COMMISSIONER OF INCOME-TAX VS JAIPUR UDYOG LTD.
1999 P T D 2592
[227 I T R 345)
[Rajasthan High Court (India)]
Before V. K. Singhal and M.A.A. Khan, JJ
COMMISSIONER OF INCOME-TAX
Versus
JAIPUR UDYOG LTD.
D. B. Income-tax Reference No.83 of 1983, decided on 08/07/1996.
(a) Income-tax---
-AppellateTribunalPowers---Production of additional 'evidence--- Tribunal has power to, take fresh evidence--- May direct I.T.O. to take evidence if assessee prevented by-sufficient cause from producing evidence-- Where evidence directed to be adduced before Income-tax' Authorities, 'Tribunalcannot adjudicate matter on merits---Matter decided-on merits and f no casemade out that assessee, not given opportunity to produce evidence before I.T.O.--Tribunal not, justified to permit, assessee. To produce further evidence and to send case back to I.T.O. for examination of evidence-- Indian Income-tax (Appellate, Tribunal) Rules, 1963, R.29.
(b) Income-tax---
----Depreciation---Extra shift allowance---Extra shift Extra allowance equal to normal depreciation not to be allowed for full year in respect of assets used during year for more than 30 days but less than 180 days---Indian Income-Tax Act 1961, S.32.
The Tribunal has power under the income-tax (Appellate Tribunal) Rules, 1963, to take fresh evidence or it may direct the Income-tax Officer to take evidence if the assessee was prevented by sufficient cause fromproducing the evidence .
From a perusal of rule 29 of the income-tax (Appellate Tribunal) Rules, 1963, it is evident that the Tribunal can require any document to be produced or, any, entries to be examined or any affidavit to be filed, to enable it to pass orders or for any other substantial cause or if the Income-tax Authorities have decided the case with out giving sufficient opportunity to theassessee to adduce evidence.
In a particular case were evidence is directed to be adduced before the Income-tax Authorities, it is not expected of the Tribunal to adjudicate the matter on the merits. The only proper course for it is to send the case back to the. Income-tax Authorities for taking evidence on record and passingorders in accordance with law.
Held on the facts, that no finding was recorded by the Tribunal that sufficient opportunity was not given to the assessee to adduce evidence. In the instant, cane the matter had been decided on the merits and a case was not made out that, the assesseewas not given opportunity to produce evidence before the Income-tax Officer. The matter had been considered on the merits and, thereafter, there remained no justification for sending the case back to the Income-tax Officer for examining, the evidence and to take further evidence, which; the assessee might adduce. The assessee hadopportunity toadduce evidence -even Wore the Tribunal, but no such evidence wasproduced Therefore the Tribunal was not justified to permit the assessee to produce further evidence and to send the case back to the Income-tax Officer for examination of evidence. Further, the Tribunal was not justified in restoring the issue to the Income-tax Officer and in directing that in case, on some fresh evidence, the Income-tax Officer thought otherwise, he might re -examine the issue:
Held also, that the Tribunal was not justified in holding that extra shift allowance equal to normal depreciation should be allowed for the full year in respect of the assets which were used during the year for more than 30 days but less than 180 days. .
CIT v. Jaipur Udyog Ltd. (1997) 225 ITR 1053 (Raj.) fol.
G.S. Bapna for the Commissioner.
N. M. Ranka for the Assessee.
JUDGMENT
V. K. SINGHAL, J.---The Income-tax Appellate Tribunal has referred the following questions of law arising out of its order, dated April 3, 1981, in respect of the assessment year 1970-71:
"(1) Whether having confirmed the disallowance of garden expenses of Rs.3,06,723, the Tribunal was justified to permit the assessee to produce further evidence and to send the case back to the Income tax Officer for examination of evidence?
(2) Whether having confirmed the disallowance of depreciation on building at Bijawasan Garden, New Delhi, and on electric and water installations therein, the Tribunal was justified in restoring the issue to the Income-tax Officer and in directing that in case, on some fresh evidence, the Income-tax Officer thinks otherwise, he may re-examine the issue?
(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that extra-shift allowance equal to normal depreciation should be allowed for the full year in respect of the assets which were used during the year for more than 30 days but less than 180 days?"
The brief facts of the case as found by the Tribunal are that an expenditure of Rs.4,67,250 was claimed by the assessee for maintaining the lawns, parks and gardens in respect of Sawai Madhopur, Jaipur, New Delhi and Calcutta. So far as Calcutta and Delhi are concerned, the Income-tax Officer was of the view that no garden was maintained at Calcutta, and the garden at Delhi was not for the purpose of the business. Therefore, the entire expenditure was disallowed. For Jaipur and Sawai Madhopur, the Income-tax Officer allowed a sum of Rs.30,000 and Rs.25,000, respectively, out of Rs.92,349 and Rs.46,209. The rest of the expenditure was disallowed. Following the order for the assessment year 1968-69, the Appellate Assistant Commissioner allowed 50 per cent. of the expenditure incurred by the assessee for the gardens at Sawai Madhopur and Jaipur.
The Tribunal found that in Calcutta the assessee maintains no garden and the expenditure of Rs.1,824 pertains to the purchase of certain plants, etc. The disallowance of expenses pertaining to Sawai Madhopur, Jaipur and Calcutta were confirmed by the Appellate Assistant Commissioner to the extent of 50 per cent on the basis of his earlier order, and as such the Tribunal confirmed the same. In respect of Delhi, it was found that the assessee has a garden in Bijwansan, near Delhi Airport. The company's office is said to be located in Connaught Place, New Delhi, and from the said office premises the distance of the garden would be more than 20 Kms. The garden at Bijwansan is in no way connected with the business of the assessee. The assessee could not show that during the relevant assessment year the employees of the assessee alongwith their families visited the said garden. The maintenance of such garden at such a huge cost was considered to be inexpedient. It was open to the general public and was not connected or related to the business of the assessee and was not even necessary for the purpose of the business of the assessee. The utility and usefulness of the said garden to the assessee could not be inferred from the record, it was considered that the expenditure pertaining to this garden was rightly disallowed and such disallowance was correctly confirmed by the Appellate Assistant Commissioner. The assessee contended that the entire evidence could not be placed on record and for that reason it was observed that if the Income-tax Officer considered that the garden is put to some business use the matter could be re-examined. According to the view of the Tribunal, the garden was not relatable to the business of the assessee.
The assessee claimed depreciation on the building at Bijwasan garden, Delhi, and electrical and water supply installations in the same garden. The rate of depreciation was also contested. Since it was found that it was in no way connected with the business of the assessee, the assets of the garden are not entitled for depreciation.
In respect of the claim for extra-shift allowance it was found that the extra shift allowance can under no circumstance be mere than the normal allowance. The claim of the assessee was based on the ground that full extra shift allowance equal to the normal depreciation allowable for the full year in respect of assets installed and used during the year for more than 30 days, but less than 180 days, should have been allowed. Emphasis was laid on column No.3 against Item No. III of Part I of Appendix I to the Income Tax Rules, 1962, as they stood during the accounting period relevant to the assessment year 1967-68. It was stated that where the use of assets is for more than 30 days, but less than 180 days, extra-shift allowance should have been allowed equal to thenormal allowance for the full 'year since the concern worked for the full Year and not at the rate of 50 percent.
So far as questions Nos.1 and are concerned it may bye observed that the Tribunal has power under the Income Tax Rules to take fresh as evidence or' it' may direct the Income tax officer to take evidence if the n tile evidence assessee is Prevented by sufficient cause from producingthe evidence Rule 29 of the Income-tax (Appellate' Tribunal) Rules 1963 reads as under see (1973) 92, ITR (St.) 7]
"29.The parties to the appeal shall notbe entitledto produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any, affidavit to be filed enable it topass order or for any other substantial cause or lf the income-taxauthorities have decided the case without giving sufficient opportunityto the assessee to adduce evidence either on points specified by them or, not specified by :them the Tribunal, for reasons to be recorded, may allow such document to be produced or affidavit tobe filed or may, allowsuch evidence to be adduced. "
From a perusal of the above We it is evident that the Tribunal-require any document to be produced or any witness to be examine or any affidavit to be filed to enable it to pass orders or for any other substantial if the Income-tax Authorities have decided the case without giving sufficientopportunity to the assessee to adduce evidence. No finding is recorded by; the Tribunal that sufficient opportunity was not given to the assessee to ^adduce evidence. In a particular case where the evidence is.: directed to be adduced before the Income-tax Authorities it is not expected to be Tribunal to, adjudicate the matter on ,the merits. The only proper course for it was 'to send the case back to the Income-tax. Authorities for taking Evidence oil record and pass order in, accordance with, law. In the pre, sent matter; the matter has been decided on the meritsand a case was :notmade out that the assessee was not given opportunity-, to produceevidence before the Income-tax Officer. The matter has been considered on the merits' anti thereafter -- there remains ' no justification -for sending the case` back' to the-Income-tax Officer for examining the evidence and to take furtherevidenceWhich the asses see may adduce. The assessee had 'opportunity to adduce evidence even before theTribunal. No such evidence was produced.
We are therefore of the opinion that the, Tribunal was not justified permit: the assessee to produce further evidence and to send the case-back to the Income-tax Officer for examination of evidence. We are further of the view that the Tribunal was not justified in restoring they issue to the, income-tax Officer and in directing that in case onsome fresh evidence, the, incometax, Officer thinks other Wise he may re-examine the, issue.
So far as question No.3 is concerned, it has already been decided by this Court in the case of the assessee in D.B. Income-tax Referenee.No.30 of., 1983 (CIT v. Jaipur Udyog Ltd., decided on July 5, 1996---since reported in (199`7) 22S'1TR 053f.'tqllowing`tliat decision, we are of the view that the Tribunal was not justified in holding that extra-shift allowance equal to normal depreciation should be allowed for the full year inrespect of tire` assets which were used during the year for more than 30 days but less than Consequently, the reference is answered in favour of the Revenue and against the assessee. No order as to costs
M.B.A./2029/FC Reference answered.