DCIT, Circle-17(1), Hyd, Hyderabad V. East India Petroleum Pvt.Ltd., Hyd, Hyderabad

CO 49/HYD/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3149 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: P MURALIKRISHNA
• Keywords: Capital asset; Depreciation; Cost of acquisition; Capital receipt
• Section: 143(3)

Judgement Text

ITA NO 876 AND CO 49 OF 2015 EAST INDIA PE TROLEUM P LTD HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.876/HYD/2015 (ASSESSMENT YEAR: 2008-09) DCIT CIRCLE 17 (1) HYDERABAD VS M/S. EAST INDIA PETROLEUM PRIVATE LIMITED HYDERABAD PAN: AAACE 4494 K (APPELLANT) (RESPONDENT) C.O. NO.49/HYD/2015 (ARISING OUT OF ITA NO.876/HYD/2015) (ASSESSMENT YEAR: 2008-09) M/S. EAST INDIA PETROLEUM PRIVATE LIMITED, HYDERABAD PAN: AAACE 4494 K VS DCIT CIRCLE 17 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. SUMAN MALIK, DR FOR ASSESSEE: SHRI P. MURALI KRISHNA O R D E R PER SMT. P. MADHAVI DEVI, J.M. THE APPEAL IS FILED BY REVENUE FOR THE A.Y 2008-09 AGAINST THE ORDER OF THE CIT (A)-5, HYDERABAD, DATE D 27.03.2015 AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE. DATE OF HEARING : 13.09.2017 DATE OF PRONOUNCEMENT : 22.09.2017 ITA NO 876 AND CO 49 OF 2015 EAST INDIA PE TROLEUM P LTD HYDERABAD. PAGE 2 OF 4 2. IN THIS CASE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y 2008-09, THE ASSESSEE HAS F ILED A REVISED COMPUTATION OF INCOME, CLAIMING THAT THE PRINCIPAL WAIVER AMOUNTING TO RS.9,26,00,305/- WAS BY MISTAKE OFFERE D TO INCOME AND CLAIMED THAT SINCE THE SAID AMOUNTS RECEIVED AR E CAPITAL IN NATURE, THE SAME CANNOT BE TAXED. AS THE ASSESSEE H AS NOT MADE THE CLAIM IN THE RETURN OF INCOME, RESPECTFULLY FOL LOWING THE DECISION OF THE APEX COURT IN THE CASE OF GOETZE IN DIA LTD. VS (284 ITR 323), THE SAME HAS BEEN REJECTED BY THE ASSESSI NG OFFICER. ON AN APPEAL, THE CIT (A), VIDE ORDERS IN ITA.NO.0344/ DC- 2(2)/CIT(A)-III/2011-12, DT.24-12-2012 HAS STATED T HAT THE ASSESSEE OBTAINED THE LOAN FOR THE PURCHASE OF MACH INERY AND IT WAS A CAPITAL RECEIPT AB-INITIO. THE CIT (A) FURTHER, DIRECTED ASSESSING OFFICER TO CONSIDER THE COST OF ACQUISITI ON OF THE CAPITAL ASSETS CONNECTED TO THIS LOAN AMOUNT AS ZERO AND DI SALLOW DEPRECIATION IN ALL THE YEARS STARTING FROM THE YEA R IN WHICH THE ASSETS WERE ACQUIRED. FOLLOWING THE DECISION OF THE CIT (A), THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE DEPRECIATION SHOULD NOT BE DISALLOWED ON THE SAID AMOUNT. 3. THE ASSESSEE SUBMITTED ITS REPLY, BUT THE AO WAS NOT CONVINCED WITH THE SAME AND COMPLETED THE ASSESSMEN T U/S 143(3) R.W.S. 147 OF THE ACT, AGAINST WHICH THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO DELETED THE ADDITI ON BY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF TATA IRON & STEEL CO. LTD (281 ITR 285) (S.C) WHEREIN IT WAS HELD THAT THE WAIVER OF LOAN ON SUBSEQUENT DATES WILL NOT AFFECT THE COST OF ASSETS. AGAINST THIS ORDER, THE REVENUE IS IN APPEA L BEFORE US AND THE ASSESSEE IS IN CROSS OBJECTION STATING THAT THE CIT (A) OUGHT TO ITA NO 876 AND CO 49 OF 2015 EAST INDIA PE TROLEUM P LTD HYDERABAD. PAGE 3 OF 4 HAVE GIVEN A CATEGORICAL FINDING THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SAHARANPUR ELECTRIC CO . LTD VS. CIT, REPORTED IN 194 ITR 294 HAS NO APPLICATION TO THE F ACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI P. MURALI KRISHNA, SUBMITTED THAT THE EARLIER PROCEEDINGS OF THE CIT (A) DATED 24.12.2012 HAD BEE N CHALLENGED BY BOTH THE ASSESSEE AS WELL AS THE REVENUE BEFORE THE TRIBUNAL IN ITA NO.235/HYD/2013 AND C.O NO.18/HYD/2013 AND THAT THE CROSS OBJECTION WAS RAISED BY THE ASSESSEE AGAINST THE DIRECTION OF THE CIT (A) TO REOPEN THE ASSESSMENT FOR THE EARLIE R A.YS AND REDUCE THE DEPRECIATION AFTER REDUCING THE COST OF ASSETS, THE TRIBUNAL VIDE ORDERS DATED 29.07.2015 HAS UPHELD TH E CONTENTION OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD V S. CIT REPORTED IN 261 ITR 501 WHEREIN IT HAS BEEN HELD TH AT THE AMOUNT OF WAIVER IS NOT ASSESSABLE U/S 28(IV) AND HENCE TH ERE IS NO REMISSION OF LIABILITY AND THE AMOUNT IS NOT ASSESS ABLE U/S 41(1) OF THE ACT AND THEREFORE, THE WAIVER OF LOAN DOES N OT REDUCE THE COST OF ACQUISITION OF THE PLANT & MACHINERY AND TH EREFORE, THERE IS NO QUESTION OF REDUCING THE DEPRECIATION ON SUCH PLANT & MACHINERY. THEREFORE, ACCORDING TO HIM, THE PRESENT APPEAL OF THE REVENUE DOES NOT SURVIVE. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE PRESENT PROCEEDINGS ARE CONSEQUENT TO THE PROCEEDINGS OF THE CIT (A) DATED 24.12.2012 WHI CH HAS SINCE BEEN NEGATED BY THE TRIBUNAL VIDE ORDER DATED 29.07 .2015. IN ITA NO 876 AND CO 49 OF 2015 EAST INDIA PE TROLEUM P LTD HYDERABAD. PAGE 4 OF 4 VIEW OF THE SAME, WE HOLD THAT THE ASSESSMENT PROCE EDINGS AND ALSO THE CONSEQUENTIAL APPELLATE PROCEEDINGS ARE NO T SUSTAINABLE. SINCE THE REVENUES APPEAL IS DISMISSED, THE ASSESS EES CROSS OBJECTION ALSO DOES NOT SURVIVE AND IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, BOTH THE REVENUES APPEAL AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 22 ND SEPTEMBER, 2017. VINODAN/SPS COPY TO: 1 DCIT, CIRCLE 17(1), 6 TH FLOOR, B BLOCK, I.T. TOWERS, AC GUARDS, HYDERABAD 2 M/S. EAST INDIA PETROLEUM P LTD, 202, ROXANA TOWE RS-B, 7-1- 24/1 GREEN LANDS, BEGUMPET, HYDERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER