EURO SHOES COMPONENTS LTD, VELLORE V. ACIT , VELLORE

ITA 1595/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2583 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA
• Assessee Lawyers: A MAHESH
• Keywords: Depreciation; Additional depreciation; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1595 & 1596/CHNY/2018 ( )( / ASSESSMENT YEARS : 2013-14 & 2014-15 M/S EURO SHOE COMPONENTS LTD., NO.478/30A, COROMANDAL ROAD, SIPCOT, RANIPET 632 403. PAN : AABCE 4723 G V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, VELLORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI A. MAHESH, FCA -.+, / 0 / RESPONDENT BY : MS. ANITA, JCIT 1 / 2% / DATE OF HEARING : 25.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 07.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNAI, FOR THE ASSESSMENT YEARS 2013-14 AND 2014- 15. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN THESE APPE ALS, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1595 & 1596/CHNY/18 2. THERE WAS A DELAY OF 6 DAYS IN FILING THESE APPE ALS BY THE ASSESSEE. THE ASSESSEE HAS FILED PETITIONS FOR CON DONATION OF DELAY. WE HEARD THE LD. REPRESENTATIVE AND THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THES E APPEALS BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY A ND ADMIT BOTH THE APPEALS. 3. THE FIRST GROUND OF APPEAL IS WITH REGARD TO REV ERSAL OF EXCESS DEPRECIATION AND DISALLOWANCE MADE UNDER SECTION 40 (A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE A SSESSEE, SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDI NG, THE ASSESSEE HAS REVERSED THE EXCESS DEPRECIATION AND A LSO REDUCED THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT BY LETTER DATED 23.02.2016. ACCORDING TO THE LD. REPRESENTATIVE, T HE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) HAVE NOT CONSID ERED THE CLAIM OF THE ASSESSEE SINCE THE REVISED RETURN WAS NOT FILED . PLACING RELIANCE ON VARIOUS CASE LAWS, THE LD. REPRESENTATI VE SUBMITTED THAT THE JUDGMENT OF APEX COURT IN GOETZE (INDIA) LTD. V . CIT (2006) 284 ITR 323 IS APPLICABLE ONLY TO THE ASSESSING OFFICER AND NOT TO THE 3 I.T.A. NOS.1595 & 1596/CHNY/18 APPELLATE AUTHORITY, THEREFORE, THE CIT(APPEALS) AT LEAST OUGHT TO HAVE CONSIDERED THE SAME. THE LD. REPRESENTATIVE P LACED HIS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CI T V. ABHINITHA FOUNDATION PVT. LTD. IN T.C (A) NO.811 OF 2016 DATE D 06.06.2017, A COPY OF WHICH IS AVAILABLE AT PAGE 12 OF THE PAPER- BOOK. 5. ON THE CONTRARY, MS. ANITA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT UNLESS THE CLAIM IS MADE IN THE RETURN OF INCOME, IN VIEW OF THE JUDGMENT OF APEX C OURT IN GOETZE (INDIA) LTD. (SUPRA), THE ASSESSING OFFICER IS NOT EXPECTED TO CONSIDER THE SAME. ADMITTEDLY, ACCORDING TO THE LD . D.R., THE ASSESSEE HAS NOT MADE ANY CLAIM IN THE RETURN OF IN COME AND IT WAS MADE BY WAY OF A LETTER DURING THE COURSE OF ASSESS MENT PROCEEDING, THEREFORE, THE ASSESSING OFFICER HAS RI GHTLY REJECTED THE CLAIM OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN RESPECT OF REVERSAL OF EXCESS DEPRECIATION AND DISALLOWANCE UN DER SECTION 40(A)(IA) OF THE ACT, THE ASSESSEE ADMITTEDLY HAS N OT MADE ANY CLAIM AND IT WAS CLAIMED BY WAY OF A LETTER DATED 2 3.02.2016. THE 4 I.T.A. NOS.1595 & 1596/CHNY/18 ASSESSING OFFICER BY APPLYING THE JUDGMENT OF APEX COURT IN GOETZE (INDIA) LTD. (SUPRA), DISALLOWED THE CLAIM OF THE A SSESSEE. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THIS T RIBUNAL CAN ENTERTAIN THE CLAIM OF THE ASSESSEE EVEN THOUGH IT HAS NOT CLAIMED IN THE RETURN OF INCOME? THIS ISSUE WAS EXAMINED B Y THE MADRAS HIGH COURT IN ABHINITHA FOUNDATION PVT. LTD. (SUPRA ). THE MADRAS HIGH COURT FOUND THAT FAILURE TO ADVERT TO THE CLAI M IN THE ORIGINAL RETURN OR IN THE REVISED RETURN CANNOT DENUDE THE A PPELLATE AUTHORITIES OF THEIR POWER TO CONSIDER THE CLAIM IF THE RELEVANT MATERIAL IS AVAILABLE ON RECORD AND IS OTHERWISE TE NABLE IN LAW. IN VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT, THIS TR IBUNAL IS OF THE CONSIDERED OPINION THAT THIS TRIBUNAL CAN ENTERTAIN THE CLAIM OF THE ASSESSEE EVEN THOUGH IT WAS NOT MADE IN THE RETURN OF INCOME. MOREOVER, THE APEX COURT ITSELF IN THE CASE OF CIT V. SHELLY PRODUCTS AND ANOTHER (2003) 261 ITR 367 FOUND THAT THE ASSESSEE CAN MAKE CLAIM DURING THE COURSE OF ASSESSMENT PROC EEDING WHICH IS OMITTED TO BE MADE IN THE RETURN OF INCOME. 7. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF BOTH THE AUTHORITIES BELOW. THEREFORE, O RDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE MATTER IS R EMITTED BACK TO 5 I.T.A. NOS.1595 & 1596/CHNY/18 THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL CONSIDER THE ISSUE WITH REGARD TO REDUCTION OF REVE RSAL OF EXCESS DEPRECIATION AND REDUCTION OF DISALLOWANCE UNDER SE CTION 40(A)(IA) OF THE ACT AS CLAIMED BY THE ASSESSEE IN THE LETTER DATED 23.02.2016 AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANC E WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 8. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDIT IONAL DEPRECIATION. 9. SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE ADMITTEDLY PURCHASED A NEW MACHINERY AND ELIGIBLE FOR ADDITIONAL DEPRECIATION OF 20%. D URING THE YEAR UNDER CONSIDERATION, ACCORDING TO THE LD. REPRESENT ATIVE, THE ASSESSING OFFICER ALLOWED 10%. THE BALANCE AMOUNT WAS TO BE CARRIED FORWARD AND TO BE ALLOWED FOR ASSESSMENT YE AR 2014-15. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE A PPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2014-15 IS ALSO BEFORE THE TRIBUNAL IN I.T.A. NO.1596/CHNY/2018. REFERRING TO THE EXPL ANATORY NOTE TO PROVISO TO SECTION 32(1)(IIA) OF THE ACT, THE LD. R EPRESENTATIVE SUBMITTED THAT THIS PROVISO WAS HELD TO BE PROSPECT IVE IN NATURE BY 6 I.T.A. NOS.1595 & 1596/CHNY/18 CIT(APPEALS). ACCORDINGLY, HE REJECTED THE CLAIM O F THE ASSESSEE. REFERRING TO THE JUDGMENT OF MADRAS HIGH COURT IN C IT V. T.P. TEXTILES PVT. LTD. (394 ITR 483), THE LD. REPRESENT ATIVE SUBMITTED THAT THE MADRAS HIGH COURT FOUND THAT THE AMENDMENT IS CLARIFICATORY IN NATURE, THEREFORE, IT IS NOT PROSP ECTIVE IN OPERATION. IN OTHER WORDS, IT IS RETROSPECTIVE IN NATURE, THEREFO RE, THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION. 10. WE HEARD MS. ANITA, THE LD. DEPARTMENTAL REPRES ENTATIVE ALSO. ADMITTEDLY, SECTION 32(1)(IIA) OF THE ACT WA S AMENDED FOR GRANTING ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR IN CASE IT CANNOT BE ALLOWED IN THE YEAR IN WHICH MACHINERY WA S INSTALLED. THE ASSESSEE ADMITTEDLY INSTALLED A NEW MACHINERY A ND USED THE SAME FOR LESS THAN 180 DAYS. THEREFORE, THE ASSESS ING OFFICER GRANTED 10% OF ADDITIONAL DEPRECIATION DURING THE Y EAR UNDER CONSIDERATION AND THE BALANCE WAS DISALLOWED ON THE GROUND THAT THE AMENDMENT WILL BE OPERATIVE IN PROSPECTIVE. TH E MADRAS HIGH COURT FOUND THAT THE AMENDMENT IS RETROSPECTIVE IN OPERATION. THEREFORE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTI FIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED 7 I.T.A. NOS.1595 & 1596/CHNY/18 TO ALLOW REMAINING 50% DEPRECIATION DURING THE ASSE SSMENT YEAR 2014-15. 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IS GRAN T OF INTEREST OF 2,46,024/- AS AGAINST THE CORRECT INTEREST OF 4,73,782/-. THIS ISSUE IS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2013-14. 12. WE HEARD SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE ASSESSEE AND MS. ANITA, THE LD. DEPARTMENTAL REPRES ENTATIVE. THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO VERI FY THE CLAIM MADE BY THE ASSESSEE. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE GRANT OF INTEREST HAS TO BE VERIFIED ON TH E FACTS AVAILABLE ON RECORD BY THE ASSESSING OFFICER. THEREFORE, THE AS SESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE WITH R EGARD TO GRANT OF INTEREST AND PASS AN ORDER AFRESH AFTER GIVING A RE ASONABLE OPPORTUNITY TO THE ASSESSEE. 