TMI Blog2006 (7) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... not the finding wrong and against law? 2. (a) Whether on the facts and in the circumstances of the case, the Tribunal is right in law and had materials to hold that it would not be correct to say that the machinery had not been put to use in the year ending March 31, 1991? 2. (b) Whether, on the facts and in the circumstances of the case, are there material and evidence for the Tribunal to find-'There is evidence to show that it was received in the estate on January 31, 1991'; 'it was on trial run for some time when the defect was noticed'; 'after making the repair the machinery was brought back to the estate when the invoice was issued' and are not the findings wrong and unsupported by evidence? 2. (c) Whether, on the facts and in the circumstances of the case the assessee is entitled to depreciation on fluid bed tea drier for the assessment year 1991-92 in the light of the finding of the Assessing Officer that the assessee had not put to use the assets during the previous year ending on March 31, 1991? 3. Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction under section 80HHC and under section 80-I before applying rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on May 15, 1991, only on which date the invoice for the sale was also issued. The Commissioner of Income-tax (Appeals) noticed that the receipt of machinery was entered in the assessee's books of account in the form of goods received note on January 31, 1991. Under such circumstance the Commissioner of Income-tax (Appeals) and later the Tribunal allowed the claim of the assessee. The Revenue has taken up the stand that there is no evidence on the part of the assessee to show that the machinery was brought to the premises on January 31, 1991. Further, it was pointed out that no invoice or a separate delivery note from the seller was obtained. Without any corroborative evidence, the Revenue took up the stand that it is not possible to substantiate the assessee's entry in its books on January 31, 1991, towards goods received note raised by the assessee itself. Further it was also pointed out that without a sale invoice it is not possible to consider the assessee as the owner of the machinery. Therefore, it was pointed out that the date of purchase of the machinery can be taken only as May 15, 1991, and, therefore, the assessee was not entitled for depreciation during the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yres Ltd. [1999] 237 ITR 706 (Ker) was a case where investment of the assessee in units of the UTI was in the course of business of manufacture and sale of tyres. While affirming the decision of this court on this point the apex court in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 held that the business of the assessee in buying and selling was an eligible business as contemplated under section 32AB of the Act. The Tribunal had found as a fact on material on record that the investment by the assessee in units of the UTI was in the course of business, and the manufacture and sale of tyres and the business of purchase and sales of units of the UTI were common in nature and both the businesses were intertwined and interlaced and, therefore, the sale of units was an "eligible business" within the meaning of section 32AB(2) of the Income-tax Act. The question as to whether the purchase and sale of the UTI bonds was in the course of business or not has to be decided by the taxing authority as a question of fact. The question as to whether the purchase of the UTI bond, REC bonds were in the course of business or not was not considered by the assessing authority in the instant case and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income of an assessee. Rule 8 creates a legal fiction, 40 per cent. deemed to be income liable to tax under rule 8 is chargeable income. The court, therefore, concluded that before applying the 40 per cent. rule, income should be first computed in accordance with the provisions of the Act, i.e., after allowing deductions including those encompassed by Chapter VI-A. This court held that a legal fiction is to be limited to the purposes for which it was created and should not be extended beyond the language of the section by which it is created. This court pointed out that rule 8 deals with two types of income, i.e., agricultural income and nonagricultural income at the ratio of 60:40 of the total income. After computing the total income, the same has to be bifurcated in the above manner. Therefore, the total income would necessarily mean the net income and not gross income. This court held that before the charging section is given effect to, taxable income must accrue and while computing the total income, all expenditure and other deductions and allowances must be taken into account. This court held that special deduction under section 80HHC must be granted before applying ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case the Tribunal is right in law in holding that for arriving at the written down value of the assets in the tea business, depreciation to the extent of 40 per cent. only was to be adjusted as the depreciation actually allowed? 4. (b) Whether, the Tribunal is factually right in upholding the contention that 'depreciation actually allowed was only 40 per cent.' and is not the finding wrong legally and factually?" In view of the decision of this court in CIT v. C. W. S. (India) Ltd. [2000] 246 ITR 278 these questions have to be answered in favour of the Revenue. This court in C. W. S. (India) Ltd.'s case [2000] 246 ITR 278 held that after computing the total income, the same has to be bifurcated in the ratio of 60:40 and the total income would necessarily mean the net income and not gross income. The income from tea estate is computed applying sections 28 to 43C, and when computing the income, depreciation of 100 per cent. is allowed under section 32 though for the purpose of charging of income under the Income-tax Act, rule 8 is applied and the income so computed is apportioned. The depreciation actually allowed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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