ITO Rg. - 8(3)-1, MUMBAI V. M/s. SAMARTH BANKING MACHINES P. LTD., MUMBAI

ITA 1139/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7856 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-01-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 07-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH SHARMA
• Assessee Lawyers: N O N E
• Keywords: Depreciation
• Section: 143(3); 143(2); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI RAJENDRA SINGH ,(AM) ITA NO.1139/MUM/2007 ASSESSMENT YEAR : 1999-2000 INCOME TAX OFFICER RANGE-8(3)-1 201, 2 ND FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. SAMARTH BANKING MACHINES PVT. LTD. 1-4, GEMINI, NEHRU ROAD OPP. SARASWAT C.H.S. VILE PARLE(E) MUMBAI-400 057. ..( RESPONDENT ) P.A. NO. (AADCS 4993 C) APPELLANT BY : SHRI SATISH SHARMA RESPONDENT BY : NON E O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30.11.2006 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 1999-2000. 2. AT THE TIME OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR ADJOURNMENT OF TH E CASE. IT WAS, ITA NO.1139/M/07 A.Y: 99-00 2 THEREFORE, DECIDED TO DISPOSE OF THE APPEAL EXPARTE, Q UA THE ASSESSEE, ON MERITS AFTER HEARING THE LD. DR. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF NOTE COUNTIN G MACHINES. IT FILED RETURN DECLARING TOTAL INCOME AT RS. NIL AFTE R CLAIMING DEDUCTION U/S.80IA OF RS.8,29,379/-. AFTER PROCESSING OF THE RETU RN, THE AO RE- OPENED THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT, 196 1 (THE ACT). IN RESPONSE TO NOTICE ISSUED U/S.148 THE ASSESSEE FILE D A LETTER STATING THAT THE RETURN ALREADY FILED MAY BE TREATED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. THEREAFTER THE AO ISSUED NO TICE U/S.142(1) AND 143(2) ALONGWITH QUESTIONNAIRE FOLLOWED BY LETTE RS. IN THE ABSENCE OF PROPER COMPLIANCE, THE AO PROCEEDED TO COMPLET E THE ASSESSMENT U/S.144 R.W.S. 147 OF THE ACT. THE AO ON THE B ASIS OF THE MATERIAL AVAILABLE ON RECORD COMPLETED THE ASSESSMENT AT AN INCOME OF RS.15,53,110/- INCLUDING THE DISALLOWANCE OF DEPRECIA TION RS.6,09,631/- AND OUT OF SUNDRY CREDITORS RS.1,02,905/-, VIDE ORDER DATED 5.12.05 PASSED U/S.148 R.W.S. 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE DELETING THE DISALLOWANCE OF DEP RECIATION RS.6,09,631/- AND ADDITION OF SUNDRY CREDITORS RS.1,02, 905/-SUSTAINED ALL OTHER DISALLOWANCES AND ACCORDINGLY, PARTLY ALLOWE D THE APPEAL. ITA NO.1139/M/07 A.Y: 99-00 3 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US. 5. GROUND NO.1 IS AGAINST THE DELETION OF DISALLOWANC E OF DEPRECIATION OF RS.6,09,631/-, GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS. 1,02,905/- ON ACCOUNT OF SUNDRY CREDITO RS AND GROUND NO.3 AND 4 ARE GENERAL IN NATURE. 6. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE ORD ER OF THE AO. 7. WE HAVE CAREFULLY HEARD THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HA S DEALT WITH THE ABOVE ISSUES AT PAGE-9 ,11 AND 12 OF HIS ORDER AND THE SAME ARE REPRODUCED HERE AS UNDER : IV. GROUND NO.4 DISALLOWANCE OF DEPRECIATION OF RS.6,09,631/- DEBITED TO PROIFT & LOSS ACCOUNT PAGE 7, PARA OF ASSESSMENT ORDER THE ASSESSEE HAS NOT MANUFACTURED ANY THING AND TH E CLAIM OF DEDUCTION U/S.80IB IS BOGUS AND HENCE THE DEPRECIATION OF RS.6,09,631/- IS ALSO NOT ALLOWABLE TO THE ASSESSEE. OUR SUBMISSIONS 1. THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE ASSETS ON WHICH THE DEPRECIATION IS CLAIMED ARE UTILIZED FOR THE PURPOSE OF MANUFACTURI NG ITA NO.1139/M/07 A.Y: 99-00 4 ACTIVITIES AND NORMAL DAY TO DAY ADMINISTRATIVE ACTIVITIES. 2. WITHOUT PREJUDICE TO ABOVE THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT EVEN IF IT IS CON CLUDED THAT NO MANUFACTURING ACTIVITIES ARE CARRIED OUT, DEPRECIATION IS ALLOWABLE AS THE ASSETS ON WHICH DEPRECIATION IS CLAIMED ARE USED FOR OTHER BUSINESS ACTIVITIES CARRIED OUT BY THE APPELLANT DURING THE YEAR. 3. WITHOUT PREJUDICE TO ABOVE THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT THE WORD USE SHOU LD BE UNDERSTOOD IN A WIDER SENSE SO AS TO EMBRACE PASSIVE AS WELL AS ACTIVE USE. 4. WITHOUT PREJUDICE TO ABOVE THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT THE DEPRECIATION SHOULD NOT BE DENIED ON THE GROUND THAT THERE WAS N O PRODUCTION ON ACCOUNT OF FACTORS BEYOND CONTROL OF THE ASSESSEE. 