Gujarat Narmada Valley Fertilizers and Chemicals Ltd., Bharuch V. Deputy Commissiner of Income Tax , Circle 2(1)(1), Vadodara

ITA 13/SRT/2023

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The case involves Gujarat Narmada Valley Fertilizers and Chemicals Limited appealing against the order of the National Faceless Appeal Centre (NFAC), which arose from an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 254 of the Income Tax Act, 1961. The primary issues in the appeal included the disallowance of expenditure on stores and spares, non-grant of TDS credit, and excess interest charged under sections 234C and 234D. The Tribunal referenced previous rulings in the assessee's own case for similar issues, which had been decided in favor of the assessee, and thus allowed the appeal on these grounds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301780 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 10-04-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2023
• Other Referred Cases: ITA No. 432/Srt/2018, ITA Nos.720 & 721/SRT/2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Revenue expenditure; TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.13/SRT/2023 Ǔनधा[रण वष[/Assessment Year: (2008-09) (Virtual Hearing) Gujarat Narmada Valley Fertilizers and Chemicals Limited, P.O. Narmadanagar, Bharuch- – 392015. Vs. Deputy Commissioner if Income- Tax, Circle -2(1)(1), Room No. 403, 4 th Floor, Aaykar Bhavan, Race Course Circle, Vadodara- 390 007 (अपीलाथŎ /Appellant) (ŮȑथŎ /Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAACG8372Q िनधाŊįरती की ओर से /Appellant by Shri Yogesh Shah, AR राजèव कȧ ओर से /Respondent by Shri Vinod Kumar, Sr. DR सुनवाई की तारीख/Date of Hearing 11/04/2023 घोषणा की तारीख/Date of Pronouncement 18/04/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2008-09, is directed against the order passed by the National Faceless Appeal Centre (In short ‘NFAC’), Delhi /ld. CIT(A)”, , which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 254 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). 2. The grounds of appeal raised by the assessee are as follows: “1. The order passed by the Commissioner of Income tax (Appeals) (“CIT(A)”) is bad in law as the order was passed before the expiry of time granted in notice issued after video conferencing for further submissions. It is submitted it be so held now. 2. The Hon'ble CIT(A) erred in law and on facts in upholding Assessing Officer’s order disallowing expenditure on stores and spares amounting to Rs.53,06,209 (Rs.64,31,768 less depreciation of Rs.11,25,559) consumed during the year on the ground that such stores and spares can be used as self- contained machinery items. It is submitted it be so held now. Page | 2 ITA No. 13/SRT/2023/AY.2008-09 Gujarat Narmada Valley Fertilizers & Chemicals Ltd. 2.1 The Hon'ble CIT(A) also failed to appreciate that for similar issues, the Hon'ble Jurisdictional High Court has in appellant’s own case deleted the disallowance made by the AO in other years and the same has not been challenged by the department before the Supreme Court. It is submitted it be so held now. 2.2 The Hon'ble CIT(A) also failed to appreciate that for similar issues, the Hon'ble Bench has in appellant’s own case deleted the disallowance made by the AO in recent ruling based on previous Honourable High Court orders. It is submitted it be so held now. 3. The Hon'ble CIT(A) erred in not adjudicating the third ground of appeal which was raised for non-grant/short grant of TDS credit of Rs.97,98,066. The appellant prays that the AO be directed to grant such TDS credit. 4. The Hon'ble CIT(A) erred in not adjudicating the fourth ground of appeal for excess interest charged by the AO u/s 234C of the Act amounting to Rs.1,49,39,921. The appellant submit that no such interest was leviable and the same may be deleted now. 5. The Hon'ble CIT(A) erred in not adjudicating the firth ground of appeal for the excess interest charged u/s 234D of the Act amounting to Rs.89,38,682. The appellant submit that no such interest was leviable and the same may be deleted now. Your appellant prays for leave to add to alter and/or to amend any of the grounds before the final hearing of the appeal.” 3. At the outset, Ld. Counsel for the assessee informs the Bench that assessee does not wish to press ground No.1, therefore, we dismiss the ground no.1 raised by the assessee as “not pressed”. 4. Ground Nos.2 to 2.2 relate to disallowance of expenditure on stores and spares amounting to Rs.53,06,209/- consumed during the year on the ground that such stores and spares can be used as self-contained machinery items. 5. When this appeal was called out of hearing, Ld. Counsel for the assessee invited our attention to the order dated 31.10.2022, passed by the Division Bench of this Tribunal in assessee’s own case, in ITA Nos.720 & 721/SRT/2018 for AYs.2013-14 and 2014-15 respectively. The issue was capital expenditure versus revenue expenditure in the context of stores and spares which were discussed and has been adjudicated in favour of the assessee. Therefore, Ld. Counsel for the assessee submitted that Ground Nos. 2 to 2.2 of the present Page | 3 ITA No. 13/SRT/2023/AY.2008-09 Gujarat Narmada Valley Fertilizers & Chemicals Ltd. appeal is squarely covered by the aforesaid order of the Tribunal, a copy of which was placed before the Bench. 6. The Learned Departmental Representative (Ld. DR) for the Revenue relied upon the order of authorities below. 7. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of this Tribunal in assessee’s own case vide order dated 31.10.2022. In this order, the Tribunal has inter alia observed as follows: “8. We have considered the rival contentions of both the parties and perused the record carefully. Ground No. 1 of the appeal relates to deletion of addition by the ld. CIT(A) made on account of disallowance of expenses on consumption and replacement of stores and spares of Rs. 1,30,29,026/-. The ld. CIT-DR for the revenue has vehemently supported the order of the Assessing Officer. 