2016 (7) TMI 924 - HC - Income Tax

High Court upholds Tribunal decision on capital loss, depreciation, and penalty imposition

PRINCIPAL COMMISSIONER OF INCOME -TAX Versus GUJARAT GAS FINANCIAL SERVICES LTD

The High Court dismissed the Revenue's appeal challenging the Tribunal's decision on capital loss of shares, depreciation on leased assets, and penalty ... Capital loss of sale of shares and securities - Held that:- Insofar as the first question is concerned, the identical issue has been decided in case of Commissioner of Income Tax vs. Mohmed Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT ] - Decided in favour of assessee. Claim of depreciation in respect of leased assets - Held that:- The assessee has been able to prove genuineness of the depreciation claim qua the air pollution control equipment in question leased out to M/s. Rajendra Steel Ltd. - Decided in favour of assessee. Issues:1. Challenge to the judgment of the Income Tax Appellate Tribunal by the Revenue.2. Questions of law proposed by the Revenue regarding capital loss of sale of shares and securities, and depreciation claim in respect of leased assets.Analysis:1. The Revenue challenged the judgment of the Income Tax Appellate Tribunal, raising questions of law regarding the allowance of capital loss of sale of shares and securities, and the claim of depreciation in relation to leased assets. The Tribunal allowed the appeals of the assessee and dismissed the appeals of the Revenue. The Tribunal affirmed the CIT(A)'s findings granting depreciation relief to the assessee and held that the failure of the Revenue's substantive ground rendered the reassessment unsustainable in law. Consequently, the disallowances and additions made by the Revenue were deleted. The Tribunal dismissed the Revenue's appeal for the assessment year 1996-97 and accepted the assessee's cross-appeal challenging the penalty imposed. The Tribunal also dismissed the Revenue's appeal for the assessment year 1997-98, as the issue had already been decided in favor of the assessee in a previous appeal.2. The Tribunal's judgment was challenged by the Revenue in this tax appeal. The High Court, after hearing both parties and examining the records, dismissed the appeal concerning the first question as it had already been decided in a previous case. Regarding the second question concerning the depreciation disallowance on air pollution control equipment leased to a company, the High Court found no reason to interfere with the Tribunal's order. The High Court noted that the assessee had successfully proven the genuineness of the depreciation claim related to the equipment, and thus, no substantial question of law arose in this appeal. Consequently, the High Court dismissed the appeals, upholding the Tribunal's decision.