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COMMISSIONER OF INCOME TAX-II Versus HYNOUP FOOD AND OIL INDUSTRIES LIMITED

2016 (8) TMI 110 - GUJARAT HIGH COURT

Allowance of process loss in Sun Flower Oil - ITAT allowed the claim - Held that:- Tribunal has considered the facts on record. Several relevant factors have been examined. These facts included uncertainty of the nature of business and fluctuating nature of process loss. By the very nature of things, the business of assessee depended on quality of cotton seed oil procured from the market. Such cotton seed oil depending on quality of cotton produced being an agricultural commodity, naturally qual .....

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ided in favour of assessee. - Depreciation on trucks given on hire - Held that:- As the trucks were not used in the business of running them on hire, the Tribunal was not right in allowing depreciation at the rate of 40% by reversing the order of the Commissioner (Appeals). The depreciation on trucks ought to have been restricted to 25% as has been rightly granted by the Assessing Officer which has been confirmed by the Commissioner (Appeals). - Decided in favour of revenue. - TAX APPEAL NO. .....

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ppeal partly by reversing the decision of the Commissioner of Income-tax (Appeals) which confirmed the order of the Assessing Officer not giving depreciation on trucks which were not used for the purpose of running of business. 3. While admitting the appeal, this court framed the following substantial questions of law: (A) Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by the CIT(A) and allowing process loss in Sun Flower Oil as claimed by the assessee? .....

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question no.1, at the outset, it needs to be noted that against the order of the tribunal in case of this very assessee respondent for the same issue, for the assessment year 19901991, the Revenue chose to approach this Court by preferring Tax Appeal No.10/2001 where identical question of law, as raised in present tax appeal, was admitted and has been decided by this Court in favour of the assessee and against the Revenue in the following manner : 9. Quite apart from the above observations, we .....

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d from crushing cotton seed by ginning factories. Cotton seed is an agricultural commodity. The quality of cotton seed would certainly impact the raw cotton seed oil and consequently refined cotton seed oil. Quality of raw material would depend on several factors such as rainfall, quality of soil and other such factors. It was also noted that if the raw cotton seed oil is obtained from crushing of inferior quality of cotton seed, then the process loss was likely to be higher, but Gross Profit ra .....

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were noticed. Tribunal also relied on the report of one M/s. Vulcl laval, supplier of machinery to the assessee for manufacturing of refined cotton seed oil who had stated that process loss is typically found depending on the quality of raw cotton seed and functioning of the plant and would normally range between 2.65% to 4.20%. It can thus be seen that the tribunal based its findings on several factors and came to the conclusion that without any evidence or base the Assessing Officer could not .....

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uality of cotton produced being an agricultural commodity, naturally quality would depend on the seeds used, the technique employed by farmers for production, soil, rainfall, irrigation and so on. In absence of any additional material, only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. Tribunal had also relied on certificate given by the supplier of machine who st .....

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o far as issued No. 2 is concerned, the learned counsel for the appellant has taken us through paragraph No. 6.5 of the assessment order at page No. 24 which is extracted hereinbelow: The assessee has claimed depreciation at the rate of 40% on trucks purchased and used for the assessee s business at ₹ 9,86,084/-. Scrutiny of the details and explanation filed by the assessee shows that the trucks acquired by the assessee in the earlier years are not used in the business of running them on h .....

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er. The other transportation charges and hire charges shown under the head other income are only incidental to assessee s own business as received from one of sister concern of assessee M/s. Maruti Roadways. Therefore, the trucks are not being used in the business of hiring of vehicles to others. In the circumstances depreciation at higher rate is not allowable to the assessee and accordingly restricted to 25% of W.D.V. The disallowance on this score comes to ₹ 3,69,782/-. Depreciation is .....

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essee, the Commissioner of Incometax (Appeals) discussed the issue in detail and confirmed the view taken by the Assessing Officer that since the trucks were not being used for hire purpose, the assessee is not entitled to claim depreciation at the rate of 40%. The Assessing Officer, therefore, rightly restrict the claim to 25%. 8. In further appeal before the Tribunal by the assessee, the Tribunal reversed the order of the Commissioner of Income-tax (Appeals) by making certain observations in p .....

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at the Tribunal has committed serious error in reversing the order of the Commissioner of Income-tax (Appeals) in view of the decision of the Apex Court in the case of Commissioner of Income-tax v. Gupta Global Exim P. Ltd. reported in (2008) ITR 132(SC) wherein it was held as follows: Setting aside the decision of the High Court and remanding the matter for fresh decision to the Commissioner (Appeals), that a neat question of law arose in the matter. Under item (2)(ii) of heading III in Appendi .....

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