The ACIT,Patan Circle, Patan V. The Agriculture Produce Market Committee, Visnagar

ITA 1031/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0452 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 11-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Assessment record
• Section: 143(3); 32; 147; 6; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1031/AHD/2012 / ASSESSMENT YEAR : 2003-04 ACIT, PATAN CIRCLE, PATAN VS THE AGRICULTURE PRODUCE MARKET COMMITTEE, MARKET YARD, VISNAGAR PAN : AAAAT 5794 R / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI SATISH SOLANKI, SR DR ASSESSEE BY : SHRI M K PATEL, AR / DATE OF HEARING : 17/08/2016 / DATE OF PRONOUNCEMENT: 29/09/2016 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GANDHINAGAR, AHMEDABAD DATED 03.02.2012 FOR AY 2003-04. 2. THE SOLE GROUND RAISED IS AS UNDER;- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO ALLOW DEPRECIATION ON ASSETS BY TAKING WDV OF THE ASSETS AS ORIGINAL COST OF THE ASSETS WHICH IS NOT IN ACCORDANCE WITH EXPLANATION 6 TO SECTION 43(6) APPLICABLE IN THE RELEVANT YEAR. 3. BRIEF FACTS ARE ASSESSMENT U/S 147 WAS SET ASI DE AND RESTORED BACK TO THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF D EDUCTION U/S 11 & 12 OF THE ACT. CONSEQUENT THERETO, ORDER U/S 143(3) R.W. S. 147 R.W.S. 254 WAS PASSED AND THE CLAIM OF DEPRECIATION AND BENEFIT U/ S 10, 11 & 12 WERE DENIED. THE ASSESSEE PREFERRED APPEAL AGAINST THIS SECOND ORDER WHERE THE LD. CIT(A) DIRECTED THE AO TO ALLOW THE CLAIM OF DE PRECIATION, BY FOLLOWING OBSERVATIONS:- SMC-ITA NO. 1031/AHD/2012 ACIT VS. THE AGRICULTURE PRODUCE MARKET COMMITTEE AY : 2003-04 2 5.1 AS IT HAS ALREADY BEEN DECIDED THAT IN THESE P ROCEEDINGS THE APPELLANT IS BEING ASSESSED AS AOP (OTHERS) AND NO BENEFIT OF SECTION 10, 11 & 12 WOULD BE AVAILABLE. IF ITS INCOME WAS TO BE COMPUTE D U/S 11 THEN DEPRECIATION WOULD HAVE TO BE ALLOWED UNDER COMMERCIAL PRINCIPLE S AND NOT AS PER INCOME-TAX ACT (SECTION 32). HOWEVER, AS HELD EARLIER , IT IS TO BE ASSESSED AS AOP (OTHERS) ONLY AND INCOME ESCAPING ASSESSMENT HAS TO BE DISCUSSED AND ADDED, IF NEEDED IN THIS STATUS ONLY. THEREFORE, TH E ALLOWABILITY OF DEPRECIATION IS TO BE SEEN U/S 32 ONLY. NOW, DEPRECIATION IS TO BE ALLOWED ON WDV AT THE RA TES PRESCRIBED. THE APPELLANT HAS CLAIMED THE ACTUAL COST OF THE BL OCK OF ASSETS AS WDV. ITS INCOME WAS NOT TAXABLE EARLIER AS LOCAL AUTHORITY U P TO A.Y. 2002-03 AND THE INCOME WAS EXEMPT AS PER SECTION 10(20) OF I.T ACT. T HEREFORE, IT HAS NOT CLAIMED DEPRECIATION EARLIER AND THEREFORE IT WAS N OT 'ACTUALLY ALLOWED'. THE VARIOUS COURTS HAVE HELD THAT THE WDV HAS TO BE WOR KED OUT BY REDUCING THE DEPRECIATION 'ACTUALLY ALLOWED' AND NOT ONLY 'ALLOW ABLE'. RELIANCE IS PLACED ON IN THE CASE OF CIT VS. MAHENDRA MILLS (2000) 243 ITR 56 (SC). IN FACT THE DECISION OF HON'BLE ITAT RAJKOT