Adithya Ferro Alloys P. Ltd., Karaikal V. DCIT, Thanjavur

CO 76/CHNY/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8665 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M NARAYANAN
• Keywords: Depreciation; Cost of acquisition; Condonation of delay; Bonafide mistake; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A. NO. 474/MDS/2013 & C.O. NO. 76/MDS/2013 (IN ITA NO. 474/MDS/2013) ASSESSMENT YEAR 2005-06 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-I, NO. 100, NANJIKKOTTAI ROAD, THANJAVUR 613 007. VS. M/S. ADITYA FERRO ALLOYS P. LTD., NO. 242/2, SURAKUDI VILLAGE, THIRUNALLAR, KARAIKKAL. [P AN : AADCA 7425 M] (APPELLANT) (RESPONDENT/CR OSS OBJECTOR) I.T.A. NOS. 840, 871 & 872/MDS/2013 ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-I, THANJAVUR. VS. M/S. ADITYA FERRO ALLOYS P. LTD., NO. 242/2, SURAKUDI VILLAGE, THIRUNALLAR, KARAIKKAL. [PAN : AADCA 7425 M] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB ASSESSEE BY : SHRI M. NARAYANAN DATE OF HEARING : 19-06-2013 DATE OF PRONOUNCEMENT : 26-06-2013 O R D E R I.T.A. NOS. 474 840 871 872 C.O.76-MDS-13 2 PER VIKAS AWASTHY, JUDICIAL MEMBER THE SET OF FOUR APPEALS I.E., ITA NOS. 47 4/MDS/2013 FOR A.Y. 2005-06, 840/MDS/2013 FOR A.Y. 2008-09, 871/MDS/20 13 FOR A.Y. 2009-10 AND 872/MDS/2013 FOR A.Y. 2010-11 HAVE BEEN FILED BY THE REVENUE AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-TIRUCHIRAPALLI DATED 31-12-2012 FOR TH E AFORESAID ASSESSMENT YEARS. THE ASSESSEE HAS FILED CROSS OBJ ECTIONS FOR THE A.Y. 2005-06. IN ALL THE AFORE MENTIONED APPEALS, THE COMMON ISSUE FOR ADJUDICATION IS: WHETHER THE PURCHASE COST OF CAST IRON INGOT MOULDS IS REVENUE OR CAPITAL IN NATURE? 2. THE REVENUE HAS FILED APPEALS FOR THE AYS. 2 008-09, 2009-10 AND 2010-11 WITH THE DELAY OF 40 DAYS. APPLICATION S FOR CONDONATION OF DELAY IN FILING OF APPEALS HAVE BEEN FILED BY TH E REVENUE. A PERUSAL OF THE GROUNDS FOR DELAY IN FILING OF THE A PPEAL SHOW THAT THE DELAY IN FILING OF THE APPEALS IS NOT INTENTIONAL O R WILFUL. THE DELAY HAS BEEN CAUSED DUE TO INADVERTENT FILING OF SINGLE APP EAL IMPUGNING THE ORDER OF CIT(APPEALS) FOR ALL THE FOUR AYS. WHEN T HE DEFECT WAS POINTED OUT BY THE REGISTRY OF THE TRIBUNAL, THE RE VENUE RECTIFIED THE DEFECT AND FILED SEPARATE APPEALS IN THE PRESCRIBED FORM 36 FOR DIFFERENT ASSESSMENT YEARS. IN THAT PROCESS, THERE WAS DELAY OF 40 DAYS IN FILING OF THE APPEALS. WE ARE SATISFIED TH AT THE DELAY IN FILING OF I.T.A. NOS. 474 840 871 872 C.O.76-MDS-13 3 THE APPEALS IS UN-INTENTIONAL AND HAS OCCURRED DUE TO BONAFIDE MISTAKE. IN THE INTEREST OF JUSTICE, THE DELAY IN FILING OF APPEAL NOS. 840/2013, 871/2013 & 872/2013 IS CONDONED. THE APP EALS ARE ADMITTED TO BE HEARD AND DECIDED ON MERITS. 3. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSE E IS MANUFACTURING TOR STEEL AND CTD BARS. THE ASSESSEE IS CONVERTING IRON SCRAP TO CAST IRON INGOT. FOR CONVERTING IRON SCRAP INTO CA ST IRON INGOTS, THE ASSESSEE IS USING CAST IRON MOULDS. THE CONTENTION OF THE ASSESSEE IS THAT THESE MOULDS AFTER ABOUT 30 TO 40 HEATS EIT HER BECOME OBSOLETE OR BECOME SCRAP ITSELF AS SOME TIMES INGOT S GET STRUCK IN THE MOULDS OR THE MOULDS DEVELOP CRACKS. ONCE THE MOUL DS BECOME WASTE/OBSOLETE THEY NEED TO BE SCRAPPED AND ARE USE D AS RAW- MATERIAL IN MANUFACTURE OF IRON INGOTS. THE ASSESS EE CLAIMED THE EXPENDITURE OF PURCHASE OF CAST IRON INGOT MOULDS A S REVENUE EXPENDITURE. THE ASSESSING OFFICER REJECTED THE CL AIM OF THE ASSESSEE AND HELD THAT THE MOULDS TO BE CAPITAL ASS ET AND ELIGIBLE FOR DEPRECIATION @ 50%. AGGRIEVED AGAINST THE ASSESSME NT ORDER FOR THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE FILED APP EALS BEFORE THE CIT(APPEALS)-TIRUCHIRAPALLI. I.T.A. NOS. 474 840 871 872 C.O.76-MDS-13 4 4. THE CIT(APPEALS) VIDE ORDER DT. 31-12-2012 D ECIDED ALL THE APPEALS FOR AYS 2005-06, 2008-09 2009-10 AND 2010-1 1 VIDE SINGLE ORDER. THE CIT(APPEALS) FOLLOWED THE DECISION OF T HE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1437/MDS/2009 FOR TH E AY. 2004-05 DECIDED ON 20-01-2011 AND ALLOWED THE APPEALS OF TH E ASSESSEE. AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), TH E REVENUE HAS COME IN APPEAL BEFORE US. 5. AT THE OUTSET, SHRI M. NARAYANAN, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE IN HAND IS SQUARE LY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1437/MDS/2009 FOR THE AY. 2004-05 DECIDED ON 20-01- 2011 AND ITA NOS. 826 & 827/MDS/2011 FOR AYS. 2007-08 & 2004-05 DECIDED ON 28-07-2011. THE LD. AUTHORISED REPRESENTATIVE (AR) PLACED ON RECORD THE COPY OF ORDER OF THE TRIBUNAL IN THE AFO RESAID APPEALS. THE LD. AR FURTHER SUBMITTED THAT FOR THE AY. 2005-06, THE ASSESSEE IS ASSAILING THE ORDER OF THE CIT(APPEALS) ON THE GROU ND THAT THE CIT(APPEALS) SHOULD HAVE CANCELLED THE ASSESSMENT O RDER AS THE REASONS FOR RE-OPENING DID NOT SURVIVE AT THE ASSES SMENT STAGE. ON THE OTHER HAND, SHRI SHAJI P. JACOB, RE PRESENTING THE DEPARTMENT FAIRLY CONCEEDED THAT THE ISSUE HAS ALRE ADY BEEN DECIDED I.T.A. NOS. 474 840 871 872 C.O.76-MDS-13 5 BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESS EES OWN CASE FOR THE AY. 2004-05 AND 2007-08. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RE PRESENTATIVE OF BOTH THE SIDES AND HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDERS OF THE TRIBUNAL RELIED UPON BY THE LD. AR OF THE ASSESSEE. A PERUSAL OF THE ORDER OF THE TRI BUNAL IN ITA NO. 1437/MDS/2009 FOR THE AY. 2004-05 DECIDED ON 20-01- 2011 SHOWS THAT THE ISSUE IN HAND HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL HAS HELD AS UNDER: WHEN WE EXAMINE THE NATURE OF MANUFACTURING PROCES S CARRIED OUT BY THE ASSESSEE AND THE SHELL LIFE OF THE MOULD S, WE FIND THAT ASSESSEE IS JUSTIFIED IN TREATING THE CONCERNED EXP ENDITURE AS REVENUE IN NATURE, FOR THE REASON THAT THE MOULDS D O NOT HAVE ENDURING LIFE. IN VIEW OF THE FINDINGS OF THE CO-ORDINATING BENCH OF THE TRIBUNAL WHICH HAVE BEEN SUBSEQUENTLY FOLLOWED IN ASSESSEES OWN CASE IN ITA NO. 826/MDS/2011 FOR THE AY. 2007-08, WE HOLD T HAT THE EXPENDITURE INCURRED ON PURCHASE OF CAST IRON INGOT MOULDS IS REVENUE IN NATURE. ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE CIT(APPEALS) AND DISMISS ALL THE FOUR APPEALS OF THE REVENUE. I.T.A. NOS. 474 840 871 872 C.O.76-MDS-13 6 7. AS REGARDS CROSS OBJECTION OF THE ASSESSEE F OR THE AY. 2005-06 IS CONCERNED, THE ONLY ISSUE RAISED IS REGARDING RE -OPENING. SINCE THE APPEAL FOR THE AY. 2005-06 HAS ALREADY BEEN DECIDED ON MERITS, THE CROSS OBJECTION HAS BECOME MERELY ACADEMIC. THE CR OSS OBJECTION IS ACCORDINGLY DISMISSED. IN THE RESULT, APPEALS OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY THE 26 TH JUNE, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIKA S AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 26 TH JUNE, 2013 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR