Samarth Fablon Private Limited , Kolkata V. Principal CIT, Central - 1, Kolkata , Kolkata

ITA 1120/KOL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4216 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: SARVESH CHHAPARIA
• Keywords: Depreciation; Additional depreciation
• Section: 32(1)(iia); 263

Judgement Text

1 ITA NO. 1120/KOL/2018 SAMARTH FABLON PRIVATE LTD., AY 2013-14 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1120/KOL/2018 ASSESSMENT YEAR: 2013-14 SAMARTH FABLON PRIVATE LTD. (PAN: AAKCS7663N) VS. PR. COMMISSIONER OF INCOME-TAX, CENTRAL-1, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 24.01.2019 DATE OF PRONOUNCEMENT 13.03.2019 FOR THE APPELLANT SHRI SARVESH CHHAPARIA, FCA FOR THE RESPONDENT SHRI A. K. NAYAK, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E REVISION ORDER OF THE LD. PR. CIT- 1, KOLKATA PASSED U/S. 263 OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 26.03.2018 FOR AY 2013-14. 2. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. AR OF THE ASSESSEE COMPANY THAT DURING THE PREVIOUS YEAR RELATING TO A Y 2013-14, ADDITION OF FIXED ASSETS UNDER THE BLOCK PLANT AND MACHINERY WAS MADE AT RS. 1,49,61,119/- (FOR MORE THAN 180 DAYS) AND RS.2,06,33,645/- (FOR LESS THAN 180 DAYS). THE ASSESSEE COMPANY CLAIMED DEPRECIATION TO THE TUNE OF RS.7,17,72,720/- AS PER THE ACT INCL UDING ADDITIONAL DEPRECIATION OF RS.1,62,60,216/- AND THE SAME WAS ALLOWED TO BE CAR RIED FORWARDED BY THE AO. HOWEVER, ACCORDING TO LD. PR. CIT, OUT OF THE TOTAL ADDITION AL DEPRECIATION THOUGH THE ASSESSEE CLAIMED RS.1,27,20,028/- ON ACCOUNT OF PLANT AND MA CHINERY, THE ASSESSEE IS ONLY ENTITLED TO ADDITIONAL DEPRECIATION TO THE TUNE OF RS.50,55,589 /-. AFTER HEARING THE ASSESSEE COMPANY, THE LD. PR. CIT DIRECTED THE AO TO COMPUTE THE ADDI TIONAL DEPRECIATION AS PER THE PROVISION 2 ITA NO. 1120/KOL/2018 SAMARTH FABLON PRIVATE LTD., AY 2013-14 OF SEC. 32(1)(IIA) READ WITH SEC. 32(1)(II) OF THE ACT EXISTED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2013-14. AGGRIEVED, THE ASSE SSEE IS BEFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO HAS GIVEN THE ADDITIONAL DEPRECIATION IN ACCORDANCE TO THE LAW LAID BY THE HONBLE KARNATAKA HIGH COURT WHEREIN TH E HONBLE HIGH COURT HAS HELD THAT THE PROVISION OF SEC. 32(1)(IIA) HAS BEEN AMENDED BY IN SERTION OF A PROVISION W.E.F. 01.04.2016 ALLOWING SUCH CARRY FORWARD OF ADDITIONAL DEPRECIAT ION OF PLANT AND MACHINERY IF IT IS USED FOR LESS THAN 180 DAYS WITH RETROSPECTIVE IN OPERAT ION. THE HONBLE HIGH COURT IN THE CASE OF RITTAL INDIA (P) LTD. VS. CIT BANGALORE (2016) 66 TAXMANN.COM 4 (KARNATAKA) LAID AS UNDER: THE GRANT OF ADDITIONAL DEPRECIATION, UNDER THE AF ORESAID PROVISION, IS FOR THE BENEFIT OF THE ASSESSEE AND WITH THE PURPOSE OF ENCOURAGING INDUST RIALIZATION, BY EITHER SETTING UP A NEW INDUSTRIAL UNIT OR BY EXPANDING THE EXISTING UNIT B Y PURCHASE OF NEW PLANT AND MACHINERY, AND PUTTING IT TO USE FOR THE PURPOSE OF BUSINESS. THE PROVISO TO CLAUSE {II} OF THE SAID SECTION MAKES IT CLEAR THAT ONLY 50 PER CENT OF THE 20 PER CENT WOULD BE ALLOWABLE, IF THE NEW PLANT AND MACHINERY SO ACQUIRED IS PUT TO USE FOR LESS THAN 1 80 DAYS IN A FINANCIAL YEAR. HOWEVER, IT NOWHERE RESTRICTS THAT THE BALANCE 10 PER CENT WOUL D NOT BE ALLOWED TO BE CLAIMED BY THE ASSESSEE IN THE NEXT ASSESSMENT YEAR. [PARA 8] THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID SECTI ON CLEARLY PROVIDES THAT A FURTHER SUM EQUAL TO 20 PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (W. THE WORD 'SHALL' USED IN THE SAID CLAUSE IS VERY SIGNIFICANT. THE BENEFIT WHICH IS TO BE GRANTED IS 20 PER CENT ADDITIONAL DEPRECIA TION. BY VIRTUE OF THE PROVISO REFERRED TO ABOVE, ONLY 10 PER CENT CAN BE CLAIMED IN ONE YEAR, IF PLANT AND MACHINERY IS PUT TO USE FOR LESS THAN 180 DAYS IN THE SAID FINANCIAL YEAR. THIS WOULD NECESSARILY MEAN THAT THE BALANCE 10 PER CENT ADDITIONAL DEDUCTION CAN BE AVAILED IN THE SUBSEQUENT ASSESSMENT YEAR, OTHERWISE THE VERY PURPOSE OF INSERTION OF CLAUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR 20 PER CENT DEDUCTION WHICH SHALL BE ALLOWED. [PARA 9] IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WEL L AS THE APEX COURT, THAT BENEFICIAL LEGISLATION, AS IN THE INSTANT CASE, SHOULD BE GIVE N LIBERAL INTERPRETATION SO AS TO BENEFIT THE ASSESSEE. IN THIS CASE, THE INTENTION OF THE LEGISL ATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWED CERTAIN ADDITIONAL BENEFIT, WHICH WAS RE STRICTED BY THE PROVISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE ASSESSMENT YEAR, IF CERTA IN CONDITION WAS NOT FULFILLED. BUT, THAT WOULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE B ALANCE OF THE BENEFIT IN THE SUBSEQUENT ASSESSMENT YEAR. THE TRIBUNAL, HAS RIGHTLY HELD, TH AT ADDITIONAL DEPRECIATION ALLOWED UNDER SECTION 32(1) (IIA) IS A ONE-TIME BENEFIT TO ENCOUR AGE INDUSTRIALIZATION, AND THE PROVISIONS RELATED TO IT HAVE TO BE CONSTRUED REASONABLY, LIBE RALLY AND PURPOSIVELY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING ADDITIONAL ALLOWANCE. [PA RA 10] 'AS NEW MACHINERY WAS PUT TO USE FOR BUSINESS PURPO SE FOR PERIOD OF LESS THAN 180 DAYS IN ASSESSMENT YEAR 2007-08, ASSESSEE CLAIMED 50 PER CE NT OF ADDITIONAL 20 PERCENT DEPRECIATION (I.E. 10 PER CENT ADDITIONAL DEPRECIATION) UNDER SE CTION 32(1)(IIA) IN ASSESSMENT YEAR 2007-08 AND ALLOWANCE OF BALANCE 10 PER CENT DEPRECIATION I N ASSESSMENT YEAR 2008-09 - ASSESSING OFFICER ALLOWED CLAIM OF ALLOWANCE OF 10 PERCENT DE PRECIATION UNDER SECTION 32(1)(IIA) IN 3 ITA NO. 1120/KOL/2018 SAMARTH FABLON PRIVATE LTD., AY 2013-14 ASSESSMENT YEAR 2007-08 BUT DISALLOWED BALANCE 10 P ER CENT DEPRECIATION IN ASSESSMENT YEAR 2008-09 - WHETHER SINCE BENEFIT WHICH IS TO BE, GRA NTED UNDER-SECTION 32(1)(IIA) IS 20 PER CENT ADDITIONAL DEPRECIATION BUT BY VIRTUE OF PROVISO TO CLAUSE (II) OF SECTION 32(1) ONLY 10 PER CENT CAN BE CLAIMED IN ONE YEAR, IF PLANT AND MACHINERY WAS PUT TO USE FOR LESS THAN 180 DAYS IN SAID FINANCIAL YEAR, THIS WOULD NECESSARILY MEAN TH AT BALANCE 10 PER CENT ADDITIONAL DEDUCTION CAN BE AVAILED IN SUBSEQUENT YEAR - HELD, YES - WHE THER THEREFORE, ASSESSEE WAS ENTITLED TO DEDUCTION OF BALANCE 10 PER CENT ADDITIONAL DEPRECI ATION IN ASSESSMENT YEAR 2008-09' 2. THE HON'BLE HIGH COURT OF KARNATAKA, CIT, MADURA I V. SHRI T. P. TEXTILES (P) LTD. (2017) 79 TAXMANN.COM 411 (MADRAS) HAS HELD THAT: ' AS A MATTER OF FACT, WITH EFFECT FROM 1-4-2016, THE AMBIGUITY, IF ANY, IN THIS REGARD, IN THE MIND OF THE ASSESSING OFFICER, STANDS REMOVED BY VI RTUE OF THE LEGISLATURE, INCORPORATING IN THE STATUTE, THE NECESSARY CLARIFICATORY AMENDMENT. [PARA 10.2] A PERUSAL OF THE MEMORANDUM EXPLAINING PROVISIONS I N FINANCIAL BILL, 2015, WOULD SHOW THAT THE LEGISLATURE