BENCH IN THE CASE OF KANDLA PORT TRUST - [2007] 104 ITD 1 (RAJKOT) IS SQUARELY ON THE ISSUE AND THE GIST OF THE DECISION IS AS FOLLOWS: 'SECTION 43(1), READ WITH SECTION 32, OF THE INCOME -TAX ACT, 1961 - ACTUAL COST - ASSESSMENT YEAR 2003-04 -ASSESSEE, A POR T TRUST, WAS EXEMPTED FROM INCOME-TAX UNDER SECTION 10(20) TILL 3 1-3-2002 - BY VIRTUE OF AMENDMENT IN SECTION 10(20) BY FINANCE ACT , 2002, ASSESSEE FILED ITS FIRST RETURN FOR ASSESSMENT YEAR 2003-04 -. IN COMPUTATION OF TOTAL INCOME, ASSESSEE CLAIMED DEPRECIATION, WHICH WAS COMPUTED ON ORIGINAL COST OF ASSETS, I.E., ASSESSEE HAD TAKEN W DV OF ASSETS AS ON 1- 4-2002 AS ORIGINAL COST OF ASSETS - ASSESSING OFFICE R ALLOWED DEPRECIATION ON BOOK VALUE OF ASSETS, WHICH WAS ARR IVED AT AFTER DEDUCTING FROM ORIGINAL COST OF ASSETS DEPRECIATION PROVIDED IN ACCOUNT BOOKS TILL 31-3-2002 - WHETHER, IN INSTANT CASE, WDV AS ON 1-4-2002 WOULD BE ORIGINAL COST OF ASSETS - HELD, Y ES - WHETHER, THEREFORE, ASSESSEE WAS ENTITLED TO DEPRECIATION ON ORIGINAL COST OF ASSETS - HELD, YES' THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE, THE AO IS DIRECTED TO ALLOW THE DEPRECIATION AS PER THE IT ACT BY CALCULATING TH E WDV AS PER THE DIRECTIONS GIVEN ABOVE. THE INCOME DETERMINED FINAL LY WOULD NOT BE LESS THAN THAT DECLARED IN THE ORIGINAL RETURN U/S 139(1) AND ASSESSED U/S 143(1) IN THE REGULAR ASSESSMENT. THE PRINCIPLE LAID DOWN BY HON' BLE SUPREME COURT IN THE CASE OF SUN ENGG. (SUPRA) SHOULD BE ADHERED TO. THE GROUND IS DECIDED ACCORDINGLY. SMC-ITA NO. 1031/AHD/2012 ACIT VS. THE AGRICULTURE PRODUCE MARKET COMMITTEE AY : 2003-04 3 4. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT T HERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN ALLOWING THE DEPRECIATIO N ON WDV BASED ON ACTUAL ALLOWANCE OF DEPRECIATION. THE ASSESSEE HAS NO OBJECTION IF THE MATTER IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE A O TO VERIFY THE AMOUNT OF DEPRECIATION ACTUALLY ALLOWED AND WORK OUT THE WDV AND ALLOWABLE DEPRECIATION ACCORDINGLY. 5. LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 6. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. ON PRINCIPLE, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A ) THAT THE WDV SHALL BE WORKED OUT ON THE BASIS OF DEPRECIATION ACTUALLY AL LOWED TO THE ASSESSEE AS EVIDENT FROM THE ASSESSMENT RECORD. IN VIEW THEREOF , I FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO TO VERIFY THE C LAIM OF DEPRECIATION ACTUALLY ALLOWED TO THE ASSESSEE AND WORK OUT THE W DV AND CONSEQUENT DEPRECIATION IN THE IMPUGNED YEAR IN CONFORMITY WIT H THE ASSESSMENT RECORDS. THIS REVENUES APPEAL IS ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 29/09/2016 *BIJU T. SMC-ITA NO. 1031/AHD/2012 ACIT VS. THE AGRICULTURE PRODUCE MARKET COMMITTEE AY : 2003-04 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD