Commissioner of Income Tax vs Goyal Gases P. Ltd.

Kirpal, J.—The petitioner seeks reference of the following two questions of law to this court :

" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Commissioner of Income Tax had no jurisdiction to pass an order u/s 263?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the order passed by the Income Tax Officer was not prejudicial to the interest of the Revenue ?"

The assessed carried on the business of filling gas in the cylinders and supplying the same to the consumers. It buys gas from the suppliers and if the cylinders require repairs, the same are repaired by someone else but the expenses are incurred by the assessed. Furthermore, the customers are required to furnish security for the cylinders which are supplied to them.

The Income Tax Officer allowed depreciation on the cylinders and also allowed expenses incurred on its repairs. Furthermore, the Income Tax Officer did not tax Rs. 18,97,859 which was appearing in the assessed books of account as security deposit in respect of the gas cylinders.

The Commissioner of Income Tax issued notice and then passed an order u/s 263 holding that the order of the Income Tax Officer was erroneous and prejudicial to the interests of the Revenue on the aforesaid three counts. The orders of the Income Tax Officer was set aside and he was directed to make a fresh assessment.

In the appeal filed, the Tribunal came to the conclusion that the decision of the Commissioner was erroneous. Firstly, the assessed was not carrying on any manufacturing activity but nevertheless the cylinders were being used for its business activities and, Therefore, depreciation was allowable. Secondly, as far as repairs are concerned, the Tribunal had held that the repairs were in fact being carried not by the assessed but by a person who was competent to carry out the repairs though the expenses were incurred by the assessed. These expenses were clearly allowable as deduction. With regard to the security deposit, the Tribunal came to the conclusion that the decision of the Supreme Court in Commissioner of Income Tax, Punjab Jammu and Kashmir, Himachal Pradesh And Patiala Vs. Punjab Distilling Industries Ltd., was not applicable and the security deposit did not belong to the assessed as the money remained as that of the consumer. On the return of the cylinders, the security deposit was refundable. Therefore, the same was not a revenue receipt.

In our opinion, on the aforesaid conclusions of the Tribunal, no question of law arises and this petition is dismissed. No costs.

Petition dismissed.