr. JUSTICE R. SURESH KUMAR
AND
THE HON'BLE Mr. JUSTICE C. SARAVANAN
W.A.No.674 of 2024
AND
C.M.P.Nos.4668 of 2024
GVN Enterprises Private Limited
Rep. by its Director G.Chandran
No.1/L, Blackers Road
6B, Gaiety Palace, 6th Floor
Chintadripet, Chennai 600 002
Previously
M/s.Mardia Sons Holdings Private Limited
A Private Limited Company
incorporated under the provisions of the Indian Companies Act, 1956
Rep. by its Director Bharat Kumar Mardia
No.5, Damodar Street
Chennai 600 010 .. Appellant
Vs.
The Deputy Commissioner of Income Tax
Company Circle IV(1)
121, Mahatma Gandhi High Road
Nungambakkam
Chennai 600 034 .. Respondent
Writ Appeal filed under Clause 15 of Letters Patent, against the order
dated 23.04.2021 passed in W.P.No.30659 of 2014.
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W.A.No.674 of 2024
For Appellant : Mr.Akhil R.Bhansali
For Respondent : Mr.V.Mahalingam
Senior Standing Counsel
Assisted by Mrs.S.Premalatha
Junior Standing Counsel
JUDGMENT
(Delivered by C. SARAVANAN, J.)
A learned Single Judge of this Court, vide common order dated
23.04.2021, dismissed W.P.Nos.8171 and 30659 of 2014. This writ appeal is
directed against the said order dismissing W.P.No.30659 of 2014, whereby,
challenge to the assessment order dated 24.10.2014 has been rejected by giving
liberty to the appellant to work out the remedy before the appellate authority.
2. The impugned order of the learned Single Judge is inspired from the
decision rendered on 23.04.2021 in W.P.Nos.3005 of 2013 and 28434 of 2014.
There is no discussion on the merits of the case. The appellant had earlier filed
W.P.No.8171 of 2013, whereby the appellant had challenged a notice issued
under Section 148 of the Income Tax Act, 1961, on 23.02.2012 and the order
dated 01.03.2013, disposing of the objection of the appellant overruling the
objection of the appellant for re-opening the assessment. During the pendency
of the aforesaid writ petition, an assessment order came to be passed on
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24.10.2014, which was challenged in W.P.No.30659 of 2014.
3. The brief facts of the case are that the appellant had leased out
computer items to Neyveli Lignite Corporation (NLC) and had signed a
Tripartite Lease Agreement dated 26.05.2006. In terms of clause 2.1, it was
specifically agreed that only NLC alone will avail income tax depreciation. The
relevant clause in the aforesaid Tripartite Lease Agreement dated 26.05.2006
reads as follows :
“2.1. In terms of purchase order No.0B6402/4001D/MM 25(1)
33/11 dated 22.5.2006 issued by the Lessee on the Vendor and the
Lessor's Advance purchase order No.CCS-NLC/PC-01 dated 26.05.2006
placed on the Vendor, the supply to the Equipment to the Lessee, is on
the basis of lease rentals and Neyveli Lignite Corporation Ltd. will avail
income tax depreciation. M/s.Mardia Sons Holdings (P) Ltd (Lessor)
advance purchase order will be the effective purchase order for this
transaction to establish the ownership of the equipment and M/s.Mardia
Sons Holdings (P) Ltd. (Lessor) will be the sole and full owner of the
Equipment.”
4. The case of the appellant before the learned Single Judge in both the
writ petitions was that after the assessment was completed on 24.10.2014 for the
assessment year 2007-08 under Section 148(3) of the Income Tax Act, 1961 and
invocation of power under Section 148, ibid., for the purpose of Section 147,
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ibid., on 01.03.2013 was bad and therefore, overruling of the objection of the
appellant was bad. Consequently, the impugned assessment order dated
24.10.2014 was also without jurisdiction.
5. As a matter of fact, the issue on the availability of depreciation which
the appellant had availed, appears to have been answered by the Hon'ble
Supreme Court in Industrial Credit and Development Syndicate Limited Vs.
Commissioner of Income Tax, Mysore and Another [(2013) 3 SCC 541].
Paragraph 28.3 from the said decision reads as under :
“28.3. If the lessee was in fact the owner, he would have claimed
depreciation on the vehicles, which, as specifically recorded in the
order of the Appellate Tribunal, was not done. It would be a strange
situation to have no claim of depreciation in case of a particular
depreciable asset due to a vacuum of ownership. As aforenoted, the
entire lease rent received by the assessee is assessed as business income
in its hands and the entire lease rent paid by the lessee has been treated
as deductible revenue expenditure in the hands of the lessee. This
reaffirms the position that the assessee is in fact the owner of the
vehicle, insofar as Section 32 of the Act is concerned.”
Thus, there is prima facie indication that there are merits in the claim of the
appellant.
6. We are, therefore, of the view that no useful purpose will be served by
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remitting the matter to the learned Single Judge to pass orders on merits, as it
would result in wastage of judicial time.
7. To balance the interest of the appellant and the Income Tax
Department, we deem it fit to quash the impugned assessment order dated
24.10.2019 and remit the case to the Assessing Officer to pass fresh orders on
merits, in the light of the decision of the Hon'ble Supreme Court in Industrial
Credit and Development Syndicate Limited Vs. Commissioner of Income Tax,
Mysore and Another [(2013) 3 SCC 541]. The Assessing Officer shall examine
the issue afresh and pass orders on merits. Needless to state, the appellant shall
be heard before passing orders.
With the above direction, this writ appeal stands disposed of. No costs.
Connected Civil Miscellaneous Petition is closed.
[R.S.K.,J.] [C.S.N., J.]
03.09.2024
gya
Internet : Yes
Index : Yes / No
https://www.mhc.tn.gov.in/judis
R. SURESH KUMAR, J.
AND
C. SARAVANAN, J.
gya
To
The Deputy Commissioner of Income Tax
Company Circle IV(1)
121, Mahatma Gandhi High Road
Nungambakkam
Chennai 600 034
03.09.2024
https://www.mhc.tn.gov.in/judis
