IFB Automotive Private Limited, Kolkata V. JCIT, Range - 12, Kolkata, Kolkata

ITA 1469/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48053 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: P K MUKHERJEE
• Keywords: Depreciation; Additional depreciation
• Section: 14A; 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA () . . , , ! . .. .'# '#'# '#. .. . , , , , $% , ,, , [BEFORE HONBLE SRI B. R. MITTA L, JM & HONBLE SRI C. D. RAO, AM] !& / I.T.A NO. 1469/KOL/2010 '( )*/ ASSESSMENT YEAR : 2005-06 IFB AUTOMATIVE PVT. LTD. -VS.- JT. COMMISSIONER OF INCOME TAX KOLKATA [PAN : AABCI 2766 H] RANGE-12, KOLKATA (,- /APPELLANT ) (./,-/ RESPONDENT ) ,- / FOR THE APPELLANT : 0 /SHRI P, K. MUKHERJEE ./,- / FOR THE RESPONDENT : 0 / SHRI P.K.MISHRA, SR.DR $1 /O R D E R [ . . , ] PER B. R. MITTAL, J. M. THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2005-06 AGAINST ORDER OF LD. CIT(A)-XXXII, KOLKATA DATED 22.01.2010. 2. IN GROUND NO.1 OF THE APPEAL, ASSESSEE HAD DISPU TED THE ORDER OF LD. CIT(A) IN CONFIRMING DISALLOWANCE U/S. 14A OF THE ACT TO BE M ADE AS PER RULE 8D OF INCOME TAX RULES. ASSESSING OFFICER HAS STATED THAT ASSESSEE EARNED D IVIDEND INCOME OF RS.7,49,85,000/- AND CLAIMED IT TO BE EXEMPTED U/S. 10(34) OF THE ACT. S INCE THE SAID DIVIDEND INCOME IS CLAIMED TO BE EXEMPTED FROM TAXABLE INCOME, ASSESSING OFFICER AS PER SECTION 14A OF INCOME TAX ACT CONSIDERED 5% TO THE DIVIDEND INCOME AS EXPENSES AN D DISALLOWED A SUM OF RS.37,49,250/-. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE L D. CIT(A). 3. LD. CIT(A) BY CONSIDERING THE DECISION OF I.T.A. T., SPECIAL BENCH MUMBAI IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD. [2009] 11 7 ITD 169 (SB), HELD THAT DISALLOWANCE BE MADE AS PER RULE 8D OF INCOME TAX RULES AND DIRECTE D ASSESSING OFFICER ACCORDINGLY. HENCE, ASSESSEE HAS FILED THIS APPEAL. ITA NO. 1469/KOL/20 10 2 4. AFTER HEARING LD. REPRESENTATIVES OF THE PARTIES , WE HOLD THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD. VS. DCIT [2010] 328 ITR 81 (BOM.) HAS OVER RULED DECISION OF I.T.A.T., SPECIA L BENCH (SUPRA) AND HAS HELD THAT RULE 8D IS PROSPECTIVE IN NATURE AND IS APPLICABLE FROM ASSESS MENT YEAR 2008-09. HENCE, ORDER OF LD. CIT(A) TO DIRECT ASSESSING OFFICER TO MAKE DISALLOW ANCE AS PER RULE 8D IS NOT VALID. AS CONCEDEED BY LD. REPRESENTATIVES OF BOTH THE PARTIE S, WE RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE PARTIES AND CONSIDERING SUCH EVIDENCES AS MAY BE RE LIED UPON FOR MAKING DISALLOWANCES IN RESPECT OF EARNING OF EXEMPTED DIVIDEND INCOME, AS PER SECTION 14A OF INCOME TAX ACT. THEREFORE, GROUND NO.1 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES BY RESTORING THE ISSUE TO LD. CIT(A). 5. IN GROUND NO.2 OF THE APPEAL, ASSESSEE HAD DISPU TED THE ORDER OF LD. CIT(A) IN CONFIRMING ADDITION OF RS.19,49,158/-, BEING AMOUNT OF UNRECONCILED CREDIT BALANCES OF SUNDRY PARTIES AS UNDER :- (1) M/S. RANKA STEELS (2) FIN. COMPONENTS & STEELS PVT.LTD. (3) M/S. HITEMP FINANCE LTD. ASSESSING OFFICER HAS STATED THAT IN ORDER TO VERIF Y THE TRANSACTIONS OF ASSESSEE-COMPANY, SOME OF THE PARTIES WITH WHOM ASSESSEE TRANSACTED, NOTICES U/S. 133(6) WERE ISSUED. FROM THE REPLIES RECEIVED, FOLLOWING DIFFERENCES IN TRANSACTIONS APP EARED :- (1) M/S. RANKA STEELS RS. 6,70,711/- (2) FIN. COMPONENTS & STEELS PVT.LTD. RS.11,68,905 /- (3) M/S. HITEMP FINANCE LTD. RS. 1,69,542/- RS.19,49,158/- ASSESSING OFFICER HAS STATED THAT ASSESSEE WAS CONF RONTED WITH THE ABOVE AND ASSESSEE WAS ASKED TO RECONCILE ABOVE DIFFERENCES. THAT ASSESSEE STATE D, THIS MIGHT OCCURRED DUE TO HOLD GOODS SUBJECT TO INSPECTION AND APPROVAL BY THE RESPECTIV E RESPONSIBLE DEPARTMENT, GOODS PURCHASED LYING IN THE FACTORY FOR INSPECTION AND APPROVAL AN D ON SOME OCCASION FOR SHORT RECEIPT OF GOODS, DAMAGED GOODS, DESPATCHED GOODS, SHORT OR EXCESS PA YMENTS, DEBIT/CREDIT NOTES, NOT RESPONDED BY OTHER PARTIES. ASSESSING OFFICER HAS STATED THAT ASSESSEE FAILED TO RECONCILE ABOVE DIFFERENCES OF RS.19,49,158/- AND ACCORDINGLY CONSIDERED IT UND ISCLOSED INCOME AND ADDED TO THE TOTAL INCOME OF ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD. CIT(A). ITA NO. 1469/KOL/20 10 3 6. LD. CIT(A) HAS STATED THAT ASSESSEE PRODUCED REC ONCILIATION OF THREE PARTIES WHICH HE HAD REPRODUCED AT PAGES 4 & 5 OF THE IMPUGNED ORDER WHI CH IS AS UNDER :- IFB AUTOMATIVE PRIVATE LIMITED RECONCILIATION OF BALANCE WITH RANKA IN THE BOOKS OF RANKA CLOSING BALANCE LESS : BILL FOR MARCH 2004 54506 + 110819 + 142750 + 86489 + 93756 + 71375 BALANCE LESS : DEBIT NOTES RS. 1,18,56,032 -------------- 1,12,96,337 3,28,802 1,09,67,535 IN THE BOOKS OF IFB AUTOMATIVE CLOSING BALANCE ADD : INVOICE NO.44125 BALANCE ADD : DEBIT NOTE ADD : BILL FOR MARCH 2004 (54,506 + 1,10,819 + 1,42,750 +86489+ 93756 + 71,375) BALANCE RS. 99,76,923 79,318 1,00,56,241 3,55,464 1,04,11,705 5,59,695 1,09,71,400 NET DIFFERENCE 3865 RECONCILIATION OF CREDITORS ACCOUNT HIGHTEMP FURNACES LIMITED RS. CLOSING BALANCE AS PER IFB AUTOMATIVE P. LIMITED 1 7,84,14,500 ADD : CHEQUES ISSUED BY THE COMPANY 3,09,91,60 0 20,94,06,100 BALANCE AS PER HIGH TEMP FURNACES LEDGER 21,38,0 7,796 UNRECONCILED BALANCE 44,01,696 IFB RECONCILIATION STATEMENT BALANCE AS PER FINE COMPONENTS A) 1,06,40,10,486 B) 14,04,03,400 1,20,44,13,886 ADD AMOUNT OF TDS NOT ACCOUNTED FOR BY IFB AUTOMATIVE 7,94,62,500 1,28,38,76,386 CHEQUE NOT ACCOUNTE FOR 4,96,72,600 1,33,35,48,986 ITA NO. 1469/KOL/20 10 4 