2008-VIL-571-P&H-DT
Equivalent Citation: [2010] 327 ITR 142 (P&H)
PUNJAB AND HARYANA HIGH COURT
123 of 2008
Date: 21.11.2008
COMMISSIONER OF INCOME-TAX
Vs
ARIHANT COTSYN LIMITED
Rajesh Sethi for the appellant.
BENCH
ADARSH KUMAR GOEL and L.N. MITTAL JJ.
JUDGMENT
The judgment of the court was delivered by
1. Adarsh Kumar Goel J.-The Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench "A" Chandigarh passed in I. T. A. No. 787/Chandi/2002 dated June 27, 2005, for the assessment year 1996-97, proposing to raise substantial questions of law :
"(i) Whether on the facts and law, the hon'ble Income-tax Appellate Tribunal was justified in ignoring the respondent as only a manufacturer as it did not have the object of earning commission and service charges as per the memorandum of articles of the respondent company ?
(ii) Whether on the facts and law, the hon'ble Income-tax Appellate Tribunal was justified in ignoring the proviso to section 43A of the Income-tax Act, in respect of liability on account of foreign exchange rate fluctuations on the basis of the time of actual payment ?"
2. The assessee, in its business income, included income from commission and service charges. The Assessing Officer, however, assessed the said part of the income as income from other sources on the ground that business of the assessee was not to earn commission or to provide service. The claim of the assessee for depreciation was allowed to the extent of increase in price due to fluctuation in foreign exchange rates resulting in increase in the price of the machinery. The Assessing Officer held that since actual payment was not made for the increased price, the assessee was not entitled to the said benefit.
3. The Commissioner of Income-tax (Appeals) allowed the claim of the assessee on both the counts, which order has been affirmed by the Tribunal. It was held that income from commission and service charges was business income and the same could not be treated to be income from other sources. The Commissioner of Income-tax (Appeals) followed the decision in the case of the assessee for the previous year.
4. As regards the claim for higher depreciation on account of increase of prices due to fluctuation in foreign exchange rate, the Tribunal held as under :
"6. . . . In our considered view, the assessee is entitled to adjust the cost of acquisition in accordance with the provisions of section 43A and all the consequences as provided under the said section will follow notwithstanding there not being any direction by the appellate authority in this regard. Thus, we see no infirmity in the order of the Commissioner of Income-tax (Appeals) in having directed the Assessing Officer to give effect to the provisions of section 43A. .
5. We have heard learned counsel for the appellant.
6. As far as question No. (i) is concerned, there is nothing to show that order on which the impugned order is based has been challenged by the Revenue. Moreover, it cannot be held that merely because the assessee is a manufacturer, it cannot have business income from commission or service charges.
7. Question No. (ii) can also not be held to be a substantial question of law in view of statutory provisions of section 43A.
8. Accordingly, the appeal is dismissed.
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