The Commissioner Of Income Tax Tamil Nadu-Vii, Madras v. M/S.print Systems & Products

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANAND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA T.C.(A) No.85 of 2006 The Commissioner of Income TaxTamil Nadu-VII,madras..AppellantVs. M/s.Print Systems & Products,No.46, TTK Road,Chennai-600 018..Respondent Appeal under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Madras 'A' Bench dated27.3.2002 in ITA No.1279/Mds/93 for the assessment year 1988-89 (ITANo.90/91-92/SR.VII dated 27.1.1993 on the file of the Commissioner ofIncome Tax (Appeals) VII, Chennai-34 against PAN/GIR No.47-064-FN-1289dated 27.3.1991 on the file of the Deputy Commissioner of Income Tax,Special Range VII, Chennai) (Delivered by P.P.S.JANARTHANA RAJA, J.) The above tax case appeal is directed against the order of theIncome-tax Appellate Tribunal in ITA No.1279/Mds/93 dated 27.3.2002raising the following substantial questions of law:"1. Whether on the facts and in the circumstances of the case theIncome Tax Appellate Tribunal was right in law in deleting theaddition in respect of commission paid to sister concern underSection 40A(2) of the Income Tax Act, even though it isunreasonable and excessive?. 2. Whether on the facts and in the circumstances of the case theIncome Tax Appellate Tribunal was right in law in granting 100%depreciation on addition of temporary erections, even though the https://hcservices.ecourts.gov.in/hcservices/ property was acquired by the assessee and not taken on lease, thetemporary erection to be treated as capital expenditure incomputing the Income of the assessee.?" 2. The facts in nutshell are as under: The assessment year involvedin this appeal is 1988-89 and the corresponding accounting year ended on31.3.1988. The assessee is a registered firm consisting of threepartners. The assessee filed return of income on 24.2.1989 admitting anincome of Rs.19,42,330/-. The assessment was completed under Section 143(3) and the total income was determined at Rs.34,74,150/-. Whilecompleting the assessment, the assessing officer disallowed the commissionamount of Rs.2,00,000/- paid to M/s.Nippon Enterprises (South), a sisterconcern, and also disallowed the claim towards depreciation at 100% ofRs.4,50,815/- in respect of addition of temporary erection. Aggrieved bythe said order, the assessee filed appeal to the appellate Commissionerof Income Tax. The Commissioner of Income Tax(appeals) allowed theappeal. Aggrieved by that order, the Revenue filed appeal before theAppellate Tribunal. The Appellate Tribunal, following its earlier orders,dismissed the departmental appeal. 3. The learned Senior Standing counsel submitted that the Tribunalwas wrong in deleting the addition made by the assessing officer withreference to the provisions of Section 40A(2) of commission payment to thesister concern. Further it is stated that the assessee paid thecommission to its sister concern, which was unreasonable and excessive.The learned counsel also submitted that the temporary erection would haveto be treated as a Revenue expenditure and the Tribunal was wrong ingranting 100% depreciation. 4. We have heard the learned Senior Standing counsel for theappellant. 5. The findings given by the Tribunal were based on the records andevidence. The Tribunal, after considering the relevant materials came tothe conclusion that the commission payment was not found to beunreasonable and further found that the commission payment when comparedwith the commission offered by the other assessee in similar business at5% could not be said to be excessive. No further evidence or material wasproduced by the Revenue that the order of the Tribunal is unreasonable andunjust. 4. We have heard the learned Senior Standing counsel for theappellant. 5. The findings given by the Tribunal were based on the records andevidence. The Tribunal, after considering the relevant materials came tothe conclusion that the commission payment was not found to beunreasonable and further found that the commission payment when comparedwith the commission offered by the other assessee in similar business at5% could not be said to be excessive. No further evidence or material wasproduced by the Revenue that the order of the Tribunal is unreasonable andunjust. 6. In respect of the second question, the Tribunal has given findingthat the assessee had made temporary partitions, false ceiling and giventhe walls a coat of paint. The only objection of the Revenue was thatsince the property was acquired by the assessee and not taken on lease,the temporary erection would have to be treated as Revenue expenditure.The Revenue is not in a position to point out any Rule or Section tosubstantiate its claim that the assessee is not entitled to 100%depreciation on temporary erection. The ownership or taking the property on lease is of no consequence, so far as construction of a temporarypartition are concerned. So, the Tribunal, considering the relevantmaterials and evidence, came to the conclusion that the assessee wasentitled to 100% depreciation in respect of the addition on temporaryerection. This view has also been taken by the Tribunal in respect ofthe earlier assessment orders. 7. In view of the foregoing conclusion, we do not find any error orinfirmity in the order of the Tribunal and hence, the same does notwarrant any interference and no substantial questions of law arise forconsideration of this Court. Hence, we dismiss the above tax case. Nocosts. msk Sd/Asst.Registrar /true copy/Sub Asst.Registrar To1. The Assistant Registrar,Income Tax Appellate Tribunal,Rajaji Bhavan, III Floor,Besant Nagar, Chennai-90.2. The Commissioner of Income Tax,Tamilnadu-VII, Chennai. 3. The Commissioner of Income Tax (Appeals) VII,Chennai-34.4. The Deputy Commissioner of Income Tax,Special Range, VII, Chennai.1 cc To Mr.Pushya Sitaraman, Senior Standing Counsel for IT, SR.8102. JRG(CO)RVL 17.03.2006 TC (A) No.85 of 2006.