LESS : DEBIT OR CREDIT NOTE ADJUSTED BY IFB AUTOMATIVE 1,64,01,00 0 1,31,71,47,986 ADD : DEBIT OR CREDIT NOTE ADJUSTED BY FINE COMPONENT 81,29,300 1,32,52,77,286 ADD : DEBIT OR CREDIT NOTE ADJUSTED BY FINE COMPONENT 33,81,700 1,32,86,58,986 LESS : OPENING DIFFERENCE 56,76,612 1,32,29,82,374 BALANCE AS PER IFB ACCOUNT 1,22,36,12,960 ___________ UNRECONCILED DIFFERENCE 6,30,586 LD. CIT(A) HAS STATED THAT ABOVE RECONCILIATION STA TEMENT ALONGWITH COPIES OF ACCOUNTS WERE FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS BUT TILL THE TIME OF PASSING OF ORDER, NO REPORT/REPLY RECEIVED FROM ASSESSING OFFICER. THERE FORE, LD. CIT(A) HAS COMPLETED THE ASSESSMENT BY OBSERVING AS UNDER :- FROM THE PERUSAL OF THE RECONCILIATION STATEMENTS SUBMITTED BY THE A.R., IT IS OBSERVED THAT THE ASSESSEE HAS TRIED TO EXPLAIN THE DIFFERENCES IN THE BALANCE SHEET OF THE ABOVE-MENTIONED THREE PARTIES BY CLAIMING AD JUSTMENTS ON ACCOUNT OF CERTAIN BILLS, DEBIT NOTES, CHEQUES ISSUED FOR PAYMENTS BUT NOT ACCOUNTED FOR, AND ADJUSTMENTS ON ACCOUNT OF DEBIT OR CREDIT NOTES. HO WEVER, THE ASSESSEE HAS NOT SUBSTANTIATED ANY OF ITS CLAIM WITH SUPPORTING EVID ENCES. APPARENTLY, THE ASSESSEE HAS TRIED TO SUBMIT A VERY VAGUE RECONCILIATION INC LUDING ALL POSSIBLE REASONS THAT COULD LEAD TO THE DIFFERENCE IN THE ACCOUNTS WITHOU T PRODUCING ANY EVIDENCE IN SUPPORT OF ITS CLAIM. SINCE, THE RECONCILIATION OFF ERED BY THE ASSESSEE IS NOT BACKED BY ANY EVIDENCE, LEAVE ASIDE ANY COGENT EVIDENCE, T HEREFORE, THE RECONCILIATION STATEMENTS SUBMITTED BY THE A.R. CANNOT BE RELIED U PON. IN THE LIGHT OF THE ABOVE DISCUSSION THE DISCREPANCY OF RS.19,49,158 IN THE A CCOUNT OF THE ABOVE MENTIONED THREE PARTIES AS PER ASSESSEES BOOKS OF ACCOUNT AN D AS PER THE BOOKS OF ACCOUNT OF THOSE PARTIES REMAINED UNRECONCILED, AND THEREFORE, THE ACTION OF THE A.O. IN ADDING THAT AMOUNT TO THE INCOME OF THE ASSESSEE IS JUSTIF IED. THEREFORE, THE ADDITION OF RS.19,49,158 STANDS CONFIRMED. HENCE, ASSESSEE IS IN FURTHER APPEAL BEFORE TRIBUNA L. 6. AT THE TIME OF HEARING LD. AUTHORISED REPRESENTA TIVE FOR THE ASSESSEE SUBMITTED THAT ITA NO. 1469/KOL/20 10 5 REQUISITE DETAILS WERE FILED BEFORE LD. CIT(A) AND LD. CIT(A) REFERRED THE MATTER TO ASSESSING OFFICER, BUT NO REPLY WAS RECEIVED BY LD. CIT(A) FR OM ASSESSING OFFICER AND HAS CONFIRMED THE ADDITION. HE SUBMITTED THAT IF THE MATTER IS RESTOR ED TO ASSESSING OFFICER, ASSESSEE WILL FURNISH REQUISITE DETAILS WHICH WERE PLACED BEFORE LD. CIT( A) AND RECONCILE THE DIFFERENCES. 7. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE FAILED TO FURNISH REQUISITE EVIDENCES TO SUBSTANTIATE RECONCILIATION STATEMENT FURNISHED BEFORE LD. CIT(A ). HE SUBMITTED THAT ADDITIONS BE CONFIRMED. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. REPRE SENTATIVES OF THE PARTIES AND ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT ASSESSEE FIL ED RECONCILIATION STATEMENT STATING NET DIFFERENCES AS UNDER :- (I) M/S. RANKA STEELS RS. 3,865/- (II) M/S. HIGHTEMP FINANCES LTD. RS.44,01,696/- (III) FINE COMPONENTS & STEELS (P) LTD. RS. 6,30, 586/- WE OBSERVE THAT LD. CIT(A) SENT RECONCILIATION STAT EMENT TO ASSESSING OFFICER FOR HIS COMMENTS. THERE IS NO DISPUTE THAT NO REPLY WAS REC EIVED FROM THE OFFICE OF ASSESSING OFFICER INSPITE OF FACT THAT DETAILS WERE RECEIVED BY ASSES SING OFFICER ON 09.10.2009 WHEREAS LD. CIT(A) PASSED ORDER ON 22.01.2010. CONSIDERING THE ABOVE FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE BE RE STORED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT ASSESSING OFFICER WILL REDECIDE THE ABOVE ISSUE AFTER CONSIDERING SUCH EVIDENCES, AS MAY BE FILED BY THE ASSESSEE BEFORE ASSESSING OF FICER AND AFTER GIVING DUE OPPORTUNITY OF HEARING TO ASSESSEE. HENCE, GROUND NO.2 OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES BY RESTORING THE ISSUE TO THE FILE OF ASSESSING OFFICE R. 9. GROUND NO.3 OF THE APPEAL IS AS UNDER :- FOR THAT THE AUTHORITY BELOW WAS NOT JUSTIFIED IN D ISALLOWING THE APPELLANT COMPANYS CLAIM OF ADDITIONAL DEPRECIATION OF RS.9, 55,860/- UNDER PROVISO TO SECTION 32(1)(II(A) OF THE I.T.ACT, 1961. 10. ASSESSING OFFICER OBSERVED THAT ASSESSEE CLAIME D ADDITIONAL DEPRECIATION UNDER CLAUSE A OF PROVISO TO SECTION 32(1)(IIA) OF THE ACT. ASSESS EE FILED REPORT ON FORM 3AA IN SUPPORT OF ITS ITA NO. 1469/KOL/20 10 6 CLAIM OF ADDITIONAL DEPRECIATION. ASSESSING OFFICER HAS STATED THAT IN SUCH REPORT, ASSESSEE CLAIMS THAT ADDITIONAL DEPRECIATION WAS CLAIMED AS PER CLAUSE B OF 1 ST PROVISO TO SECTION 32(1)(IIA) OF THE ACT. IT WAS STATED THAT THERE WAS SUBSTANTIAL EXPANSION BY WAY OF INCREASE IN INSTALLED CAPACITY OF INDUSTRIAL UNDERTAKING AS EXI STED BEFORE 1 ST APRIL, 2002. ASSESSING OFFICER HAS STATED THAT ON VERIFICATION OF REPORT OF ASSESS EE, ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION IN ASSESSMENT YEAR 2003-04 & 2004-05 AND WAS CLAIMI NG ADDITIONAL DEPRECIATION ON THE BASIS OF INSTALLED CAPACITY AS ON 31.03.2002. ASSESSING OFFI CER OBSERVED THAT ASSESSEE HAD NOWHERE INDICATED INSTALLED CAPACITY AS ON 31.03.2004 AND A S ON 31.03.2005 TO SHOW THAT IT HAD ACHIEVED THE DESIRED CAPACITY OF EXPANSION. HENCE, ASSESSING OFFICER DISALLOWED CLAIM OF ADDITIONAL DEPRECIATION OF RS.9,55,860/-. BEING AGGRIEVED, ASS ESSEE FILED APPEAL BEFORE LD. CIT(A) 11. ON BEHALF OF ASSESSEE, LD. AUTHORISED REPRESENT ATIVE FOR THE ASSESSEE CONTENDED THAT ASSESSEE FILED NECESSARY AUDITORS CERTIFICATE FOR CLAIMING ADDITIONAL DEPRECIATION. HENCE, ASSUMPTION MADE BY ASSESSING OFFICER WAS INCORRECT. LD. CIT(A) AFTER CONSIDERING THE ABOVE SUBMISSION OF ASSESSEE STATED THAT ASSESSEE HAS OFF ERED NO DETAILS REGARDING ITS INSTALLED CAPACITY. THAT NO COMPARATIVE FIGURES AT THE BEGINNING OF THE ORDER AND AT THE END OF THE ORDER HAD BEEN PROVIDED. THOUGH FORM NO3AA DOES NOT CONTAIN ANY DE TAILS TO SUBSTANTIATE THAT ASSESSEE HAD ACHIEVED REQUISITE EXPANSION IN ITS INSTALLED CAPAC ITY. HENCE, LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. BEING AGGRIEVED ASSESSEE IS I N FURTHER APPEAL BEFORE TRIBUNAL. 12. AT THE TIME OF HEARING, LD. AUTHORISED REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT ASSESSEE FILED DETAILS BY WAY OF AUDITORS REPORT T O CLAIM DEPRECIATION. HE SUBMITTED THAT FURTHER DETAILS MAY BE FILED TO CLAIM ADDITIONAL DEPRECIATI ON, IF THE MATTER IS RESTORED TO ASSESSING OFFICER. LD. AUTHORISED REPRESENTATIVE FOR THE ASSE SSEE FAIRLY CONCEDED THAT NO DETAILS OF INSTALLED CAPACITY AS ON 31.03.2004 AND AS ON 31.03 .2005, AS OBSERVED BY LD. CIT(A), WERE FILED BEFORE THE AUTHORITIES BELOW. 13. LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO DETAILS WERE FILED BY ASSESSEE TO ESTABLISH THAT ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION. 14. CONSIDERING THE ABOVE FACTS AND SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES, WE, ITA NO. 1469/KOL/20 10 7 IN THE INTEREST OF JUSTICE, RESTORE THIS ISSUE TO T HE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT ASSESSING OFFICER WILL CONSIDER THE CLAIM OF ASSES SEE FOR ADDITIONAL DEPRECIATION AND CONSIDERING SUCH DOCUMENTS AS MAY BE FILED BY ASSES SEE. WE MAY STATE THAT IF ASSESSEE FAILS TO SUBMIT REQUISITE DETAILS, AS MAY BE REQUIRED BY ASS ESSING OFFICER, ASSESSING OFFICER WILL DECIDE THE ISSUE ON THE BASIS OF DOCUMENTS AVAILABLE WITH HIM AND AS PER PROVISIONS OF THE ACT. HENCE, GROUND NO.3 OF THE APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES BY RESTORING TO ASSESSING OFFICER. 15. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES AS INDICATED ABOVE. 4 $1 5 6' 7 48 #% ORDER PRONOUNCED IN THE COURT ON 08. 04. 2 011. SD/- SD/- [ . '# '#'# '# . , $% ] [ . . , ] [ C. D. RAO ] [ B. R. MITTAL ] ACCOUNTANT MEMBER JUDICIAL MEMBER #% / DATED : 8 TH APRIL, 2010. $1 9 .: ;$:)< - COPY OF THE ORDER FORWARDED TO: 1. $ /APPLICANT- IFB AUTOMATIVE PVT.LTD., PLOT NO. IND -5, SECTOR-I, EAST CALCUTTA TOWNSHIP, GOLD PARK, KASBA INDUSTRIAL ESTA TE, KOLKATA-700 107. 2 ./,- / RESPONDENT : C.I.T. (APPEALS)-XXXII, RAFI AHMED K IDWAI ROAD, KOLKATA. 3. 1' / CIT 4. 1' ( )/ CIT(A) 5. =7 .' / DR, KOLKATA BENCHES, KOLKATA [ /: . / TRUE COPY] $1'6 / BY ORDER > / !? /DEPUTY/ASSTT. REGISTRAR . [KKC @A 'B? C /SR.PS]