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2012 (10) TMI 332 - HC - Income TaxPurchase of catalyst of Plant & Machinery - Revenue v/s capital - whether Court has right to frame new or additional substantial question of law at the stage of hearing? - Held that:- A plain reading of sub-section (3) of Section 260A shows that at the time of hearing for admission of appeal in case High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. Sub-section (4) further provides that appeal shall be heard only on the question so formulated and the respondent be allowed to argue the case, be permitted to argue the case that no such substantial question of law is involved. In the present case, language of both substantial question of law framed on 20.4.2010 seems to be different than what has been used by the appellant which reveals that after considering the pleading on record the substantial question of law was formulated by the court itself. The first question relates to capital expenditure incurred in catalyst of enduring nature. However, the appellant during the course of hearing argued that expenditure incurred on catalyst as capital expenditure co-relate with the expenditure of machinery spares etc, which requires consideration under the proviso. Needless to mention that the CIT (Appeal) Lucknow in its order dated 22.3.2007 observed that to quote, “Furthermore the extent to which such spares & catalysts were utilized year to year, or were carried forward is unspecified. Yearly consumption and the circumstances leading them to be declared obsolete is not brought on record. Nor the manner in which the inventory is accounted. There is no sound logic for keeping catalysts ammonia etc. for so many years without use/disposal. The entire claim is without evidence. Catalysts & spares are specialized items and the writing off of such items after 18-5 years is irrational.” Thus, there is co-relation with the issue pertaining to the catalyst and spares. Now the proposed portion pertaining to spares may be admitted. Argument advanced that power may be exercised during the course of hearing carries weight. As per the proviso of sub-section 4 of Section 260 A High Court has got ample power to frame new or additional substantial question of law during the course of hearing if it is satisfied on its own or on the pointing out of either of the parties for the reasons recorded. The provision contained in sub-section 1,2,3 or sub-section 4 of Section 260 A shall not come in the way of the High Court to exercise power conferred by the proviso of Subsection 4. Thus the objection raised by assessee is overruled and rejected. Court has right to frame new or additional substantial question of law at the stage of hearing in pursuance to power conferred by the proviso of Sub- Section 4 of Section 260 A - list the present appeal immediately after three weeks for further hearing so that after hearing parties and subject to satisfaction and reasons recorded, additional substantial question of law may be framed - against assessee.
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