TaxTMI 
TaxTMI 
TaxTMI 
1985 (1) TMI 105
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....s under section 263 for which the notice was issued. The Commissioner narrated the facts of the case that in the previous year the assessee had shown an expenditure of Rs. 2,30,505 under the head 'Repairs of factory shed'. He pointed out that the assessee had no factory shed earlier and had shown Rs. 2,34,153 separately on account of construction of two new factory sheds, which it appears, was incorrectly claimed and allowed. He was of the view that since the assessee was not in possession of any factory shed prior to this year, the amount of Rs. 2,30,505 prima facie was either excessive or of a capital nature. That apart, he pointed out that there was allowance for running expenses of the motor car which was considered unjustified as the assessee had income from leasehold property. The Commissioner noted that it was on these two grounds that action under section 263 was initiated. 3. The assessee complied with the notice issued, contending that the assessee spent Rs. 2,34,153, which had been claimed as repairs and not wrongly allowed as such. It was true that there has been typographical error and the amount should be Rs. 2,30,505. 4. The assessee raised certain preliminary obje....
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....TR 339 (All.) in order to stress that the expenditure incurred in the circumstances, was of revenue. He also relied on the decision in the case of CIT v. Kalyanjee Mavji & Co. [1980] 122 ITR 49 (SC). Another authority relied on by the assessee was on the decision in the case of R. B. Naraian Singh Sugar Mills (P.) Ltd. v. CIT [1981] 129 ITR 698 (Delhi). The Commissioner analysed the facts of the case and found that these are different from the facts of those decided cases. He examined the details of the sheds and structures which the assessee had contracted to purchase which were several in numbers. He found from the final list that there were certain items which were not in the earlier list. He noted that the assessee's representative has very fairly conceded that the expenditure on such items which were not in existence earlier but which came to existence after, cannot be considered to be for repairs. Such new items listed and considered by the Commissioner were in respect of garage, testing shed, painting shed, platform and stores amounting to Rs. 71,642. 9. The Commissioner pointed out that the assessee had no arguments to support the contention that this expenditure at least ....
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....the contention of the assessee in this respect. It is also submitted that in a similar circumstance, the Hon'ble Supreme Court has not sustained the action of the department in reopening the assessment under section 147(b) of the Act, on the basis of 'information' as to 'law' on the opinion of audit party on the point of law. It was held that such opinion would not amount to information for the purpose of section 147(b). It is urged, therefore, that the same position would be in the present context also and, therefore, the Commissioner has acted illegally in initiating the proceedings under section 263. It is, therefore, urged that on these premises, the order of the Commissioner may be quashed and the appeal of the assessee may be allowed. 11. The learned departmental representative, on the other hand, resists the submissions made on behalf of the assessee contending that the assessee's learned counsel has brought certain materials before us in the form of copy of the audit objection, etc., which might have been obtained by surreptitious means, as these matters are internal corresponding only for the department and it is not understood as to how the assessee managed to obtain the....
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....he Commissioner itself, which would indicate beyond doubt that the Commissioner has considered the facts and materials on record and has applied his mind to the same before giving the direction to the ITO as done by him in the present case. It is stressed that facts of the present case are distinguishable from those of the case of Jeewanlal (1929) Ltd. It is also submitted that the Commissioner can take into consideration any information from any source and, therefore, the contention of the assessee in this respect cannot be accepted at all. It is argued that the Commissioner has not considered any extraneous materials before coming to the conclusion that the order of assessment was erroneous and prejudicial. On the whole, it is urged that the appeal by the assessee on the point having no merits may be rejected. 14. We have heard both the sides and have perused the order of the authorities below for our consideration. We have also gone through the decisions in the cases relied on before us. We find that there is considerable force in the arguments made by the learned departmental representative that the ratio enunciated in the case of Sirpur Paper Mill Ltd., would not be applicabl....
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.... of CIT v. Electro House [1971] 82 ITR 824. That apart, the provisions of section 263 are machinery provisions and not charging provisions. It is true, fiscal statutes are to be construed strictly but not in respect of machinery provisions, as held by the Hon'ble Supreme Court in the case of CIT v. National Taj Traders [1980] 121 ITR 535. 16. We have perused the order of the Commissioner. We do not find any slight indication that he has acted mechanically only on the basis of the audit objection. Of course, the assessee has raised this point before the Commissioner, who did not accept the contention as the assessee's representative could not lay any evidence, documentary or otherwise, in support of the allegation. As stated earlier, the assessee's representative has placed before us copy of certain audit objection in order to strengthen the case of the assessee. But as objected by the learned departmental representative, these extraneous materials which were not before the Commissioner cannot be taken into consideration. This objection made on behalf of the revenue is valid. Even otherwise, for the sake of argument, there is no indication that the audit has directed the revenue au....
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....f the assessee. 19. Having regard to the entirety of the circumstances and facts of the case and keeping in view the ratio enunciated in the different decisions cited earlier, we are of the opinion that the Commissioner has assumed a proper jurisdiction under section 263, in the context of the present case before us. No interference is called for in this respect. 20. The assessee's learned counsel has taken up his arguments on merits also. It is pointed out that the assessee has been deriving income from its leasehold properties and during the year has taken up a foundry business for the first time by taking up a leasehold property having certain structures and in addition to those certain new structures were raised. It is his submission that even in such a situation, the entire expenditure should have been allowed as revenue expenditure relying on the decision of the Hon'ble Delhi High Court in the case of Instalment Supply (P.) Ltd. v. CIT [1984] 149 ITR 53 and also on the decision of the Hon'ble Allahabad High Court in the case of Girdhari Das & Sons. It is also submitted that the status of the assessee in the instant case is only that of a tenant and he was admittedly not the....