5. THE LEARNED CIT(A) XXIX HAS ALREADY DELETED THE ABOVE ADDITION WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2001-02. 6. THEREFORE, THE APPELLANT PRAYS YOUR HONOR TO ALLOW THE ABOVE DEPRECIATION AMOUNTING TO RS.6,09,631/- AS DEDUCTION U/S.32 OF THE INCOME TAX ACT, 1961 FROM INCOME FROM BUSINESS AND DIRECT THE ASSESSING OFFIC ER TO DO THE NEEDFUL. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS ION MADE BY APPELLANT. IN THIS REGARD, IT IS STATED THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION IN APPELLAN TS OWN CASE FOR ASSESSMENT YEAR 2001-02. SINCE THE ISSUE IS IDENTICAL, FOR THE DETAILED REASONS DISCUSSED IN TH E APPEAL ORDER NO. CIT(A) XXIX/ITO-8(3)(1)/IT 110/2004-05, DATED 12.01.2005 FOR ASSESSMENT YEAR 2001-02 IN APPELLANTS OWN CASE, DISALLOWANCE OF DEPRECIATION OF RS.6,09,631/- IS DELETED. VI GROUND NO.6 DISALLOWANCE OF SUNDRY CREDITORS OF RS.1,02,905/- PAGE 7, PARA 5 OF ASSESSING OFFICER THE ASSESSEE VIDE HIS LETTER DATED 28.11.2005, HAS FILED THE LIST OF SUNDRY CREDITORS FOR RS.10,29,056/-. HOWEVER, NO ADDRESSES OF SUNDRY CREDITORS AND PAN AR E FURNISHED. THEREFORE, I HEREBY DISALLOW 10% OF THE SAME ITA NO.1139/M/07 A.Y: 99-00 5 WHICH COMES TO RS.1,02,905/- AND ADDED TO TOTAL INCOME. OUR SUBMISSIONS 1. THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT ALL THE CREDITORS ARE GENUINE PARTY. 2. THE LEARNED ASSESSING OFFICER FURTHER FAILED TO VERIFY THE GENUINENESS OR OTHERWISE OF THE CREDITOR S BEFORE DISALLOWING THE SAME. 3. WITHOUT PREJUDICE TO ABOVE THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT THERE ARE NO PROV ISION IN THE INCOME TAX ACT, 1961 TO DISALLOW SUCH AMOUNT. 4. WITHOUT PREJUDICE TO ABOVE THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT AN AMOUNT CAN BE DISALLOWED ONLY IF IT IS CLAIMED AS AN ALLOWABLE EXPENSES/DEDUCTION. 5. THE LEARNED CIT(A) XXIX HAS ALREADY DELETED THE ABOVE ADDITION WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2001-02. 6. THEREFORE, THE APPELLANT PRAYS YOUR HONOR TO DELETE THE SAID DISALLOWANCE OF RS.1,02,905/- FROM INCOME FROM BUSINESS AND DIRECT THE ASSESSING OFFICER TO DO THE NEEDFUL. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS ION MADE BY APPELLANT. IN THIS REGARD, IT IS STATED THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION IN APPELLAN TS OWN CASE FOR ASSESSMENT YEAR 2001-02. SINCE THE ISSUE IS IDENTICAL, FOR THE DETAILED REASONS DISCUSSED IN TH E APPEAL ORDER NO. CIT(A) XXIX/ITO-8(3)(1)/IT.110/2004-05, DATED 12.01.2005 FOR ASSESSMENT YEAR 2001-02 IN APPELLANTS OWN CASE, ADDITION OF RS.1,02,905/- IS DELETED. IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECO RD BY THE REVENUE AGAINST THE FINDING OF THE LD. CIT(A) AND K EEPING IN VIEW THAT THE SIMILAR DISALLOWANCE OF DEPRECIATION AND ADDITION O F SUNDRY CREDITORS HAVE BEEN DELETED BY THE LD. CIT(A) IN ASSESSM ENT YEAR 2001-02 AND FURTHER THE ADDITION OF SUNDRY CREDITOR S OF RS.1,02,905/- BEING 10% OF TOTAL SUNDRY CREDITORS OF RS.10,29,056/- W AS MADE ON ITA NO.1139/M/07 A.Y: 99-00 6 ADHOC BASIS WHICH IS NOT PERMISSIBLE UNDER THE LAW, THE ORDER PASSED BY THE LD. CIT(A) DELETING THE ABOVE DISALLOWANCE/ADD ITION DOES NOT CALL FOR ANY INTERFERENCE AND ACCORDINGLY THE GROUNDS TA KEN BY THE REVENUE ARE REJECTED. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.02.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 01.02.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.1139/M/07 A.Y: 99-00 7 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 22.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22.1.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 01.02.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 03.02.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER