Chennai Petroleum Corporation Limited v. The Deputy Commissioner of Income-tax, Large Tax Payer Unit, Chennai
[Citation -2020-LL-1013-81]

Citation 2020-LL-1013-81
Appellant Name Chennai Petroleum Corporation Limited
Respondent Name The Deputy Commissioner of Income-tax, Large Tax Payer Unit, Chennai
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 13/10/2020
Assessment Year 2004-05
Judgment View Judgment
Keyword Tags substantial question of law • expenditure incurred • allowable deduction • depreciation allowance
Bot Summary: So far as the Substantial Question of Law No.3 is concerned, the same issue was considered as the assessee's own case for the Assessment Year 1998-99 in T.C.A.No. As far as the decision of this Court reported in 260 ITR 655 is concerned, if under law, there is a prohibition on the assessee to put the cars on roads for want of registration, considering such prohibition, the claim of the assessee under Section 32 of the Income Tax Act could not be granted. Accordingly, the Substantial Question of Law No.3 is decided in favour of the assessee by following the aforementioned decision. The Tribunal took note of the decision of the Hon'ble Supreme Court of India and arrived a finding against the assessee, We find no grounds to interfere with the said finding. Though there is a reference made to the said submission of the assessee, We find that there is no specific finding rendered by the Tribunal on that record. Substantial Question of Law No.1 is answered against the assessee. 522 of 2018 No.3 is answered in favour of the assessee, following the judgment of the Hon'ble Division Bench in the assessee's own case in T.C.A.No.


T.C.A.No.522 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.10.2020 CORAM HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.522 of 2018 and C.M.P.No.10644 of 2018 M/s.Chennai Petroleum Corporation Limited 536, Anna Salai, Teynampet, Chennai 600018 PAN:AAACM4392C Appellant Versus Deputy Commissioner of Income Tax, Large Tax Payer Unit, Chennai 600101 Respondent Prayer:- Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, Madras 'B' Bench, dated 05.12.2017 made in I.T.A.No.1980/Mds/2011 relating to Assessment Year 2004-05. For Appellant : Mr.R.Vijayaraghavan For Respondent : Mr.T.Ravikumar Senior Standing counsel 1/8 http://www.judis.nic.in T.C.A.No.522 of 2018 JUDGMENT [Order of Court was made by T.S.SIVAGNANAM, J.] This appeal has been filed by assessee under Section 260 of Income Tax Act, 1961 ('the Act' for brevity), challenging order dated 05.12.2017 passed by Income Tax Appellate Tribunal, Madras, 'B' Bench ('the Tribunal' for brevity) in I.T.A.No.1980/Mds/2011 for Assessment Year 2004-05. following Substantial Questions of Law are framed for consideration: 1. Whether Tribunal was right in law in holding that expenditure incurred towards revamping of vis- breaker unit which was abandoned is not allowable deduction under Section 37 of Act? 2. Whether Tribunal should have directed grant of depreciation on repair charges incurred on Vis Breaker. 3. Whether Tribunal was right in law in disagreeing with Order of Third Member of Tribunal in Assessee's own case for AY 1998-99 in ITA No.1822/Mds/2006 dated 23.10.2009 & Hon'ble Madras High Court decision in asseesse's own case for AY 1998-99 in TCA 2/8 http://www.judis.nic.in T.C.A.No.522 of 2018 358 of 2010 regarding claim of depreciation on gas sweetening plant? 2. We have heard Mr.R.Vijayaraghavan, learned counsel for appellant / assessee and Mr.T.Ravikumar, learned Senior Standing counsel appearing for respondent / Revenue. 3. So far as Substantial Question of Law No.3 is concerned, same issue was considered as assessee's own case for Assessment Year 1998-99 in T.C.A.No.358 of 2010. issue was decided in favour of assessee. Substantial Questions of Law framed for consideration in said case was also identical to that of Question No.3 herein pertaining to claim for depreciation on gas sweetening plant. operative portion of judgment reads as follows: 18. We are in entire agreement with view expressed by Bombay High Court in decision reported in (1971) 79 ITR 613 (Whittle Anderson Ltd Vs. Commissioner of Income Tax, Bombay City I.) following decision reported in (1937) 5 ITR 626 (Bhikaji Venkatesh Vs. Commissioner of Income-tax ) in light of decision of this Court reported 3/8 http://www.judis.nic.in T.C.A.No.522 of 2018 in 128 ITR 675 (CIT Vs. Vayithiri Plantations Ltd). 19. Even though learned Standing counsel appearing for Revenue contended that such decision related to case of development under Section 33 of Income Tax Act, yet, this Court referred to decision under Section 32 of Income Tax Act in context of expression 'used for purpose of business' as explained in (1954) 25 ITR 265 (Liquidators of Pursa Ltd Vs CIT) and held that so long as business was going and machinery got ready for use but due to certain extraneous circumstances, machinery could not be put to use, said fact could not stand in way of granting relief under Section 32 of Act. 20. As far as decision of this Court reported in 260 ITR 655 (CIT Vs. Maps Tours and Travels) is concerned, if under law, there is prohibition on assessee to put cars on roads for want of registration, considering such prohibition, claim of assessee under Section 32 of Income Tax Act could not be granted. Thus above said decision has to be seen in light of facts and circumstances of case; hence, same would not be of any assistance to assessee. In fact, learned Standing counsel appearing for Revenue fairly stated before this Court that in decisions reported in (2009) 311 ITR 202 (Commissioner of Income Tax Vs. Southern Petrochemical Industries 4/8 http://www.judis.nic.in T.C.A.No.522 of 2018 Corporation Ltd.,) and (2008) 301 ITR 255 (Commissioner of Income Tax Vs. Southern Petrochemical Industries Corporation Ltd.,), this Court had considered grant of depreciation even to stand-by machinery. When that being case, we do not find any justifiable ground to disturb reasoning of majority members of Income Tax Appellate Tribunal. 21. Under stated circumstances, on admitted case that business was going concern and machinery could not be put to use due to raw material paucity, we reject Revenue's contention, thereby, confirm majority view of Income Tax Appellate Tribunal. 4. Accordingly, Substantial Question of Law No.3 is decided in favour of assessee by following aforementioned decision. So far as Substantial Question of Law No.1 is concerned, we have noted findings recorded by Tribunal. We have perused findings recorded by Tribunal and find that Tribunal rightly reverse order passed by Commissioner of Income Tax ['CIT(A)' for brevity] on this aspect. Tribunal took note of decision of Hon'ble Supreme Court of India and arrived finding against assessee, We find no grounds to interfere with said finding. Accordingly, Substantial Question of law No.1 is 5/8 http://www.judis.nic.in T.C.A.No.522 of 2018 answered against assessee. With regard to Substantial Question of law No.2 is concerned, having held that deduction is not allowable under Section 37 of Act with regard to expenditure incurred for revamping of vis-breaker Unit. Tribunal ought to have considered claim for consideration at vis-breaker Unit. Though there is reference made to said submission of assessee, We find that there is no specific finding rendered by Tribunal on that record. That apart, We find that such claim for depreciation was not made by assessee before Assessing Officer or before CIT(A) as alternate submission and it was raised only before Tribunal. Therefore, We are inclined to grant liberty to assessee to raise that issue before Assessing Officer which can be considered in accordance with law. 5. In light of above decision, Tax Case Appeal is partly allowed. Substantial Question of Law No.1 is answered against assessee. Substantial Question of Law No.2 is remanded to Assessing Officer for limited purpose of considering claim for grant of depreciation on repair charges incurred on vis-breaker unit and Substantial Question of Law 6/8 http://www.judis.nic.in T.C.A.No.522 of 2018 No.3 is answered in favour of assessee, following judgment of Hon'ble Division Bench in assessee's own case in T.C.A.No.358 of 2010 dated 09.07.2013. No costs. Consequently, connected miscellaneous petition is closed. (T.S.S.,J) (V.B.S.,J) 13.10.2020 (2/2) Kak Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To Income Tax Appellate Tribunal, 'B' Bench, Chennai. T.S.SIVAGNANAM, J. 7/8 http://www.judis.nic.in T.C.A.No.522 of 2018 AND V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.522 of 2018 13.10.2020 8/8 http://www.judis.nic.in Chennai Petroleum Corporation Limited v. Deputy Commissioner of Income-tax, Large Tax Payer Unit, Chennai
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