13. THE NEXT ISSUE ARISES FOR CONSIDERATION FOR ASS ESSMENT YEAR 2013-14 IS CREDIT OF 8,27,348/- UNDER SECTION 115-O OF THE ACT IN RESPECT OF DISTRIBUTION TAX AS AGAINST THE ACTUAL T AX PAID 20,92,703/-. 8 I.T.A. NOS.1595 & 1596/CHNY/18 14. SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT WHILE MAKING PAYMENT WITH REGARD TO DISTRIBUTION TAX, THE ASSESSEE HAS WRONGLY UPLOADED THE ASSESSMENT YE AR. THE ASSESSING OFFICER CLAIMS THAT HE HAS NO POWER TO RE CTIFY THE MISTAKE COMMITTED BY THE ASSESSEE. 15. WE HEARD MS. ANITA, THE LD. DEPARTMENTAL REPRES ENTATIVE ALSO. THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT EVEN THOUGH THE PAYMENT WAS MADE WRONGLY THROUGH ONLINE, THE AS SESSING OFFICER BEING THE ASSESSING AUTHORITY HAS THE JURIS DICTION AND POWER TO VERIFY THE CLAIM OF THE ASSESSEE WHETHER THE ASS ESSEE HAS WRONGLY PAID THE TAX FOR OTHER ASSESSMENT YEAR OR F OR THIS ASSESSMENT YEAR. AFTER VERIFICATION, IF THE ASSESS ING OFFICER FINDS THAT THERE IS ANYTHING WRONG IN UPLOADING THE PAYME NT IN RESPECT OF THE ASSESSMENT YEAR, NECESSARY CORRECTION SHOULD BE MADE. WRONG UPLOADING OF ASSESSMENT YEAR THROUGH ONLINE CANNOT BE TAKEN ADVANTAGE BY THE DEPARTMENT. THE PROCEEDING BEFORE THE ASSESSING OFFICER BEING A JUDICIAL PROCEEDING UNDER SECTION 136 OF THE ACT, THE ASSESSING OFFICER HAS TO ACT JUDICIOUS LY AND RECTIFY THE MISTAKE IF ANY COMMITTED BY THE ASSESSEE IN MAKING PAYMENT OF TAXES. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE 9 I.T.A. NOS.1595 & 1596/CHNY/18 MATTER NEEDS TO BE VERIFIED BY THE ASSESSING OFFICE R. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL VERIFY THE DISTRIBUTION TAX PAID BY T HE ASSESSEE UNDER SECTION 115-O OF THE ACT AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 16. THE NEXT ISSUE ARISES FOR CONSIDERATION FOR ASS ESSMENT YEAR 2013-14 IS LEVY OF INTEREST UNDER SECTION 115P OF T HE ACT. 17. WE HEARD SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE ASSESSEE AND MS. ANITA, THE LD. DEPARTMENTAL REPRES ENTATIVE. LEVY OF INTEREST IS A FACTUAL ASPECT WHICH NEEDS TO BE VERIFIED ON THE BASIS OF THE MATERIAL. THE ASSESSING AUTHORITY IS A RIGHT PERSON TO VERIFY THE CLAIM OF INTEREST UNDER SECTION 115P OF THE ACT. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FIL E OF THE ASSESSING OFFICER. 18. NOW COMING TO ASSESSMENT YEAR 2014-15, SHRI A. MAHESH, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT A REVISED RETURN WAS FILED WITHIN THE TIME LIMIT PROVIDED UND ER THE ACT. 10 I.T.A. NOS.1595 & 1596/CHNY/18 HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED T HE REVISED RETURN. 19. WE HEARD MS. ANITA, THE LD. DEPARTMENTAL REPRES ENTATIVE ALSO. THE LD. D.R. SUBMITTED THAT IT IS NOT KNOWN WHETHER THE REVISED RETURN WAS FILED WITHIN THE TIME LIMIT OR N OT. 20. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASS ESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HAS FILED THE REVISE D RETURN WITHIN THE TIME LIMIT PROVIDED UNDER THE PROVISIONS OF INC OME-TAX ACT, THE SAME HAS TO BE CONSIDERED BY THE ASSESSING OFFICER. HOWEVER, IT IS NOT KNOWN WHETHER THE REVISED RETURN WAS FILED WITH IN THE TIME PROVIDED UNDER THE ACT OR NOT? HENCE, ORDERS OF BO TH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO RE- EXAMINE THE MATTER AND FIND OUT WHETHER THE ASSESSE E FILED THE REVISED RETURN WITHIN THE TIME LIMIT PROVIDED UNDER THE ACT AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 21. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11 I.T.A. NOS.1595 & 1596/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 7 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 7 TH NOVEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-8, CHENNAI-34 5. 7: -2 /DR 6. ;( < /GF.