RECOGNISED THE FACT THAT THE MANNER IN WHICH THE REVENUE CHOSE TO INTERPRET THE PROVISION, AS IT STOOD PRIOR TO ITS AMENDMENT WOULD LEAD TO DISCRIMINATION, IN RESPECT OF PLANT AND MACHINERY, WHICH WAS USED FOR LESS THAN 180 DAY S, AS AGAINST THAT, WHICH WAS USED FOR 180 DAYS OR MORE. [PARA 11.2] THE AMENDMENT IS CLARIFICATORY IN NATURE AND NOT PR OSPECTIVE, AS IS SOUGHT TO BE CONTENDED BY THE REVENUE. THE MEMORANDUM CANNOT BE READ IN THE M ANNER, IN WHICH, THE REVENUE HAS SOUGHT TO READ IT, WHICH IS, THAT THE AMENDMENT BRO UGHT IN WOULD APPLY ONLY PROSPECTIVELY. [PARA 11.31] THE MEMORANDUM, WHICH IS SOUGHT TO BE RELIED UPON B Y THE REVENUE, ONLY CLARIFIES AS TO HOW THE UNAMENDED PROVISION HAD TOBE READ ALL ALONG .. [PARA 11.4]' 3. THE HON'BLE ITAT, KOLKATA IN THE CASE OF CENTURY ENKA LTD. V. DCIT [2015] 58 TAXMANN.COM 318(KOLKATA-TRIB) HAS HELD THAT WHERE A SSESSING OFFICER ALLOWED ADDITIONAL DEPRECIATION IN IMMEDIATE PRECEDING ASSESSMENT YEAR , DENIAL OF REMAINING 50 PER CENT OF ADDITIONAL DEPRECIATION IN CURRENT YEAR FOR ADDITIO NAL DEPRECIATION WAS UNJUSTIFIED. 4. THE HON'BLE ITAT, DELHI IN THE CASE OF COSMO FIL MS LTD. V. DCIT, CIRCLE 3(1), NEW DELHI [2012] 24 TAXMANN.COM 189 (DELHI) HAS HELD THAT BEN EFIT OF ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) IS AVAILABLE IN FULL AS SOON AS NEW ASSETS ARE PURCHASED AND FACT THAT SAID ASSETS WERE PUT TO USE FOR LESS THAN 180 DAYS, DOES NOT AFFECT SUCH BENEFIT. IT IS FURTHER SUBMITTED THAT THE ISSUES MENTIONED I N THE AFORESAID 263 NOTICE HAVE BEEN EXAMINED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. HENCE THERE IS NO SCOPE TO PASS ORDER U/S. 263 OF THE ACT WHERE THE A O HAS TAKEN ONE POSSIBLE VIEW. WE WOULD LIKE TO RELY ON FOLLOWING JUDGMENTS: 1. CIT (CENTRAL) LUDHIANA VS. MAX INDIA LIMITED (2007) 295 ITR 282 (SC) 2. MALABAR INDUSTRIAL CO. LTD. VS. CIT, DELHI (2000) 2 43 ITR 83 (SC). 4. IN VIEW OF THE AFORESAID JUDICIAL PRECEDENT THE VIEW TAKEN BY THE AO ALLOWING THE ADDITIONAL DEPRECIATION IS IN LINE WITH THE HONBLE HIGH COURT SUPRA, IT CANNOT BE HELD TO BE ERRONEOUS. THEREFORE, SINCE THE ORDER OF AO IS NOT ERRONEOUS AND IS DEFINITELY A PLAUSIBLE VIEW IN THE LIGHT OF THE HONBLE HIGH COURTS RATIO , AND WE TAKING NOTE THAT THE CONDITION PRECEDENT FOR INVOKING REVISIONAL JURISDICTION BY L D PR CIT IS THAT AOS ORDER MUST BE BOTH 4 ITA NO. 1120/KOL/2018 SAMARTH FABLON PRIVATE LTD., AY 2013-14 ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE IS OBVIOUSLY ABSENT IN THIS CASE. WE FURTHER NOTE IN VIEW OF THE RATIO LAID BY THE HO NBLE HIGH COURT SUPRA THAT NEITHER THE VIEW OF THE AO CAN BE HELD TO ERRONEOUS NOR AT ANY RATE AS UNSUSTAINABLE IN LAW. SO WHEN THE ORDER OF THE AO CANNOT BE HELD TO BE ERRONEOUS, WHICH IS SINE QUA NON FOR EXERCISE OF JURISDICTION U/S. 263 OF THE ACT, THEREFORE, WE QUA SH THE ORDER OF THE LD. PR. CIT WHICH IS IMPUGNED BEFORE US. THEREFORE, THE ASSESSEE SUCCEE DS. 5. OTHER GROUND I.E. GROUND NO.4 OF APPEAL IS GENER AL IN NATURE DOES NOT REQUIRE ANY ADJUDICATION HENCE, THE SAME IS DISMISSED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13TH MARCH, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SAMARTH FABLON PRIVATE LTD., 6, GANESH CHANDRA AVENUE, 4 TH FLOOR, KOLKATA- 700 013. 2 RESPONDENT PR. CIT, CENTRAL-1, KOLKATA 3 4 D CIT, CENTRAL CIRCLE-1(4), KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR