Kandla Port Trust, GANDHIDHAM V. The Assistant Commissioner Of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 148/RJT/2009

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1111 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: RAMA SHANKAR SINGH
• Keywords: Depreciation; Difference of opinion; Reason to believe; Change of opinion
• Section: 12A; 12AA; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI , ACCOUNTANT MEMBER . ITA. NO S . 147 & 1 48 / RJT /20 09 (ASSESSMENT YEAR S : 200 3 - 0 4 & 200 4 - 0 5 ) KANDLA PORT TRUST, A.O. BUILDING, TAGORE ROAD, GANDHIDHAM (KUTCH) 370201 APPELLANT VS. ACIT, CIRCLE - GANDHIDHAM, PLOT NO.32, SECTOR - 3, GANDHIDHAM RESPONDENT PAN: AAALK0046N / BY ASSESSEE : SHRI MUKUND BAKSHI & SHRI RAMA SHANKAR SINGH, C.A. / BY REVENUE : SHRI M. L. MEENA, D.R . / DATE OF HEARING : 25 .0 5 .2015 / DATE OF PRONOUNCEMENT : 28 .0 5 .2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO APPEALS FILED BY REVENUE PERTAIN TO SAME ASSESSEE ARE ARISING OUT FORM THE ORDER S OF CIT(A) - II , RAJKOT , DATED 07 . 0 1.20 09 . SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I T A NO S . 147 & 1 48 /RJT/ 09 [ KANDLA PORT TRUST VS. ACIT ] A.YS. 03 - 04 & 04 - 05 PAGE 2 2. IN ITA NO. 147 / RJT /20 09 , REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND S : 1) LD. CIT(A) II HAS ERRED IN LAW BY TREATING THE REASONS RECORDED BY AO FOR REASSESSMENT AS VALID ONE WHEREAS FROM NUMBER OF SC AND HC JUDGMENT, IT IS CLEAR THAT THE REASSESSMENT MADE ON MERE CHANGE OF OPINION AND WITHOUT ANY REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BASED ON MERE SUSPICION IS BAD IN LAW. FOR THE FACT AND CIRCUMSTANCES OF THE CASE, THE NOTICE ISSUED FOR REASS ESSMENT IS INVALID AND ASSESSMENT BASED ON IMPROPER NOTICE IS BAD IN LAW AND REASSESSMENT NEEDS TO BE CANCELLED AND TREATED AS NULL AND VOID. 2) LD CI T (A) II HAS ERRED IN LAW BY TREATING THE REASSESSMENT MADE ON THE INSTRUCTION OF HIGHER AUTHORITIES AS V ALID WHEREAS FROM NUMBER OF SC AND HC JUDGEMENT, IT IS CLEAR THAT REASSESSMENT MADE ON INSTRUCTIONS OF HIGHER AUTHORITIES WITHOUT HAVING OWN BELIEF OF AO REGARDING ESCAPMENT OF INCOME IS BAD IN LAW. FOR THE FACTS AND CIRCUMSTANCES OF THE CASE, THE REASSESS MENT IS BAD IN LAW AND NEEDS TO BE C AN CELLED AND TREATED AS NULL AND VOID . 3) LD CI T (A) II HAS ERRED IN LAW BY ACCEPTING THE CONTENTION OF AO THAT NOTICE U/S . 143(2) WAS SERVED ON TO THE APPELLANT ALONG WITH SOME OTHER PAPER AND AS A RESULT NO SEPARATE SI GNATURE WAS OBTAINED ON NOTICE WHEREAS IN FACT NO NOTICE U/S. 143(2) WAS SERVED ON TO THE APPELLANT AND AS A CONSEQUENCES FROM NUMBER OF DECISIONS IT IS CLEAR THAT ASSESSMENT MADE WITHOUT ISSUE OF NOTICE U/S. 143(2) IS BAD IN LAW. FOR THE FACTS AND CIRCUMS TANCES OF THE CASE, THE REASSESSMENT MADE WITHOUT ISSUE OF NOTICE U/S. 143(2) IS BAD IN LAW AND HENCE INVALID. 4) LD CI T (A) HAS ERRED IN LAW AND ON FACTS FOR NOT ALLOWING ADDITIONAL GROUNDS OF APPEAL RAISED BY APPELLANT FOR TREATING ITS INCOME EXEMPT U/ S. 11 TO 13 OF THE ACT AS YOUR APPELLANT HAS GOT THE REGISTRATION CERTIFICATE U/S. 12A OF THE INCOME TAX ACT AFTER FILING OF THE APPEAL AND BY VIRTUE, ITS INCOME IS EXEMPT FROM TAX U/S. 11 TO 13 OF THE INCOME TAX ACT. FROM NUMBER OF SE DECISIONS, IT IS C LEAR THAT T HE ADDITIONAL GROUNDS BASED OR, LEGAL ISSUE CAN FOR THE FIRST TIME I T A NO S . 147 & 1 48 /RJT/ 09 [ KANDLA PORT TRUST VS. ACIT ] A.YS. 03 - 04 & 04 - 05 PAGE 3 BE RAISED BEFORE APPELLATE AUTHORITY. FOR THE FACTS AND CIRCUMSTANCES OF THE CASE, APPELLANT SHOULD HAVE ALLOWED TO RAISE THE ADDITIONAL GROUND BEFORE CI T AND ITS INCOME SHOULD B E TREATED AS EXEMPT U/S. 11 TO 13 OF THE ACT. 5) LD CI T (A) HAS ERRED IN LAW AND ON FACTS BY MENTIONING IN THE ORDER THAT 'AO WAS RIGHT AND CORRECT IN PASSING AN ASSESSMENT ORDER ALLOWING THE DEPRECIATION AS PER THE WDV AS ON 1/4/2002' BUT ALLOWING THE DE PRECIATION WHICH HAS BEEN' CALCULATED IN REASSESSMENT ORDER BY TAKING THE WDV OF ASSETS AS ON 1/4/2000. THUS THE WDV OF THE ASSETS HAS TO BE TAKEN FROM 1/4/2002 AND NOT FROM 1/4/2000 AS HELD BY AO IN REASSESSMENT ORDER. FOR THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE DIFFERENCE OF DEPRECIATION BETWEEN THESE TWO DATES NEEDS TO BE ALLOWED TO THE APPELLANT. 6) LD CI T (A) HAS ERRED IN LAW AND ON FACTS BY NOT TAKING ANY COGNIZANCE OF THE FACT THAT THE DEPRECIATION ON VARIOUS CORE ASSETS OF PORTS LIKE WHARVES, PAVMENTS, DOCKS, DRAINS, JETTIES, RAILWAYS, ROLLING STOCK WAS CLAIMED BY APPELLANT BASED ON FUNCTIONAL CLASSIFICATION OF SUCH ASSETS TREATING THE SAME AS PLANT & MACHINERY BUT THE AO HAS TREATED THE SAME AS BUILDING AND ALLOWED THE DEPRECIATION ON SAME AT THE RATE APPLICABLE TO BUILDING. HON'BLE ITAT, RAJKOT FOR THE A.Y. 2003 - 4 AND HON'BLE CI T (A) II , RAJKOT FOR A.Y. 2004 - 5 HAS ALLOWED THE DEPRECATION OF ABOVE MENTIONED ASSETS AT THE RATE APPLICABLE TO PLANT & MACHINERY BASED ON FUNCTIONAL CLASSIFICATION O F ASSETS. NO SUCH ISSUE IS DISCUSSED IN THE APPELLATE'S ORDER. FOR THE FACTS AND CIRCUMSTANCES OF THE CASE, CORE ASSETS OF THE APPELLANT AS MENTIONED ABOVE NEEDS TO CLASSIFIED UNDER THE CATEGORY PLANT & MACHINERY AND THE D EPRECATION NEEDS TO BE ALLOWED AT THE RATE APPLICABLE TO PLANT & MACHINERY. 7) LD. CI T (A) HAS ERRED IN LAW AND ON FACTS IN TREATING THE EXPENDITURE ON MAINTENANCE DREDGING AS CAPITAL DREDGING IGNORING CERTIFICATE FROM DCI & ACTUAL NATURE OF WORK DONE. FOR THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS NEEDS TO BE ALLOWED AS MAINTENANCE DREDGING . SIMILAR GROUND S HA VE BEEN RAISED BY REVENUE IN A.Y.200 4 - 0 5 . I T A NO S . 147 & 1 48 /RJT/ 09 [ KANDLA PORT TRUST VS. ACIT ] A.YS. 03 - 04 & 04 - 05 PAGE 4 3 . SIMILAR ISSUE AROSE IN ASSESSEE S OWN CASE FOR A.Y. 2005 - 06, WHEREIN TRIBUNAL IN ITA NO. 178/RJT/2009 HELD AS UNDER: 11. AFTER H EARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN EARLIER YEARS. IT IS PERTINENT TO NOTE THAT WHEN THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2005 FOR THE ASSESSMENT YEAR UNDER APPEAL, THE APPLICATION FOR REGISTRATION OF THE TRUST U/S 12A WAS PENDING BEFORE THE CIT, RANGE - 1, RAJKOT. THIS WAS REFUSED ON 24.4.2007. THEREAFTER AS PER THE DIRECTION OF THE TRIBUNAL, THE LD. CIT, RAJKOT - I VIDE ORDER DATED 5.12.20 08 PASSED U/S 12AA GIVING EFFECT TO THE ORDER OF TRIBUNAL, THE LD. CIT, RAJKOT, GRANTED REGISTRATION U/S 12AA WITH EFFECT FROM 1.4.2002. