Itxa/740/2011 Of Commissioner Of Income Tax - 1 v. Cipla Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.740 OF 2011 The Commissioner of Income Tax, Central-1..Appellant.V/s.M/s. Cipla Ltd...Respondent. Mr. Suresh Kumar, for the Appellant.Mr. Nitesh Jasni with Ms. Saroj Jadhav i/b. Sanjay Udeshi & Co., for the Respondent. P.C:- CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 6[th] FEBRUARY, 2013. In this Appeal by the Revenue for the Assessment Year 1995-96 has raised the following question of law for our consideration. “(a)Whether on the facts and in the circumstances of the case and in law the ITAT is perverse in accepting the valuation of a 15 years old boiler at Rs.1.75 Crores which is 5 times the WDV and 3 times the original cost? (b)Whether on the facts and in the circumstances of the case and in law the ITAT was right in applying the ratio of Bombay Burmah Trading Corporation v/s. ACIT to the facts of the present case when the facts are different?”. 2(i)So far as question (a) is concerned, in the year 1979-80, M/s. Triveni Engineering Works Limited (M/s. Triveni Engineering) purchased two boilers at the costs of Rs.57.20 lakhs each. In the Assessment Year 1995-96, two boilers were sold to the Respondent-Assessee at the price of Rs.1.75 Crores per boiler as against its Written Down Value (WDA) at Rs.36.13 lakhs as reflected in the books of M/s. Triveni Engineering. On purchase, the Respondent-Assessee gave the boilers to M/s. Triveni Engineering on lease. The Assessing Officer by an assessment order under Section 143(3) of the Act disallowed the depreciation at 50% of the purchase price of the boilers claimed by the Respondent-Assessee as being a bogus transaction. (ii)In the first round of litigation between the Revenue and Respondent-Assessee, the Tribunal by order dated 24[th] March, 2008 came to a finding of fact that the purchase of the boilers by the Respondent-Assessee from M/s. Triveni Engineering was not bogus. However, the matter was remanded to the Assessing Officer to examine the valuation of the Boilers. In these proceedings, the Revenue challenges the valuation of the boilers at Rs.1.75 Crores 740-2011 paid per boiler by the Respondent-Assessee to M/s. Triveni Engineering. It is the case of the Revenue, the purchase price on proper valuation should be only the WDV i.e. Rs.36.13 lakhs per boiler as reflected in the books of M/s. Triveni Engineering. The Tribunal, by its impugned order dated 12[[th]] (iii)The Tribunal, by its impugned order dated 12[[th]]November, 2009 has while rejecting the contention of the Revenue held that valuation adopted on the basis of Valuation Report dated 1[st] March, 1995 is acceptable and proper. The valuation report dated 1[st] March, 1995 has arrived at fair market value of each of theboiler by adopting the method of replacement cost. This method of valuation on the basis of replacement costs is one of the accepted/recognized method of valuation as found by the Tribunal. The revenue has not contradicted the above finding before us or shown how and why the same is perverse. (iv)In these circumstances as the decision of the Tribunal is based on a finding of fact viz. Value of boilers, we do not entertain the proposed question of law (a). 3So far as question (b) is concerned, counsel of the Respondent states that the same does not arise. Further, the revenue has not shown how the decision of the Tribunal in the matter of Bombay S.R.JOSHI3 of 4 Burmah Trading Corporation v/s. ACIT is not applicable to the present facts. This is more so the issue stands concluded against the revenue as regards geniuness of the transaction and also the valuation. Thus, we do not entertain proposed question of law (b). 4 Accordingly, appeal is dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)