The ACIT, 1 (1), V. M/s Bhargava Carbonics P Ltd,

ITA 11/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2425 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 20-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: AJAY K CHHAJED
• Keywords: Reopening of assessment; Depreciation
• Section: 143(3); 142(1); 32; 148; 139

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA, AM ITA NO. 11/IND/09 A.Y. 2001-02 ASSTT. COMMR. OF INCOME TAX 1(2) BHOPAL APPELLANT VS M/S BHARGAVA CARBONICS PVT. LTD. BHOPAL RESPONDENT PAN AABCB-6324N APPELLANT BY : SMT. APARNA KARAN, SR. DR RESPONDENT BY : SHRI AJAY K. CHHAJED, ADVOCATE O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 10.11.2008 ON THE GROUND THAT ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED FIRST APPELL ATE AUTHORITY ERRED IN ALLOWING 100% DEPRECIATION ON GAS CYLINDERS USED BY THE ASSESSEE FOR STORING AND LOADING PURPOSES AND THE DISALLOWANCE O F RS. 7,12,818/- MADE ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY T HE ASSESSEE. 2 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD MRS. APARNA KARAN, LEARNED SENIOR DR AND SHRI AJAY K. CHHAJED, LEARNED COUNSEL FOR THE ASSESSEE. THE CONTENTION ON BEHALF OF THE REVENUE I S IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR T HE ASSESSEE DEFENDED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE SUBMISSIONS PUT FORTH BY THE LEARNED RESPECTIVE COUNSELS AND PERUSED THE MATERIAL AVAILA BLE ON THE FILE. BRIEF FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED CO MPANY. THE CASE WAS ORIGINALLY ASSESSED U/S 143(3) OF THE ACT ON 9.3.20 04 WHEREIN THE ASSESSEE WAS ALLOWED 100% DEPRECIATION OF RS. 9,50, 424/- ON GAS CYLINDERS USED FOR STORING/LOADING PURPOSES. AS PE R THE REVENUE, ONLY 25% IS THE ALLOWABLE RATE, THEREFORE, NOTICE U/S 14 7/148 WAS ISSUED ON 30.3.2006 TO WHICH THERE WAS NO COMPLIANCE BY THE A SSESSE. THEREAFTER NOTICE U/S 142(1) ALONGWITH QUESTIONNAIRE WAS ISSUE D ON 4.9.2006. THE LEARNED AO BY FOLLOWING THE DECISION IN THE CASE OF CIT V. NATIONAL AIR PRODUCTS; 126 ITR 196 (DEL) ALLOWED ONLY 25% DEPREC IATION CONSEQUENTLY, THE AMOUNT OF RS.7,12,818/- WAS ADDE D TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE CHALLENGED THE LEGALITY OF ORDER PASSED U/ S 148 DUE TO THE REASON THAT IT WAS REOPENED AFTER COMPLETION OF FOU R YEARS OF ASSESSMENT BY FURTHER CONTENDING THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSA RY FOR PASSING THE 3 ASSESSMENT ORDER. ON REOPENING OF ASSESSMENT U/S 14 7/148 OF THE ACT, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON VA RIOUS JUDICIAL PRONOUNCEMENTS AS CONTAINED AT PAGE 2 OF THE IMPUGN ED ORDER LIKE MAHAVIR SPINNING MILLS V. CIT; 270 ITR 290 (P&H), D ULICHAND SINGHANIA V. ACIT; 269 ITR 192(P&H), HINDUSTAN LEVER LIMITED V. ACIT; 268 ITR 332 (BOM) AND GN SHAW (WINE) PRIVATE LIMITED V. ITO ; 260 ITR 513 (CAL). ON ALLOWABILITY OF DEPRECIATION ON GAS CYLIN DER, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE IMPUGNED O RDER. CONSIDERING THE ABOVE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED FIRST APPELLATE AUTHORITY HELD THAT THE DEP RECIATION IS ALLOWABLE AT THE RATE OF 100%. THE ALLOWABILITY OF RATE OF DEPRE CIATION AT 100% WAS NOT CONTROVERTED BY THE REVENUE BEFORE US. WE HAVE CONSIDERED THE SUBMISSIONS PUT FORTH BY THE LEARNED RESPECTIVE COUNSELS AND FOUND THAT AS PER APPENDIX I (PART I) RULE 5 OF INCOME TAX RULES, 1962, AS MENTIONED AT ITEM NO. (4 ) INSERTED BY THE INCOME TAX (4 TH AMENDMENT) RULES, 1983 WITH EFFECT FROM 2.4.1983 (EFFECTIVE FROM ASSSSSMENT YEAR 18984-85) THE RATE OF DEPRECIATION ALLOWABLE ON GAS CYLINDERS INCLUDING VALVES AND REG ULATORS IS 100% ON THE WRITTEN DOWN VALUE OF SUCH BLOCK OF ASSETS AS A RE USED FOR THE PURPOSES OF BUSINESS OR PROFESSION OF THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR AS CONTAINED IN RULE 5(1) OF IT R ULES, 1962, SUBJECT TO THE PROVISO THAT THE AGGREGATE DEPRECIATION ALLOWED IN RESPECT OF ANY 4 ASSET FOR DIFFERENT ASSESSMENT YEARS SHALL NOT EXCE ED THE ACTUAL COST OF THE SAID ASSET, SUBJECT TO PROVISO THAT THE UNDERTA KING SPECIFIED IN CLAUSE (I) OF SUB-SECTION (1) OF SECTION 32 OF THE ACT MAY INSTEAD OF DEPRECIATION SPECIFIED IN APPENDIX IA AT ITS OPTION BE ALLOWED D EPRECIATION UNDER SUB- RULE (1) READ WITH APPENDIX I, IF SUCH OPTION IS EX ERCISED BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 OF THE ACT. IN VIEW OF THIS PROVISION, THE RATE OF DEPRECIATION ON GAS CYLINDER IS ALLOWABLE AT THE RATE OF 100% FOR THE I MPUGNED ASSESSMENT YEAR BEING ASSESSMENT YEAR 2001-02 AS SUCH PER CENT AGE OF DEPRECIATION IS ALLOWABLE FROM THE ASSESSMENT YEAR 1988-89 TO 2002-03 CONSEQUENTLY THERE IS NO INFIRMITY IN THE IMPUGNED ORDER. EVEN OTHERWISE DEPRECIATION ALLOWANCE IS A CONCESSION GRANTED BY T HE STATE IN COMPUTATION OF INCOME BASED ON MANY FACTORS RELEVAN T TO A WHOLESOME FISCAL ADMINISTRATION. DEPRECIATION REPRESENTS THE DIMINUTION IN THE VALUE OF AN ASSET WHEN APPLIED TO THE PURPOSE OF MAKING P ROFIT OR GAIN. DEPRECIATION IS THUS RELATED TO AN ASSET AND IS A N OTIONAL LOSS AS AGAINST ACTUAL LOSS IN THE SENSE OF OUT-GOINGS OF BUSINESS, THEREFORE, IT CAN BE SAID THAT IT IS A STATUTORY ALLOWANCE NOT EXPRESSLY CONFINED DIMINUTION IN VALUE OF THE ASSET BY REASON OF WEAR AND TEAR. THE PER CENTAGE OF RATE OF DEPRECIATION IN RESPECT OF GAS CYLINDERS INCLUDING VALVES AND REGULATORS WAS REDUCED TO 80% FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06 AND FROM THE ASSESSMENT YEAR 2006-07 IT WAS REDUCED TO 60% (BLOCK/ITEM 5 NO. III(8)(X) OF SUB-RULE 5.14-1. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, THE RATE OF DEPRECIATION APPLICABLE TO ASSES SMENT YEAR UNDER CONSIDERATION IS 100% CONSEQUENTLY, THIS GROUND OF THE REVENUE IS HAVING NO MERIT. SINCE THE REOPENING OF ASSESSMENT U/S 147/148 WAS NOT CHALLENGED BEFORE US, CONSEQUENTLY, WE ARE REFRAINI NG OURSELVES IN DELIBERATING UPON THE ISSUE OF LEGALITY OF REOPENIN G OF ASSESSMENT. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 17 TH DECEMBER, 2009. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER 17 TH DECEMBER, 2009 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR, GUA RD FILE *DBN/-