Sundar Sons (India) Exports, Salem V. DCIT, Salem

CO 98/CHNY/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7337 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIK RAMADITYA SR
• Assessee Lawyers: D MANOHAR
• Keywords: Reopening of assessment; Depreciation
• Section: 32; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE -PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.788/MDS/2011 (ASSESSMENT YEAR: 2005-06) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-III, 93, RAMAKRISHNA ROAD, SALEM-7. VS. M/S. SUNDAR SONS INDIA(EXPORT) NO.124, KURUMBER STREET, SALEM-636 001. PAN:AAMFS2524F (APPELLANT) (RESPONDENT) & CROSS OBJECTION NO.98/MDS/2011 (IN ITA NO.788/MDS/2011 (ASSESSMENT YEAR: 2005-06) M/S. SUNDAR SONS INDIA(EXPORT) NO.124, KURUMBER STREET, SALEM-636 001. PAN:AAMFS2524F VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-III, 93, RAMAKRISHNA ROAD, SALEM-7. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : MR. VIKRAMADITYA, SR. AR ASSESSEE BY : MR. D.MANOHAR DATE OF HEARING : 7 TH JUNE ,2012 DATE OF PRONOUNCEMENT : 7 TH JUNE, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), SALEM DATED 15.02.2011. ITA NO.788/MDS/11 & CO NO.98/MDS/11 2 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGE D IN THE BUSINESS OF MANUFACTURING AND EXPORT OF TEXTILE GARMENTS AND FABRICS. THE ASSESSEE FILED RETURN OF INCOME FO R THE ASSESSMENT YEAR 2005-06 ON 28.03.2006 ADMITTING INC OME OF ` 1,40,32,270/-. THE RETURN OF THE ASSESSEE WAS PROC ESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 148 ON 10.4.2008. IN REPLY TO NOTICE, THE ASSESSEE SUBMITTED THAT THE RETURN FILE D ON 28.03.2006 BE TREATED AS COMPLIANCE TO THE NOTICE. THEREAFTER, NOTICE UNDER SECTION 143(2) OF THE AC T DATED 23.09.2009 WAS SERVED ON THE ASSESSEE. ON THE REQU EST OF THE ASSESSEE, REASONS FOR REOPENING OF ASSESSMENT W AS GIVEN BY THE ASSESSING OFFICER VIDE LETTER DATED 1 1.12.2009. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE H AD ALSO INSTALLED WINDMILL. THE ASSESSEE HAD MADE INVESTMEN T IN THE WINDMILL AFTER 1.10.2004. THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE ABOVE WINDMILL @ 50% OF 80% AMOUNTING TO ` 61,60,400/-. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR GRANTING HIGHER DEPRE CIATION ON ITA NO.788/MDS/11 & CO NO.98/MDS/11 3 THE GROUND THAT AS PER THE PROVISIONS OF SECTION 32 (1)(I) OF THE ACT READ WITH RULE 5(1A) OF THE INCOME TAX RULES IN RESPECT OF ASSET OF AN UNDERTAKING ENGAGED IN THE GENERATIO N OR GENERATION & DISTRIBUTION OF POWER, THE ADMISSIBLE DEPRECIATION WILL BE AT THE PERCENTAGE SPECIFIED IN APPENDIX 1A ON THE ACTUAL COST OF THE ASSETS USED IN GENERA TION OF POWER I.E. 7.69% AS PER APPENDIX 1A IN THE PRESENT CASE. FOR CLAIMING HIGHER DEPRECIATION OF 80% AS PROVIDED IN APPENDIX I, THE ASSESSEE HAS TO EXERCISE OPTION AS PER PROVISO TO RULE 5(1A) BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT FOR THE RELE VANT ASSESSMENT YEAR IN WHICH GENERATION OF POWER HAD B EGUN. AS PER THE ASSESSING OFFICER, THE ASSESSEE IN THE P RESENT CASE HAD NOT GIVEN OPTION TO GET HIGHER RATE OF DE PRECIATION BEFORE THE DUE DATE OF FILING OF RETURN, AS SUCH PR E-REQUISITE CONDITIONS OF AVAILING HIGHER DEPRECIATION IS NOT S ATISFIED, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE TO CLAIM HI GHER RATE OF DEPRECIATION AT 80%. 3. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 31.12.2009, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE ITA NO.788/MDS/11 & CO NO.98/MDS/11 4 CIT(A). THE CIT(A) VIDE ORDER DATED 15.02.2011ALLOW ED THE APPEAL OF THE ASSESSEE. NOW THE REVENUE HAS COME IN SECOND APPEAL IMPUGNING THE ORDER OF THE CIT(A) PRI MARILY ON THE FOLLOWING GROUNDS:- THE CIT(A) HAS FAILED TO APPRECIATE THE IMPORT OF PROVISION OF APPENDIX I OF RULE 5 OF I.T.RULES. THE SECOND PROVISO TO RULE 5(1A) MAKES IT MANDATORY FOR AN ASSESSEE WHO/WHICH IS ENGAGED IN GENERATION OR GENERATION & DISTRIBUTION OF POWER TO EXERCISE THE OPTION IF IT/HE INTENDS TO CLAIM DEPRECIATION AS PER APPENDIX I INSTEAD OF DEPRECIATION AVAILABLE UNDER APPENDIX(1A), BEFORE THE DUE DATE OF FURNISHING THE RETURN AS PER SECTIO N 139(1) OF THE I.T.ACT. THE CIT(A) HAS FAILED TO NOTE THAT THE ASSESSEE FIRM HAS FILED RETURN OF INCOME BELATEDLY ON 28.03.2006 WHEREAS THE DUE DATE FOR FILING RETURN U/S.139(1) OF IT ACT IS 31.10.2005. THEREFORE THE CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEPRECIATION AS PER APPENDIX I, WHEN I T HAS NOT EXERCISED ANY OPTION TO AVAIL DEPRECIATION AS PER APPENDIX I IN LIEU OF DEPRECIATION AS PER APPENDIX 1A. 4. THE D.R. SUBMITTED A DETAILED NOTE ON THE APPLI CABILITY OF APPENDIX 1A UNDER RULE 5(1A) OF INCOME TAX RULES AND THE RATES OF DEPRECIATION VIS--VIS THE WINDMILL. H E SUBMITTED THAT THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ITA NO.788/MDS/11 & CO NO.98/MDS/11 5 ASSESSEE AND THE IMPUGNED ORDER PASSED BY THE CIT(A ) IS A NON-SPEAKING ORDER. 5. ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT A P OWER GENERATING COMPANY. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS CATEGORICALLY STATED THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF T EXTILES GARMENTS AND FABRICS. THE ASSESSEE IS ENTITLED FOR HIGHER RATE OF DEPRECIATION @ 80% INSTEAD OF SPECIAL RATES AS PER APPENDIX A1. HE SUBMITTED THAT THE ASSESSING OFFICE R HAS NOT APPRECIATED THE FACT THAT APPENDIX 1A IS NOT APPLIC ABLE IN THE CASE OF ASSESSEE AS IT IS NOT ENGAGED IN GENERATION & DISTRIBUTION OF POWER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS PASSED BY THE ASSESSING OFFICER AS WELL AS CIT(A). A PERUSAL OF T HE IMPUGNED ORDER DATED 15.2.2011 SHOWS THAT THE CIT (A) HAS NOT PASSED REASONED ORDER FOR ALLOWING THE APPEAL O F THE ASSESSEE. THE ORDER OF THE CIT(A) IS CRYPTIC AND SK ETCHY. THE CIT(A) HAS NOT PASSED SPEAKING ORDER GIVING DETAILE D REASONS ITA NO.788/MDS/11 & CO NO.98/MDS/11 6 FOR ALLOWING THE APPEAL OF THE ASSESSEE. MOREOVER, THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS ALSO TAKEN CONTRADICTORY STAND WITH RESPECT TO THE BUSINESS OF THE ASSESSEE . IN OUR CONSIDERED OPINION, THE ORDER OF THE CIT(A) IS LIABLE TO BE SET ASIDE AND THE MATTER REQUIRES T O BE REMANDED BACK TO THE ASSESSING OFFICER TO DECIDE TH E MATTER AFRESH AFTER TAKING INTO CONSIDERATION FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO PASS SPEAKING ORDER AFTER AFFORDING OPP ORTUNITY OF HEARING TO THE ASSESSEE. ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 7 TH OF JUNE, 2012 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 7 TH JUNE, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .