ACIT, C-6, Ludhiana V. M/s Lotus Texpark Ltd., Ludhiana

ITA 1562/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8198 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Keywords: Depreciation; Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A CHANDIGARH !, ' # , $ % & ' ( , )* # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 1562/CHD/2018 ASSESSMENT YEAR : 2014-15 THE ACIT, CIRCLE 6, LUDHIANA. VS LOTUS TEXPARK LIMITED, 93, INDUSTRIAL AREA-A, LUDHIANA. PAN /TAN NO: AABCL2655E APPELLANT RESPONDENT REVENUE BY : SMT. VEENA JOSHI, CIT-DR !' ASSESSEE BY : SHRI ASHWANI KUMAR # $'% DATE OF HEARING : 11.07.2019 &'()'% D ATE OF PRONOUNCEMENT : 16.07.2019 )-/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A SSAILING THE CORRECTNESS OF THE ORDER DATED 01.09.2018 OF CIT(A)-3, LUDHIANA PERTAINING TO 2014-15 ASSESSMENT YEAR ON THE VARIOUS GROUNDS. I) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO WORKOUT CORRECT POSITION OF WDV OF THE BUILDING DESPITE THE FACT THAT THE ISSUE IS UNDER ADJUDICATION BEFORE HON'BLE PUNJ AB & HARYANA HIGH COURT, CHANDIGARH FOR THE A.Y. 2011-12 FROM WHERE THE ISSU E RAISED ACTUALLY.' II) ''WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION MADE U/S 14A IGNORING THE OBS ERVATION OF AO BEING NOT SATISFIED WITH CORRECTNESS OF THE CLAIM OF THE ASSESSEE COMPA NY THAT NO EXPENDITURE HAS BEEN MADE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME.' III) THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 2. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. AR THAT THE ORDER PASSED BY THE CIT(A) IS FULLY COVERED IN FAVOUR OF THE ASS ESSEE, HOWEVER, SINCE THE APPEAL HAS BEEN FILED BY THE REVENUE, THE LD. CIT-DR WAS R EQUIRED TO ADDRESS THE GROUNDS. ITA 1562/CHD/2018 A.Y. 2014-15 PAGE 2 OF 3 3. ADDRESSING THE FIRST ISSUE RAISED BY THE REVENUE IN THIS APPEAL, THE LD. CIT- DR DREW ATTENTION TO THE FINDING ARRIVED AT IN PARA 5.2 OF THE IMPUGNED ORDER. REFERRING TO THE SAME SINCE NO INFIRMITY COULD BE P OINTED OUT BY HER IN THE DIRECTIONS GIVEN, IT WAS HER SUBMISSION THAT PROBAB LY THE ISSUE WAS BEING CONTESTED FURTHER FOR WHICH PURPOSES THE AO IS TRYI NG TO KEEP THE ISSUE ALIVE. 4. THE LD. AR RELYING UPON THE FACTS AS CONSIDERED IN PARA 5.1 ON THE BASIS OF WHICH FINDING HAS BEEN ARRIVED AT IN PARA 5.2 RELIE D UPON THE ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE FACTS OF THE CASE AT HAND, IT IS SE EN THAT THE AO HAD ALLOWED DEPRECIATION CONSIDERING THE WRITTEN OUT VALUE (WDV )) OF THE ENTIRE ASSETS AS PER ASSESSMENT ORDER FOR 2013-14 ASSESSMENT YEAR WITHOU T GIVING THE BENEFIT OF THE CONSEQUENTIAL APPEAL EFFECT TO THE ORDERS OF THE IT AT FOR 2010-11 ASSESSMENT YEAR AND 2011-12 ASSESSMENT YEAR. THIS POSITION WAS BRO UGHT TO THE NOTICE OF THE CIT(A) IN APPEAL BY THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, FOLLOWING SUBMISSIONS ARE FOUND TO HAVE BEEN ADVANCED : DURING THE ASSESSMENT PROCEEDINGS FOR THE YEAR UND ER CONSIDERATION, DEPRECIATION WAS ALLOWED BY THE ASSESSING OFFICER BY CONSIDERING THE CLOSING BALANCES AS PER ASSESSMENT ORDER U/S 143(3) FOR THE ASSESSMENT YEAR 2013-14 IGNORING THE RELIEF ALLOWED BY HON'BLE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH, CHANDIGARH FO R THE AY 2010-11 & AY 2011-12. CONSEQUENTLY AN AMOUNT OF RS. 2,41,03,507/- WAS ADD ED TO THE INCOME OF THE APPELLANT COMPANY AS EXCESS DEPRECIATION CLAIMED WHICH IS UNJ USTIFIED AND HENCE NEEDS TO BE DELETED. 