LAKSHMANS PLASTICS PVT. LTD., MUMBAI V. D.C.I.T. - 3(2), MUMBAI

ITA 1477/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72010 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , !'#$ , % & BEFORE SHRI B.R. MITTAL, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 6436/MUM/2009 ( ' ' ' ' / ASSESSMENT YEAR : 2006-07 A N D ./ I.T.A. NO. 1477/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 M/S. LAKSHMANS PLASTICS PVT. LTD., 1412M DALAMAL TOWER, 14 TH FLOOR, 211, NARIMAN POINT, MUMBAI-400 021 / VS. THE ITO-3(2)(1) AAYAKAR BHAVAN, MUMBAI-400 020 ( % ./ )* ./ PAN/GIR NO. : AAACL 0751G ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: NONE ,-(+ / . / RESPONDENT BY : SHRI M.L.PERUMAL / 01% / DATE OF HEARING : 30.12.2013 23' / 01% / DATE OF PRONOUNCEMENT : 31.12.2013 4 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO SEPARATE APPEALS BY THE ASSESSEE ARE DIR ECTED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)-III, MUMBAI PER TAINING TO ASSESSMENT M/S. LAKSHMANS PLASTICS PVT. LTD. 2 YEARS 2006-07 & 2007-08. AS BOTH THESE APPEALS INV OLVED IDENTICAL ISSUES, THEY WERE HEARD TOGETHER AND DISPOSE OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IN BOTH THESE YEARS RELATES TO NOT ALLOWING DEPRECIATION ON THE SOLE GROUND THAT THE D EPRECIATION WAS SHOWN IN THE STATEMENTS OF ACCOUNT OF UNIVERSAL EXPORTS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A MANUFACTURER OF PP WOVEN SACKS & EXPORTERS OF PP WO VEN SACKS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, WHILE GOING THROUGH THE COMPUTATION OF INCOME FOR THE ASSESSMEN T YEAR 2006-07, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DED UCTED AN AMOUNT OF RS. 51,80,558/- ON ACCOUNT OF DEPRECIATION OF M/S. UNIV ERSAL EXPORTS FROM THE NET PROFIT COMPUTED AS PROFIT AND LOSS ACCOUNT. IT WAS EXPLAINED THAT THE ASSESSEE COMPANY IS A PROPRIETOR OF M/S. UNIVER SAL EXPORTS. THE RETURN OF INCOME OF M/S. UNIVERSAL EXPORTS WAS FILE D WITH ACIT, CIR- 15(1), MUMBAI. IT WAS ALSO EXPLAINED THAT M/S. UNI VERSAL EXPORTS IS MAINTAINING SEPARATE SET OF BOOKS OF ACCOUNT. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF DEPRECIATION OF M/S. UNIVERSAL EXPORTS. THE ASSESSEE FILED NECESSARY DETAILS EXPLAINING THAT M/S. UNIVER SAL EXPORTS IS THE EOU STARTED BY THE ASSESSEE FOR MANUFACTURER OF PP/HDPE BAGS AS SANCTIONED BY AUTHORITIES OF KANDLA SPECIAL ECONOMIC ZONE . T HE ASSESSEE FURTHER EXPLAINED THAT THE UNIT IS FULLY OWNED AND MANAGED BY THE ASSESSEE COMPANY AND PROFIT EARNED OR LOSS INCURRED IS ALSO ACCOUNTED FOR TAX PURPOSES IN THE FINAL ACCOUNTS PREPARED BY THE COMP ANY. THE ASSESSEE CLAIMED THAT THE DEPRECIATION OF RS. 51,80,558/- IS ALLOWABLE AS THE INCOME OF M/S. UNIVERSAL EXPORTS IS CLUBBED WITH TH E INCOME OF THE ASSESSEE COMPANY. THE STATEMENTS MADE BY THE ASSES SEE WERE REJECTED BY M/S. LAKSHMANS PLASTICS PVT. LTD. 3 THE AO WHO WAS OF THE OPINIO9N THAT M/S. UNIVERSAL EXPORTS IS A SEPARATE ENTITY WHICH MAINTAINS THE ACCOUNTS INDEPENDENTLY. THE AO ALSO STATED THAT THE RETURN OF INCOME OF M/S. UNIVERSAL EXPORTS HAS BEEN FILED SEPARATELY WHEREIN THE AMOUNT OF DEPRECIATION OF RS . 51,80,558/- HAS ALREADY BEEN CONSIDERED. THE AO WAS OF THE FIRM BE LIEF THAT SINCE THE DEPRECIATION HAS ALREADY BEEN ALLOWED IN THE HANDS OF THE PROPRIETARY CONCERN, M/S. UNIVERSAL EXPORTS, THE SAME CANNOT BE CONSIDERED ONCE AGAIN IN THE HANDS OF THE ASSESSEE COMPANY AND ACCO RDINGLY DISALLOWED THE CLAIM OF DEPRECIATION. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. THE LD. CIT(A) OBSERVED THAT M/S. UNI VERSAL EXPORTS HAS DECLARED A LOSS OF RS. 26,22,726/- AND WHILE COMPUT ING THE SAID LOSS, THE DEPRECIATION OF RS. 51,80,558/- HAS ALREADY BEEN TA KEN INTO CONSIDERATION, HENCE, THE ASSESSEE IS NOT ENTITLED TO CLAIM THE SA ME DEPRECIATION SECOND TIME AGAIN WHILE COMPUTING ITS OWN INCOME. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. T HE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT FOR THE A.Y. 2005-06 ON IDENTICAL FACTS, THE LD. CIT(A) HAS ALLOWED THE DEPRECIATION IN THE HANDS OF THE ASSESSEE AND THE SAID DECISION OF THE LD. CIT(A) WA S ACCEPTED BY THE DEPARTMENT AS NO APPEAL WAS PREFERRED BEFORE THE TR IBUNAL. THE LD. COUNSEL SUBMITTED THAT NOW THE REVENUE CANNOT TAKE A DIFFERENT STAND. IT IS THE SAY OF THE LD. COUNSEL THAT M/S. UNIVERSAL E XPORTS IS NOTHING BUT A 100% PROPRIETARY CONCERN OF THE ASSESSEE COMPANY. ONLY BECAUSE OF CERTAIN NORMS FIXED FOR EOU AT KANDLA REGION, THE A SSESSEE WAS COMPELLED TO DO THE BUSINESS IN THE NAME OF A NEW P ERSON AND THEREFORE, THE ASSESSEE CREATED A PROPRIETARY CONCERN M/S. UNI VERSAL EXPORTS WITH DISTINCT PAN NO EXCEPT FOR THIS, THERE IS NO DIFFER ENCE BETWEEN THE M/S. LAKSHMANS PLASTICS PVT. LTD. 4 ASSESSEE- COMPANY AND M/S. UNIVERSAL EXPORTS, THERE FORE, THE ASSESSEE SHOULD BE ALLOWED TO CLAIM DEPRECIATION. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IT IS NOT IN DISPUTE THAT M/S. UNIVERSAL EXPORTS HAS A DISTINCT PAN AND MAINTAINING SEPARATE BOOKS OF ACCOUNT AND ALSO FILING RETURN OF INCOME. IT IS ALSO NOT I N DISPUTE THAT M/S. UNIVERSAL EXPORTS IS A PROPRIETARY CONCERN OF ASSES SEE -COMPANY. THE ASSESSEE IS A CLOSELY HELD LIMIT LIABILITY COMPANY AND BEING A LEGAL PERSON CAN BECOME PROPRIETOR/PARTNER OF ANY OTHER CONCERN. IN THE PRESENT CASE, THE ASSESSEE BECAME PROPRIETOR OF M/S. UNIVERSAL EX PORTS BUT THE UNDISPUTED FACTS REMAINS THAT M/S. UNIVERSAL EXPORT S IN ITSELF IS A DISTINCT PERSON ASSESSABLE TO INCOME TAX. THE ONLY CLAIM OF THE ASSESSEE COMPANY IS ON THE PROFIT OF THE PROPRIETARY CONCERN WHICH IS TO BE ADDED TO ITS NET PROFIT AT THE END OF THE YEAR EXCEPT FOR THIS THE PROFIT OF THE PROPRIETARY CONCERN M/S. UNIVERSAL EXPORTS HAS TO B E DETERMINED AND COMPUTED AS PER ITS OWN BOOKS OF ACCOUNT, THEREFORE , THE REVENUE AUTHORITIES HAVE VERY RIGHTLY ALLOWED THE DEPRECIAT ION IN THE HANDS OF M/S. UNIVERSAL EXPORTS AS THE SAME IS CLAIMED AND DEBITE D IN THE BOOKS OF ACCOUNT OF M/S. UNIVERSAL EXPORTS. THE ASSESSEES RIGHT IS ONLY OVER THE NET PROFIT DETERMINED AND COMPUTED AS PER THE BOOKS OF M/S. UNIVERSAL EXPORTS. WE FIND THAT THE ASSESSEE HAS IN ITS OWN COMPUTATION OF INCOME HAS COMPUTED ITS INCOME AS FOLLOWS: A) NET PROFIT FROM LAKSHMANS PLASTICS P_VT. LTD.- RS . 2,08,268/- B) PROFIT FROM PROP. FIRM M/S.UNIVERSAL EXPORTS RS. 7, 50,662/- M/S. LAKSHMANS PLASTICS PVT. LTD. 5 8. THE ASSESSEE CANNOT BE ALLOWED ONCE AGAINST DEPR ECIATION FROM THE PROFITS SO DETERMINED. CONSIDERING ALL THE FACTS I N TOTALITY, WE DO NOT FIND ANY REASON IN THE CLAIM OF THE ASSESSEE AS THE LD. CIT(A) HAS VERY CORRECTLY ON FACTS DISMISSED THE CLAIM OF THE ASSES SEE. NO INTERFERENCE IS CALLED FOR. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN BOTH THE YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2013 . 4 / 3' % 5 67 31.12.2013 3 / 8 SD/- SD/- (B.R. MITTAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 6 DATED 31.12.2013 . . ./ RJ , SR. PS M/S. LAKSHMANS PLASTICS PVT. LTD. 6 4 4 4 4 / // / ,0! ,0! ,0! ,0! 9!'0 9!'0 9!'0 9!'0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. !;8 ,0 , , / DR, ITAT, MUMBAI 6. 8< = / GUARD FILE. 4 4 4 4 / BY ORDER, -!0 ,0 //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI