DY.COMMISSIONER OF INCOME TAX , CIRCLE-4, NAGPUR V. M/S KAPILANSH DHATU UDYOG PRIVATE LIMITED , NAGPUR

MA 18/NAG/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle-4, Nagpur (Applicant) versus M/s. Kapilansh Dhatu Udyog Pvt. Ltd. (Respondent), concerning an appeal initially dismissed by the Tribunal due to the low tax effect. The Revenue sought to recall the Tribunal's earlier order, arguing that the case should be re-evaluated as it falls under the exceptions specified in the CBDT Circular No. 3/2018, particularly due to a Revenue audit objection regarding the incorrect depreciation claimed by the assessee on a residential flat. The Tribunal agreed with the Revenue's position, leading to the recall of the previous order and setting the stage for a new hearing on the substantive issues.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 24474 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 14-08-2020
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: SHIKHA LOYA
• Keywords: Depreciation; Tax effect; Audit objection
• Section: 143(3); 154; 32

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER, AND SHRI K.M. ROY, ACCOUNTANT MEMBER M.A. no.18/Nag./2020 (Arising out of ITA No.104/Nag./2019) (Assessment Year : 2011–12) Dy. Commissioner of Income Tax Circle–4, Nagpur ……………. Applicant (Original Appellant) v/s M/s. Kapilansh Dhatu Udyog Pvt. Ltd. Block no.112, Handloom Market Gandhibagh, Nagpur 440 002 PAN – AAACK7380C ……………. Respondent (Original Respondent) Assessee by : Ms. Shikha Loya Revenue by : Shri Abhay Y. Marathe Date of Hearing – 11/10/2024 Date of Order – 30/10/2024 O R D E R PER BENCH By this Miscellaneous Application (“M.A.”) the Revenue seeks recall of the impugned order dated 15/10/2019, passed by the Tribunal in Revenue’s appeal being ITA no.104/Nag./2019, for the assessment year 2011–12. 2. The submissions of the applicant Revenue are reproduced below:– “For the Assessment Year 2011-12 in I.T.A. No. 104/Nag/2019 the Hon'ble Tribunal has passed an Order in the case of assessee on 15.10.2019. In the above order the Hon'ble Tribunal has stated that prima-facie the tax effect involved in the appeal is less than the monetary limit prescribed by CBDT Circular No. 3/2018 dated 11.07.2018, for filing of appeals before the Tribunal by the Department. Hence the appeal filed by the Revenue was dismissed on account of low tax effect. It was further clarified in the order that the Revenue shall be 2 M/s. Kapilansh Dhatu Udyog Pvt. Ltd. MA no.18/Nag./2020 at liberty to approach the Tribunal for restoration of appeal, to show that the appeal is protected by the exceptions mentioned in Para 10 of the above mentioned CBDT Circular. In this case, the assessee is a company engaged in the business of manufacturing of C.I. Pipes, Flanges and Fittings etc. The return of income was filed on 31.08.2011 declaring total income of Rs. 2,75,50,960/-. The assessment was made u/s 143(3) of the I.T. Act on 25.03.2014 in which returned income accepted. The appeal was filed by the assessee before Hon'ble CIT(A)-1, Nagpur against the order u/s 154 of the I.T. Act passed on 28.12.2015. The assessee purchased a residential flat at Delhi and claimed the depreciation @ 10%. Notice u/s 154 dated 15.06.2015 was issued to the assessee and it was pointed out by the AO that since the residential flat was purchased, therefore, the depreciation should have been claimed @ 5% as per the block 1 of the Depreciation schedule and not @ 10%. The assessee submitted that the residential flat purchased by the assessee company was used for the purpose of Nodal Office cum Boarding House for carrying out the commercial activities at Delhi and therefore, considering the use of the property, the depreciation is rightly claimed @ 10%. The AO did not accept the reply furnished by the assessee and disallowed depreciation claimed in excess of 5% vide order u/s 154 of the I.T. Act dated 28.12.2015. Since the addition was made on the basis of Revenue audit objection, the case comes under the exception clause no. 10(c) of Amended para 10 of Circular No. 3 of 2018 dated 11.07.2018. In view of the above, it is humbly prayed that the Order passed vide I.T.A. No. 104/Nag/2019 dated 15.10.2019, may be reviewed with respect to the point as discussed above.” 3. During the course of hearing, the learned Departmental Representative has placed on record a copy of Revenue Audit Objection dated 30/01/2005, which is summarized below:– “As per Section 32 of the Income Tax Act 1961, depreciations is allowable at the prescribed percentage on tangible assets as buildings, Plant & Machinery, furniture etc. and on intangible assets such as technical know how, patents, copyright etc. owned wholly or partly by the assessee and used for the purpose of business or profession. As per Section 2(11) the term \"block of assets\" means a group of assets falling within a class of assets. 3 M/s. Kapilansh Dhatu Udyog Pvt. Ltd. MA no.18/Nag./2020 As per Block 1: Buildings - Residential buildings other than hotels and boarding houses the rate of depreciation 5% is applicable. The assessment of Kapilansh Dhatu Udyog Pvt Ltd, for the A.Y 2011-12 was completed on 25.03.2014 determining total of Rs 2,75,50,960/-. Audit examination revealed that assessee had purchased and registered residential flat at Ghajiyabad, Utter Pradesh on dt 14/08/2010 of Rs.67,50,000/-. It was seen from the statement of depreciation in 3CD report that the assessee has claimed depreciation of Rs 675000/- @10% instead of Rs. 337500/- @5% on residential flat. This has resulted excess allowance of depreciation of Rs. 337500/- involving tax effect of Rs.1,04,288/-excluding interest u/s 234B. This is brought to the notice for necessary action and reply within 3 days.” 4. As could be seen from the above, the Revenue Audit Objection is a clear pointer to the fact that the appeal could not have been dismissed purely on monetary limit. Therefore, the impugned order dated 15/10/2019, passed by the Tribunal in Revenue’s appeal being ITA no.104/Nag./2019, for the assessment year 2011–12, is hereby recalled for denovo adjudication on merit. The Registry is directed to fix the corresponding appeal in due course after issuance of notice to the parties fixing the date of hearing. 5. In the result, M.A. filed by the Revenue is allowed. Order pronounced in the open Court on 30/10/2024 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER NAGPUR, DATED: 30/10/2024 4 M/s. Kapilansh Dhatu Udyog Pvt. Ltd. MA no.18/Nag./2020 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "