ASST CIT 15(2)(2), MUMBAI V. OWENS CORNING ENTERPRISES (INDIA ) P.LTD, MUMBAI

ITA 1269/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9750 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: K K VED
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR , HON'BLE ACCOUNTANT MEMBER ITA.NO. 1269 /MUM/201 6 (A.Y: 2010 - 11 ) A.C.I.T 15(2)( 2) R.NO. 403 , 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 V. M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD. 7 TH FLOOR, ALPHA BUILDING, HIRANANDANI GARDENS, POWAI , MUMBAI - 76 PAN NO: AAHCS 9923 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. VED REVENUE BY : SHRI RAJAT MITTAL DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 21 .03 .2018 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER O F THE LD.CIT(A) 24 MUMBAI DATED 28.12.2015 FOR THE ASSESSMENT YEAR 2010 - 11. REVENUE AGITATED THE ORDER OF THE LD.CIT(A) IN ALLOWING THE DEPRECIATION CLAIM OF THE ASSESSEE ON THE PLANT AND MACHINERY LEASED OUT. 2 ITA.NO.1269/MUM/2016 (A.Y: 2010 - 11) M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE IS INTO MANUFACTURING AND SALE OF GLASS FABRICS FILED E - RETURN ON 0 1.11.2011 DECLARING LOSS OF .7,54,21,752/ - . ASSESSMENT WAS COMPLETED U/S. 143(3) ON 12.03.2014 DETERMINING THE TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT AT .99,72,785/ - . DURING THE ASSESSMENT YEAR 2009 - 10 ASSESSEE DISCONTINUED ITS MANUFACTURING A CTIVITIES AND LET OUT ITS FACTORY BUILDING PLANT AND MACHINERY TO M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD ON LEASE ARRANGEMENT W.E.F. 01.04.2009. ASSESSEE OFFERED SUCH LEASE RENTAL UNDER THE HEAD OF BUSINESS INCOME. HOWEVER, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE LEASE RENTAL INCOME SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE , ASSESSING OFFICER COMPLETED THE ASSESSMENT BY ASSESSING THE LEASE RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME . FURTHER , THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON PLANT AN D MACHINERY AND SINCE THE ASSESSEE DISCONTINUED ITS BUSINESS OF MANUFACTURING ACTIVITIES AND CLOS ED DOWN THE ACTIVITIES , ASSESSING OFFICER WAS OF THE VIEW THAT T HE ASSESSEE IS NOT ENTITLED FOR DEP RECIATION OF SUCH PLANT AND MAC HINERY. THEREFORE, SINCE THE INCOME FROM LEASE RENTAL HAS BEEN TREATED AS INCOME FROM OTHER SOURCES THE DEPRECIATION CLAIMED BY THE ASSESSEE COMPANY ON ITS PLANT AND MACHINERY WAS DISALLOWED. 3 ITA.NO.1269/MUM/2016 (A.Y: 2010 - 11) M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD 3. ON APPEAL THE LD.CIT(A) ACCEPTED WITH THE VIEW OF THE ASSESSING OFFICER THAT LEASE RENTAL INCOME SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES U/S. 56(II)(3) OF THE ACT. HOW EVER, THE LD.CIT(A) ALLOWED THE WITHOUT PREJUDICE GROUND AND ACCEPTED THE ALTERNATIVE SUBMISSION OF THE ASSESSEE THAT SINCE THE LEASE RENTAL INCOME WAS ASSES SE D UNDER THE HEAD INCOME FROM OTHER SOURCES THE DEPRECIATION ON LEASE D ASSE TS SHOULD BE CONSIDERED U/S. 57(II) OF THE ACT. SINCE NO EVIDENCE WAS LED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IN RESPECT OF THE CLAIM FOR DEPRECIATION AND SINCE THE INCOME IS TAXED UNDER HEAD INCOME FROM OTHER SOURCES AND THE LD.CIT(A) OBSERVING THAT IF DEPRECIATION WA S ALLOWABLE THE SAME SHOULD HAVE BEEN ALLOWED BY THE ASSESSING OFFICER U/S. 57 OF THE ACT, HE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF THE ASSESSEE AN D ALLOW DEPRECIATION AGAINST INCOME FROM OTHER SOURCES AFTER PRO VIDING SUFFICIENT OPPORTUNI TY. 4. THE REVENUE IS IN APPEAL BEFORE US AND THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. LD. AR SUPPORTED THE ORDER OF THE LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY IN THIS CASE THERE WAS N O ALTERNATIVE CLAIM MADE BEFORE ASSESSING OFFICER THAT DEPRECIATION SHOULD BE ALLOWED IN 4 ITA.NO.1269/MUM/2016 (A.Y: 2010 - 11) M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD CASE THE RENTAL INCOME IS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . ALTERNATIVE PLEA WAS RAISED BEFORE THE LD.CIT(A) WHO A CCEPTED THE CLAIM OF THE ASSESSEE A N D DIRECTED THE ASSESSING OFFICER TO TAKE INTO ACCOUNT THE ASSESSEES CLAIM AFTER G IVING SUFFICIENT OPPORTUNITY AN D ALLOW SUCH DEPRECIATION AGAINST THE INCOME FROM OTHER SOURCES. PROVISION S OF SECTION 57(II) OF THE ACT P ROVIDES FOR DEDUCTION U/S. 32(1) I.E. DEPRECIATION ON ASSETS WHILE COMPUTING THE INCOME CHARGEABLE FROM THE INCOME FROM OTHER SOURCES. THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN DIRECTING THE ASSESSING OFFICER TO TAKE INTO ACCOUNT THE CLAIM OF THE ASSESSEE AND ALLOW SUCH DEPRECIATION AGAINST INCOME FROM OTHER SOURCES. THUS WE SUSTAIN THE ORDER OF THE LD.CIT(A) A ND REJECT THE GROUND OF REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21 S T MARCH , 2018 . SD/ - SD/ - ( RAJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 21 / 03 / 2018 GIRIDHAR , SPS 5 ITA.NO.1269/MUM/2016 (A.Y: 2010 - 11) M/S. OWENS CORNING ENTERPRISE (INDIA) PVT LTD COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM