M/s. kriton Weld Engg.Co., Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 1358/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57235 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH THAKKER
• Keywords: Transfer pricing; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.1358 / AHD/2011 (ASSESSMENT YEAR 2006-07) M/S. KRITON WELD ENGG. CO. 406, GIDC ESTATE, MAKARPURA, VADODARA VS. ITO, WARD 2(1), VADODARA PAN/GIR NO. :AAEFK1456C (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SURESH THAKKER, AR RESPONDENT BY: SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 29.02.2012 DATE OF PRONOUNCEMENT: 29.02.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) II, BARODA DATED 08.02.2011 FOR THE ASSESSME NT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) II, VADODARA IS NOT JUSTIFIED BOTH IN LAW AND ON FACTS IN A UP HOLDING A DISALLOWANCE OF SHORT TERM CAPITAL LOSS ON SALE OF PLANT AND MACHINERY, FURNITURE & FIXTURE, OFFICE EQUIPMENTS, LOOSE TOOLS, COMPUTER ETC. AMOUNTING TO RS.4,28,285/-. IT IS PRAYED THAT THE SHORT TERM CAPITAL LOSS ON SA LE OF ABOVE ASSET OF RS.4,28,285/- BE ALLOWED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF WELDING MACHINERY AND EQUIPMENTS AND IT S SPARE PARTS. IN THE I.T.A.NO. 1358 /AHD/2011 2 COURSE OF ASSESSMENT PROCEEDINGS, IT IS NOTED BY TH E A.O. THAT THE ASSESSEE HAD CLAIMED SHORT TERM CAPITAL LOSS ON SALE OF DEPR ECIABLE FIXED ASSETS. THE A.O. ALSO OBSERVED THAT THE ASSESSEE HAD SOLD I TS ASSETS TO THE ASSOCIATE CONCERN AT BELOW WDV PRICE AND CLAIMED SH ORT TERM CAPITAL LOSS ON ACCOUNT OF SALE OF THESE DEPRECIABLE ASSETS . THE A.O. DISALLOWED THE LOSS OF RS.4,28,285/- CLAIMED BY THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATER IN APPEAL BEFORE LD. CIT (A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT AT PAGE 27 OF THE PAPER BOOK IS THE OPENING WDV AS PER BOOKS OF ACCOUNT WHEREAS ON PAGES 28 & 29 OF THE PAPER BOOK IS THE WORKING OF WDV OF ASSETS AS P ER INCOME TAX RULES. HE ALSO SUBMITTED THAT BOTH THE ASSESSEE AS WELL AS THE A.O. HAVE CONSIDERED THE BOOK VALUE OF THE WDV INSTEAD OF WDV AS PER INCOME TAX RULES AND HENCE, THE MATTER MAY BE RESTORED BAC K TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER CONSIDERING THE WDV OF FIXED ASSETS SOLD AS PER INCOME TAX RULES. LD. D.R. OF THE REVENUE S UPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT ON PAGE 28 & 29 OF THE PAPER BOOK, IS THE WDV AS ON 31.03.2006 ALONG WITH OPENING WDV. THE SAME IS AS PER THE INC OME TAX RULES BUT IT IS NOT FOR THE PRESENT ASSESSEE BUT FOR THE COMPANY TO WHOM THE ASSETS WERE SOLD BY THE ASSESSEE FIRM AND HENCE, THE SAME IS NOT RELEVANT. THE WDV OF THE ASSESSEE FIRM AS PER THE INCOME TAX RULE S IS NOT AVAILABLE ON RECORD AND THE SAME IS NOT NOTED BY THE AUTHORITIES BELOW ALSO. AS PER THE PROVISIONS OF SECTION 50 OF THE INCOME TAX ACT, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN/LOSS IN RESPECT OF DEPRE CIABLE ASSETS, THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BE GINNING OF THE PREVIOUS I.T.A.NO. 1358 /AHD/2011 3 YEAR HAS TO BE REDUCED FROM THE FULL VALUE OF THE C ONSIDERATION RECEIVED AND ACCRUED AS A RESULT OF TRANSFER OF THE ASSETS. IN OUR CONSIDERED OPINION, WDV OF THE BLOCK OF ASSETS AT THE BEGINNIN G OF THE PREVIOUS YEAR TO BE CONSIDERED FOR THE PURPOSE OF SECTION 50 SHOU LD BE THE WDV AS PER THE INCOME TAX RULES AND NOT AS PER THE BOOKS OF AC COUNT. SINCE THE SAME IS NOT CONSIDERED AND EVEN SECTION 50 WAS NOT TAKEN NOTE OF FOR THE PURPOSE OF DECIDING THE ISSUE BY THE AUTHORITIES BE LOW, WE FEEL THAT IN THE INTERESTS OF JUSTICE, THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER CONSIDERING ALL THE RELEVANT P ROVISIONS AND THE FACTS OF THE CASE. HENCE, WE SET ASIDE THE ORDER OF LD. CIT (A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. WE WOULD ALSO LIKE TO OBSERVE THAT IT IS NOTED BY THE LD. CI T(A) IN PARA 2.3 OF HIS ORDER THAT ONCE THE SALE HAS BEEN MADE TO ASSOCIATE CONCERN, TRANSFER SHOULD BE AT ARMS LENGTH PRICE BUT NO FINDING IS GI VEN BY HIM AS TO WHETHER THE SALE PRICE DECLARED BY THE ASSESSEE IS AT ARMS LENGTH OR NOT. THE A.O. SHOULD CONSIDER THIS ASPECT ALSO AND THIS ASPECT SHOULD ALSO BE CONFRONTED TO THE ASSESSEE BEFORE DECIDING THE ISSU E. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO. 1358 /AHD/2011 4 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 29/2 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/2.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 29/2 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.29/2 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29/2/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .