As assessee in bona fide belief gifted coupons as momentos, thus no penalty, HC

Facts in Brief:

1. The appellant is in the business of manufacture of automobile components. In respect of replacement of plant and machinery, which is a part of the continuous manufacturing system, the appellant claimed a sum of Rs.71,07,022/= as revenue expenditure and further claimed 100% depreciation on certain items on the ground that all the items are energy saving devices.

2. The Assessing Officer, however, held against the assessee/appellant, against which the appellant moved the CIT (Appeals), who on consideration of the matter, allowed the appeal in part.

3. Aggrieved against the said portion of the order, which went against it, the appellant/assessee preferred appeal to the Tribunal, which was dismissed, confirming the order of the CIT (A).

On appeal HC held as under:

4. In Chandra Bihari Gautam v. State of Bihar [2002] 9 SCC 208 the Supreme Court has held as under :—

5. Time and again it has been held by this Court that no interference would be made with the concurrent finding of fact based on pure appreciation of evidence even if this Court was to take a different view on the evidence. The Court will normally not enter into reappraisal or the review of evidence unless the trial court or the High Court is shown to have committed an error of law or procedure and the conclusions arrived at are perverse.

6. This Court cannot enter into the credibility of the evidence with a view to substitute its opinion for that of the High Court. This Court may interfere where on proved facts wrong inferences of law are shown to have been drawn. It needs to be emphasized that this Court is not a regular court of appeal to which every judgment of the High Court in a criminal case may be brought up for scrutinizing its correctness.

7. It is only in a rare or exceptional case where there is some manifest illegality or grave or serious irregularity that the Court would interfere with such findings of fact. In this regard reference may be made to the judgments of this Court in Duli Chand v.Delhi Admn., Ramaniklal Gokaldas v. State of Gujarat, Dalbir Kaur v. State of Punjab andRamanbhai Naranbhai Patel v. State of Gujarat, etc."

8. Keeping the above position of law in mind, even a cursory look at the order passed by the Tribunal would manifestly reveal that the Tribunal, on the issue of depreciation, after going through the orders of the lower authorities was of the view that the view taken by the CIT (Appeals) is correct on facts. Such being the factual scenario, in the absence of any specific material on the legal issue, disputing the manner in which the issue of depreciation was considered, we are not inclined to go into issues on facts as projected by the appellant/assessee. Accordingly, the 2nd substantial question of law is answered in favour of the Revenue and against the assessee.

9. Insofar as the first question of law is concerned, learned counsel appearing for the appellant pleads that the issue should be remanded back to the CIT (Appeals) to consider whether replacement of plant and machinery would be a case of revenue expenditure or capital expenditure. Similar issue, it appears, has been considered by this Court in the case of Super Spinning Mills Ltd. v. Asstt. CIT [2013] 357 ITR 720/218 Taxman 125/37 taxmann.com 290 wherein, this Court, following the decision of the Supreme Court in CIT v. Sri Mangayarkarasi Mills (P.) Ltd. [2009] 315 ITR 114/182 Taxman 141 remanded the matter back to the CIT (Appeals) for consideration and pass detailed orders. The relevant portion is extracted hereinbelow for better clarity :—

10. Even though the assessee has furnished list of items chart, the data which are available before us were not available before any of the appellate authorities for coming to the right conclusion herein. Thus, with no details available as stated in the case of CIT v. Ramaraju Surgical Cotton Mills reported in [2007] 294 ITR 328 (SC), the decision of the Tribunal cannot be held as based on any material data necessary for considering the claim one way or the other. Hence, the proper course herein is to set aside the order of the Income-tax Appellate Tribunal and remit the matter back to the Commissioner of Income-tax (Appeals) for de novo consideration.

11. Keeping in view the law declared by the apex court in the case of CIT v. Ramaraju Surgical Cotton Mills reported in [2007] 294 ITR 328 (SC) and in the case of CIT v. Sri Mangayarkarasi Mills P. Ltd. reported in [2009] 315 ITR 114 (SC) ; [2009] TIOL-86-SC-II, the Commissioner of Income-tax (Appeals) shall grant an opportunity to the assessee to state its case in a proper perspective and decide on the issue as to whether the expenditure, in effect, could be treated as "revenue expenditure".

12. We direct the Commissioner of Income-tax (Appeals) to pass a detailed order on the impact of the replaced material as well as the functioning of the machinery after hearing the assessee in detail, who, we hope, would extend all cooperation before the Commissioner of Income-tax (Appeals) and furnish the materials for arriving at a proper conclusion.'

13. Following the abovesaid ratio, without going into the first substantial question of law as raised above, this Court is of the considered opinion that the matter has to be remanded back to the CIT (Appeals) for reconsidering the issue. Accordingly, on the first issue, the matter is remanded back to the CIT (Appeals) for consideration and passing detailed orders.

14. In the result, the appeal is partly allowed by way of remand. However, in the circumstances of the case, there shall be no order as to costs.