Law: Income Tax Act, 1961

Section: 32,256,256(2)

Income-tax--Reference---Powers of High Court---High Court cannot frame new question---Depreciation allowed on finding that assets belonged to assessee but were leased out---High Court could not reframe question and consider whether lessee actually used assets---Indian Income Tax Act, 1961, Ss.32 & 256. There are two restrictions on the High Court exercising jurisdiction under section 256(2) of the Income Tax Act, 1961. The High Court cannot disturb the finding of fact recorded by the Tribunal and based on the material available before it. The High Court can reframe a question so as to bring out the real question of law arising from the order of the Tribunal but it cannot frame a new question or reframe a question in such a way as would amount to raising a new question which was not raised before the Tribunal: Held, dismissing the application to direct reference, (i) that it was not disputed that the business of the assessee in the relevant assessment year had been the leasing out of its assets including trucks, cylinders, photo-­composing and type setting machines. The finding of fact recorded by the Tribunal was that during the assessment year, the assessee was the owner of the assets and they were leased out. The tact that the assets were not actually used or were not capable of being put to use by the lessee might have been relevant for the purpose of finding out whether the transaction was colourable or not but it had no relevance so far as the finding of the assets having been used by the lessor (assessee) for the purpose of the business of leasing was concerned. The question whether depreciation could be allowed despite non-user of assets for business purposes, did not arise from the order of the Tribunal. It could not be referred to the High Court. (ii) That the second question related to gas cylinders. They were owned by the lessee but the ownership was transferred to the assessee during the assessment year and the lease had also taken place during the assessment year as found by the Tribunal. The question whether the Tribunal was correct in holding that delivery of movable property includes the user of the asset by the purchaser did not arise from…

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