9. On the other hand, the ld. AR of the assessee has supported the order of ld. CIT(A) and submits that this ground of appeal is squarely covered by the decision of the Tribunal in assessees own case for the A.Y. 2012-13 in ITA No. 432/Srt/2018 order dated 22/08/2022, copy of which is filed. 10. We have considered the submissions of the parties. We find that the assessing officer treated the expenses incurred on replacement on spares and parts of machinery as capital expenses being enduring in nature. The ld CIT(A) granted relief to the assessee by taking view that replacement of part of machinery have not enhanced the capacity of existing facility. The ld. CIT(A) also held that in assessee’s own case for A.Y. 2003-04 to 2005-06 and again in A.Y. 2007-08 to 2011-12, similar replacement expenses were allowed as revenue expenditure. Before us, the AR of the assessee vehemently relied on the decision of Tribunal in A.Y. 2012-13 in ITA No. 432/Srt/2018 dated 22/08/2022, wherein this combination has passed the following order: “19. We have considered the submissions of both the parties and have gone through the orders of the lower authority. We have also seen the orders of the Tribunal and High Court in various years and recorded above. We find that during assessment the assessing officer noted that the assessee has claimed expenses of Rs. 5.246 Crore on account of replacement of certain parts of the machineries. The assessing officer held that on replacement of such parts the assessee will get long term benefit which is enduring in nature and the expenses are not in the nature of current repairs. The assessing officer allowed depreciation at different rate on different part and worked out total depreciation of Rs. 1.657 Crore and remaining of Rs. 3.588 Crore was disallowed. We find that before ld CIT(A) the assessee made similar submissions as made before us and relied on various case laws. The ld CIT(A) after considering the submissions of the assessee held that the assessee has replaced the exiting part of machine or replaced the parts which have become obsolete and the replacement was essential. It was held that the Page | 4 ITA No. 13/SRT/2023/AY.2008-09 Gujarat Narmada Valley Fertilizers & Chemicals Ltd. replacement has not increased the existing capacity, so entire expenditure was treated as revenue expenditure. We find that on similar disallowance the assessee was allowed relief by Tribunal and granted relief to the assessee in AY 2003-04 to 2005-06, 2008-09 to 2011-12. The revenue filed appeal before High Court against the order of Tribunal in AY 2003-04 to 2005-06, 2008-09 to 2011-12, which has been dismissed. Further, the assessing officer himself allowed similar relief to the assessee from AY 2017-18 onwards. Hence, we find that ground of appeal is squarely covered in favour of assessee and against the Revenue. Thus, following the principal of consistency we affirm the order of Ld. CIT(A). In the result, this ground of appeal is dismissed.” 11. Considering the decision of Tribunal in assessees own case for A.Y. 2012-13 and in earlier years as recorded above and by following the principle of consistency, we do not find merit in the grounds of appeal raised by the revenue and we affirm the order passed by the ld. CIT(A). In the result, this ground of appeal is dismissed. 8. As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in assessee’s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). Therefore, respectfully following the binding judgment of the Co-ordinate Bench (supra), we allow Ground Nos.2 to 2.2 raised by the assessee. 9. In the result, Ground Nos. 2 to 2.2 raised by the assessee are allowed. 10. Ground No.3 raised by the assessee relates to non-grant/sort term of TDS of Rs.97,98,066/-. 11. The Ld. Counsel for the assessee submitted before the Bench that AO may be directed to grant the TDS credit in accordance with law. 12. On the other hand, Ld. DR for the Revenue submitted that a suitable instruction may be given to the Assessing Officer to examine the TDS credit and to grant TDS credit in accordance with law. 13. We have heard both the parties and perused the material available on record. We note that the issue raised by the Ld. Counsel before us is on account of non-grant/short grant of TDS credit of Rs.97,98,066/-. The Ld. Counsel pointed out that Assessing Officer has not granted TDS credit despite of repeated Page | 5 ITA No. 13/SRT/2023/AY.2008-09 Gujarat Narmada Valley Fertilizers & Chemicals Ltd. reminders. Therefore, we direct the Assessing Officer to examine the relevant documents and evidences and grant the TDS credit in accordance with law. 14. In the result, ground no.3 raised by the assessee is allowed for statistical purposes. 15. Ground No.4 and 5 raised by the assessee relates to charging of interest under section 234C and 234D of the Income Tax Act. 16. We note that these grounds are consequential in nature, therefore we direct the Assessing Officer to compute the interest under section 234C and 234D in accordance with the provisions of law. Therefore, ground nos.4 and 5 raised by the assessee are allowed for statistical purposes. 17. In the result, appeal filed by the assessee is partly allowed for statistical purposes in above terms. Order pronounced on 18/04/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 18/04/2023 SAMANTA /Dkp Outsourcing Sr.P.S Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Senior Private Secretary/ Private Secretary/Assistant Registrar, ITAT, Surat