Allowed

The Commissioner of Incometax Hyd v. Diamond Hatcheries Hyd

Telangana HC24 Sept 2014ITTA/44/2003

Case brief

AI extract

What is this about?

The Tribunal allowed an appeal where a hatchery claimed depreciation on its building as part of plant and machinery. The current court quashed this order, holding that buildings cannot be treated as part of plant and machinery, citing a Supreme Court decision, and remitted the matter to the Assessing Officer.

What did the court decide?

Orders passed by the Commissioner and the Tribunal are set aside; the matter is remitted to the Assessing Officer.

The Commissioner of Incometax Hyd Vs Diamond Hatcheries Hyd — Income Tax | Telangana HC (2014)

¶1

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE T.SUNIL CHOWDARY I.T.T.A.No.44 of 2003

¶2

JUDGMENT: (Per LNR,J)

¶3

This appeal under Section 260-A of the Income Tax Act,1961 is filed by the Revenue feeling aggrieved by the order, dated 19.09.2000 passed by the Hyderabad ‘A’ Bench of the Income Tax Appellate Tribunal in I.T.A.Nos.470/Hyd/96 referable to assessment years 1991-92.

¶4

The respondent is a Hatchery functioning at Hyderabad, and is assessed to tax. In the returns submitted by it, for the assessment year referred to above, it claimed depreciation on the building by describing it as part of plant and machinery. The Assessing Officer disallowed the same. However, the appeal preferred before the Commissioner of Income Tax (Appeals) was allowed. Thereupon, the Department filed appeal before the Tribunal. The appeal was dismissed through order, dated 19.09.2000.

¶5

Heard Sri S.R.Ashok, learned senior standing counsel for the appellant and Sri Challa Gunaranjan, learned counsel for the respondent. There is some uncertainty as to whether the building in which poultry or hatchery is established is part of plant and machinery. T h e Hon’ble Supreme Court in Commissioner of Income Tax vs. Padmavathi Hatcheries Private Limited^[1] took the view that the building of that nature cannot be treated as part of plant

¶6

and machinery. Whatever may have been the circumstances under which the Commissioner and the Tribunal have taken a different view, once the Supreme Court held that the building cannot be treated as part of plant and machinery, the view taken by them cannot be sustained in law.

¶7

Hence, the appeal is allowed and the orders passed by the Commissioner and the Tribunal are set aside.

¶8

It is urged before us that the impact of tax is minimal and in fact, the respondent has posted losses. If that be so, it is a matter to be taken into account by the Assessing Officer. Except that we have decided the principle, we did not quantify the tax liability. The Assessing Officer shall take relevant facts into account, while passing the consequential orders.

¶9

The miscellaneous petition filed in this writ appeal shall also stand disposed of. There shall be no order as to costs.

¶10

____________________ L.NARASIMHA REDDY, J

¶11

____________________ T.SUNIL CHOWDARY, J

¶12

Date: 24.09.2014 JSU

¶13

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND

¶14

THE HON’BLE SRI JUSTICE T.SUNIL CHOWDARY