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND DIRECT THE AO TO RECOMPUTE THE INCOME OF T HE ASSESSEE KEEPING IN VIEW THE FACT THAT NOW THE LD. CIT, RAJKOT HAS GRANTED REGISTRATION U/S 12AA TO THE ASSESSEE - TRUST WITH EFFECT FROM 1.4.2002. AT THE TIME OF HEARING OF THIS APPEAL, BOTH SIDES CONCEDED THAT IF EXEMPTION AS CLAIMED BY THE ASSESSEE UND ER SECTIONS 11/12/13 IS ALLOWED IN VIEW OF THE REGISTRATION U/S 12AA GRANTED BY THE CIT - RAJKOT WITH EFFECT FROM 2002, THE ISSUE RAISED IN GROUNDS NO.2 TO 5 WILL BECOME ACADEMIC. HOWEVER, LOOKING TO THE FACT THAT AGAINST THE DECISION OF THE TRIBUNAL IN ITA NO.350/RJT/2007 DATED 20.6.2008, THE APPEAL OF THE REVENUE IS PENDING BEFORE THE HON BLE GUJARAT HIGH COURT, THEREFORE, WHILE RE - COMPUTING THE INCOME OF THE ASSESSEE - TRUST, IF REQUIRE, THE AO WILL CONSIDER THE OBJECTIONS OF THE ASSESSEE IN RESPECT OF GROUN DS NO.2 TO 5 WHICH ARE LISTED BY US HEREINABOVE AND THEREAFTER PASS SPEAKING ORDER IN ACCORDANCE WITH LAW. 12. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 3.1 FURTHER IT WAS POINTED OUT THAT MATTER WAS CARRIED BY REVENUE IN APPEAL BEFORE JURISDICTIONAL HIGH COURT, WHEREIN I T A NO S . 147 & 1 48 /RJT/ 09 [ KANDLA PORT TRUST VS. ACIT ] A.YS. 03 - 04 & 04 - 05 PAGE 5 HON BLE HIGH COURT HAS DECIDED THE APPEAL IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 27. ABOVE OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSEE S APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT. WHETHER THE CONDITIONS FOR EXEMPTION UNDER SECTION 11 ARE SATISFIED OR NOT, ARE THE ISSUES WHICH NEED TO BE EXAMINED ONLY AT THE TIME OF ASSESSMENT. HOWEVER, THE ASSESSEE IN THE FACTS OF THE PRESENT CASE CANNOT BE DENIED REGISTRATION UND ER SECTION 12A OF THE ACT. 28. WHEN WE ARE IN THE PROCESS OF REJECTING THE TAX APPEAL NO.575 OF 2009, REST OF THE TAX APPEALS WOULD AUTOMATICALLY HAVE TO MEET WITH THE SAME RESULT. IN THE RESULT, ALL TAX APPEALS ARE DISMISSED. 3.2 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR SO FOLLOWING SAME REASONING, WE ARE NOT INCLINED TO CONQUER WITH THE FINDING OF CIT(A) ON THE ISSUE. SO, WE SET ASIDE THE IMPUGNED ORDER AND DIRECTED THE ASSESSING OFFICER TO RECOMPUT ED THE INCOME OF ASSESSEE, K EEPING IN MIND THE FACT THAT NOW CIT, RAJKOT HAS ALREADY GRANTED REGISTRATION U/S.12AA TO ASSESSEE TRUST W.E.F. 01.04.2002. AT THIS STAGE, BOTH PARTIES AGREED THAT IN CASE OF EXEMPTION AS CLAIMED BY ASSESSEE U/S.11/12/13 IS ALLOWE D IN VIEW OF THE REGISTRATION U/S.12AA GRANTED BY CIT, RAJKOT W.E.F. 01.04.2002. ISSUE RAISED IN OTHER GROUNDS WILL GO ACADEMIC. 4. SIMILAR ISSUE AROSE IN A.Y.2004 - 05. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, WE SET ASIDE THE IMPUGNED ORDER I T A NO S . 147 & 1 48 /RJT/ 09 [ KANDLA PORT TRUST VS. ACIT ] A.YS. 03 - 04 & 04 - 05 PAGE 6 AND DIRECT THE ASSESSING OFFICER TO R ECOMPUTE THE INCOME OF ASSESSEE IN LIGHT OF ABOVE DISCUSSION. 5 . IN THE RESULT, APPEAL S FILED BY ASSESSE E FOR BOTH YEARS ARE ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF MA Y , 201 5 . SD/ - SD/ - (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT : DATED 28 /0 5 /2015 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEA LS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, RAJKOT 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT