TaxTMI 
TaxTMI 
1985 (5) TMI 107
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.... 1982 passed by the ITO in the case of the appellant for the asst. yr. 1979-80 2. The CIT found that the assessment order was erroneous and prejudicial to the Revenue on the three counts, namely: (i) The ITO had allowed 100per cent depreciation on cylinders in the amount of Rs. 16,13,955 although there was no manufacturing activity during the relevant previous year; (ii) The ITO had allowed an expenditure of Rs. 12,912 on repairs of plant and machinery although the assessee's factory did not run and especially because the machinery on which the repairs where carried on do not belong to the assessee; and (iii) The ITO had failed to consider whether amounts totalling Rs. 18,97,859 appearing in the assessee's account books as secur....
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....security deposits in the assessee's income. Instead of doing so, the CIT has directed the ITO to make fresh inquiries into the three items which means that the CIT was not satisfied that the order was in fact prejudicial to the Revenue. 5. The ld. Departmental Representative, on the other, hand, contended that the ITO's order is silent on all the three points and, therefore, it has to be deemed to have been made without making any inquiry and an order made without property inquiry can properly be said to be erroneous and prejudicial to the Revenue. 6. We have given our careful consideration to the respective arguments on either side and have perused the record. The ld. Departmental Representative relied upon the observations of the Ho....
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.... of the inquiry to be made cannot be prescribed and it will depend on the particular facts of each case. No doubt, the assessment order is silent on the security deposits and repairs. As regards the depreciation, it has been allowed by a conscious calculation in terms of a chart. 7. As is evident, the ld. CIT has doubted the allowance of depreciation amounting to Rs. 16,13,955 allowed on gas cylinders. The assessee is a manufacturer of oxygen gas which is compressed into gas cylinders. The assessee is a manufacturer of oxygen gas which is compressed into gas cylinders. The gas cylinders are therefore, used as containers for the gas. The CIT's observation is that since the assessee's factory for the production of the aforesaid gas, did no....
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.... exclusively for the assessee's business. He has doubted the allowance of this amount on the ground that the amount was pent on the repairs of machinery that did not belong to the assessee. If the amount has been spent wholly and exclusively for the assessee's business, it did not matter to whom the machinery belonged. As stated above, the assessee was using the gas manufactured by M/s. Amrit Vanaspati Company and it was at their plant that the assessee's gas cylinders were filled. If the assessee was using the plant and machinery belonging to Amrit Vanaspati Company for its own business, it could legitimately spend money on the repairs of that plant and machinery. The ld. CIT has not even found that there was nay obligation on Amrit Vanasp....
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....er can be set aside merely on the ground that no inquiry was made on the point. In view of the peculiar facts of this case it was incumbent on the CIT to demonstrate that the order is erroneous. The reason is that the CIT has sought to apply ratio in the case of CIT vs. Punjab Distilling Industries Limited mechanically and without appreciating the material differences. The ld. Departmental Representative also relied on this ruling in the same fashion. In that case the assessee was a manufacture of a country liquor which was sold in bottles. As the report shows besides the price of the liquor and the bottles in which liquor was sold, a further charge called 'empty bottles return security deposit' was collected by the assessee from its custom....
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....turned after 30 days from date of delivery by the seller shall be at the risk and responsibility of the buyers who shall be liable to pay the cost of cylinder (a) Rs. 1700 per cylinder immediately on demand. 3. Cylinders are on trust with the purchaser and not to be refilled from any other gas plant except the seller, in the case of any refilling from other Gas plant by the purchaser then he shall be liable to pay a penalty (a) Rs. 150 per cylinder per filling or as fixed by the seller. 4. Charges for damages shall be payable by purchaser as under:- Value Rs. 75 each. Spindle Rs. 10 each. Cap Rs. 20 each. Gland-nut Rs. 5 each. 5. The condition of cylinder can only be adjudged in the premises of the factory o....