6. CONSIDERING THE FACTS AND THE SUBMISSIONS, FOLLO WING DIRECTIONS WERE GIVEN TO THE AO BY THE CIT(A): 5.2 VIDE THIS GROUND OF APPEAL THE ASSESSEE HAS CH ALLENGED THE ACTION OF THE ASSESSING OFFICER BY WAY OF NOT ALLOWING DEPRECIATION IN ACCO RDANCE TO PROVISION OF INCOME TAX ACT. IT IS SEEN THAT, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER HAS CONSIDERED THE WDV OF BUILDING, AS PER BROUGHT FORW ARD WDV OF BUILDING, FROM ASSESSMENT YEAR 2013-2014. WHEREAS THE ASSESSEE HAS CONTESTED, THAT THE ASSESSING OFFICER HAS NOT GIVEN THE BENEFIT OF THE RELIEF, GIVEN BY THE JURISDICTIO NAL TRIBUNAL IN THE CASE OF THE ASSESSEE IN EARLIER YEARS, WHILE CONSIDERING THE WDV OF THE BUI LDING FOR THE PURPOSE OF GIVING BENEFIT OF DEPRECIATION I HAVE CONSIDERED THE BASIC FACTS OF T HE CASE, IN MY CONSIDERED VIEW THE ASSESSEE IS ENTITLED TO GET BENEFIT OF WDV OF THE BUILDING A S BROUGHT FORWARD AFTER APPLICATION OF THE DECISION OF HONORABLE JURISDICTIONAL TRIBUNAL IN TH E CASE OF ASSESSEE IN ASSESSMENT YEAR 2013- 2014 AND IN EARLIER YEARS. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO WORK OUT CORRECT POSITION OF THE WDV OF THE BUILDING, IN ACCORDANCE TO THE POSITION OF BLOCK OF BUILDING, AFTER APPLICATION OF DECISION OF HONORABLE JURISDICTIONAL TRIBUNAL IN ASSESSMENT YEAR 2013-2014 AND IN EARLIER YEARS TO ASCERTAIN THE CORRECT WDV A ND ALLOW DEPRECIATION ACCORDINGLY. WITH THE RESULT THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6.1 ON PERUSAL OF THE SAME, WE FIND NO INFIRMITY IN THE DIRECTIONS GIVEN. THE LD. CIT-DR ALSO WAS UNABLE TO POINT OUT ANY SPECIFI C OBSERVATION WHICH THE ITA 1562/CHD/2018 A.Y. 2014-15 PAGE 3 OF 3 REVENUE SEEKS TO ADDRESS EXCEPT HIGHLIGHTING THE FA CT THAT PROBABLY THE ISSUE WAS BEING KEPT ALIVE BY THE AO. WE FIND ON GOING THROU GH THE FACTS AND SUBMISSIONS THAT IN THE ABSENCE OF ANY INFIRMITY ON FACTS OR LA W THE DIRECTIONS OF THE CIT(A) BEING CONSEQUENTIAL AND IN ACCORDANCE WITH LAW ARE BEING CONFIRMED. GROUND NO. 1 RAISED IS REJECTED. 7. THE ISSUE RELATABLE TO GROUND NO. 2 RAISED IN TH E PRESENT PROCEEDINGS IS FOUND ADDRESSED IN PARA 6 BY THE CIT(A). THE AO IN THE FACTS OF THE PRESENT CASE MADE AN ADDITION BY WAY OF DISALLOWANCE U/S 14A REA D WITH RULE 8D WHICH WAS CHALLENGED IN APPEAL BEFORE THE CIT(A). THE ASSESS EE BEFORE THE CIT(A) CANVASSED THAT NO INVESTMENTS HAVE BEEN MADE IN THE YEAR UNDE R CONSIDERATION AND FURTHER THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. THES E SUBMISSIONS ON FACTS ARE CONSIDERED IN PARA 6.2 TO 6.5 OF THE IMPUGNED ORDER CONSIDERING WHICH THE CIT(A) GRANTED RELIEF HOLDING AS UNDER : 6.6. ON A PRAGMATIC APPROACH OF ALL THE RELEVANT C ASE LAWS AND THE ENTIRE FACTS AND CIRCUMSTANCES, IT IS HELD THAT SINCE THERE WAS NO E XEMPT INCOME WHICH WAS INCLUDED IN THE TOTAL INCOME DURING THE YEAR UNDER CONSIDERATION, P ROPORTIONATE DISALLOWANCE OF INTEREST PAID IS ALSO NOT CALLED FOR. UNDER SUCH CIRCUMSTANCES, T HE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS. 1,26,67,193/- TO THE INCOME OF T HE APPELLANT U/S 14A OF THE INCOME TAX ACT IS NOT JUSTIFIED. THE AO IS, THEREFORE, DIRECTED TO DELETE THE DISALLOWANCE. 8. IN THE ABSENCE OF ANY REBUTTAL ON FACTS OR LAW, WE FIND NO REASON TO VARY THE CONCLUSION ARRIVED AT. BEING SATISFIED WITH THE EX PLANATION OFFERED AND CONSIDERED BY THE CIT(A), GROUND NO. 2 RAISED BY TH E REVENUE IS DISMISSED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY,2019. SD/- SD/- ( $ % & ' ( ) ( ! ) (ANNAPURNA GUPTA) (DIVA SINGH) )* #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER % $ '+ ',- .-' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT -3. # /' / CIT4. # /' ( )/ THE CIT(A) 5. -01 '2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 / ASSISTANT REGISTRAR