Itta/133/2003 Of The Commissioner Of Income Taxd I v. M/S Rathi Share And Stock Brokers Ltd

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDARAMI.T.T.A.No.133 of 2003 JUDGMENT: (Per LNR,J) The Revenue filed this appeal feeling aggrieved bythe order, dated 03.05.2002 passed by the HyderabadBench of the Income Tax Appellate Tribunal. The assessee is a stock broker. In its returns filedfor the assessment year 1995-96, it claimed depreciationon the stock exchange card. The Assessing Officerhowever refused to treat it as an asset and thereby didnot allow any depreciation. He made a prima facieadjustment under Section 143(1)(a) of the Income TaxAct, 1961 (for short ‘the Act’). Feeling aggrieved by theorder of Assessing Officer, the respondent filed anappeal before the Commissioner (Appeals) and thesame was dismissed on 26.03.1997. Therefore, it carriedthe matter in further appeal to the Tribunal. The appealwas allowed by the Tribunal through order, dated03.05.2002. Heard learned counsel for the appellant andlearned counsel for the respondent. Two questions arise for consideration. The first isas to whether the stock exchange card can be treatedas an asset and the answer to this question depends onthe question of allowing depreciation. At the relevantpoint of time, there was a serious debate as to whether astock exchange card can be treated as an asset. Therefore, the Assessing Officer ought to haveaddressed it on merits. The second is that a prima facie adjustment underSection 143(1)(a) of the can be made, only when theAssessing Officer does not doubt or dispute the factsand figures furnished by assessee in its returns. Oncehe entertains any doubt as to the acceptability or legalityof any particular item, the only alternative available forhim is to issue a notice under Sub-section (2) of Section143 of the Act and then to pass order under Sub-section(3) of that very provision. The disallowance of any claimirrespective of its merits under section 143(1)(c) isimpermissible in law. On both counts, the view taken bythe Assessing Officer was incorrect. The Tribunal hascorrected the mistake committed by the AssessingOfficer as well as the Commissioner. We do not find anybasis to interfere with the order. Therefore, the appeal is dismissed. The miscellaneous petition filed in this appeal shallalso stand disposed of. There shall be no order as tocosts. ____________________ L.NARASIMHA REDDY, J ______________________ CHALLA KODANDARAM, J Date: 26.11.2014JSU THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDARAM JSU I.T.T.A.No.133 of 2003 Date: 26.11.2014