DCIT, Coimbatore V. M/s. Mahaveer Sarees P. Ltd., Coimbatore

ITA 1658/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0957 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO. 1658/MDS/2012 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(3), COIMBATORE. V. M/S. MAHAVEER SAREES P. LTD., NO. 9/8, CROSS CUT ROAD, COIMBATORE-641 012. (PAN : AABCM4712H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GURU BASHYAM, JCIT RESPONDENT BY : NONE DATE OF HEARING : 22.0 1.2013 DATE OF PRONOUNCEMENT : 22.01.201 3 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS)-I, COIMBATORE DATED 13-06-2012 FOR THE ASSESSMENT YEAR 2004-05. ITA NO.1658/MDS/0122 : 2 : 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING IN TEXTILE GOODS. THE ASSESSEE FILED A RET URN DECLARING TOTAL LOSS OF ` 83,880/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INSTALLED A WIND ELECTRIC GENERATOR AT THE COST OF ` 1,11,68,080/- AND CLAIMED HIGHER DEPRECIATION OF ` 44,67,232/- @ 40% AS PER APPENDIX-I. HOWEVER, THE ASSESSEE DID NOT FILE OR EXERCISE THE OPTION TO CLAIM HIGHER DEPRECIATION AS PER SECTION 32 READ WITH RULE 5(1A). THE CASE WAS RE-O PENED U/S 147 BY ISSUING A NOTICE U/S 148 ON 28-03-2011. IN RESPONSE TO NOTICE U/S 148 THE ASSESSEE FILED A REPLY STATING T HAT THE RETURN FILED U/S 139 ON 31-10-2004 RELATING TO THE ASSESSM ENT YEAR 2004-05 MAY BE TREATED AS COMPLIANCE TO THE NOTICE U/S 148. SUBSEQUENTLY, NOTICE U/S 143(2) DATED 20-06-2011 WA S SERVED ON THE ASSESSEE CALLING FOR EXPLANATION FROM THE AS SESSEE WITH REGARD TO THE CLAIM OF HIGHER DEPRECIATION. IN RES PONSE TO THAT THE ASSESSEE REPLIED THAT: THE ASSESSEE HAS EXERCISED HIS OPTION AS PER HIS KNOWLEDGE OF THE ACT. WHEN THERE IS NO SPECIFI C FORM OR METHOD PRESCRIBED FOR EXERCISING THE SAID OPTION THEN THE CLAIM MADE IN THE RETURN OF INCOME AS WELL AS REFLECTED FROM THE BOOKS OF ACCOUNT AND ITA NO.1658/MDS/0122 : 3 : AUDIT REPORT FILED ALONG WITH RETURN OF INCOME IS MORE THAN THE EXERCISE OF THE OPTION AS REQUIRED UNDER SECTION PROVISO TO RULE 5(1A) THE ASSESSEE HAS CLEARLY EXERCISED HIS OPTION AS EXPLAINED IN THE JUDGEMENT OF M/S. KKSK LEATHER PROCESSORS VS. ITO, ITAT, CHENNAI. .THE LIMIT PROVIDED UNDER THE SECOND PROVISO TO RULE 5(1A) IS ONLY TO FACILITATE THE ASSESSING OFFI CER IN DISCHARGING ITS OBLIGATIONS AND DUTIES AS PER TH E PROVISIONS OF SUBSECTION (1) OF SECTION 32 OF THE INCOME-TAX ACT. THEREFORE THE SAID REQUIREMENT CANNOT ACT ON THE OPTION EXERCISED BEFORE THE RETURN IS FILED AND THEREFORE NO FRUITFUL PURPOSE O R OBJECT CAN BE ACHIEVED BY MANDATING EXERCISE OF OPTION PRIOR TO FILING OF RETURN ON DUE DATE. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANA TION OF THE ASSESSEE ONLY ALLOWED DEPRECIATION TO THE EXTENT OF ` 4,29,412/- AND THE EXCESS DEPRECIATION CLAIMED AMOU NTING TO ` 40,37,820/- WAS DISALLOWED AND ADDED BACK TO THE TO TAL INCOME OF THE ASSESSEE COMPANY. 3. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(APPEALS). THE CIT(APPEALS) HAS ALLO WED THE ITA NO.1658/MDS/0122 : 4 : APPEAL FILED BY THE ASSESSEE BY OBSERVING THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF K.K.S.K. LEATHER PROCESSORS (P) LTD. V. ITO (2010) 126 ITD 215 (CHENNAI) AND RELIEF WAS GR ANTED. 4. ON BEING AGGRIEVED, THE REVENUE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL. NONE APPEARED ON BEHALF OF TH E ASSESSEE. THE LEARNED DR ONLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESS EE IS ELIGIBLE FOR CLAIM OF HIGHER DEPRECIATION OR NOT. THE VERY SIMILAR ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF K.K.S.K. LEATHER PROCESSORS (P) LTD. (SUPRA) AND THE TRIBUNA L HAS ELABORATELY DISCUSSED AND HELD THAT SINCE THERE IS NO SPECIFIC FORM OR METHOD PRESCRIBED FOR EXERCISING OPTION, TH E CLAIM MADE IN THE RETURN OF INCOME AS WELL AS REFLECTED F ROM BOOKS OF ACCOUNT AND AUDIT REPORT FILED ALONG WITH THE RE TURN OF INCOME WAS MORE THAN EXERCISE OF OPTION AS REQUIRED UNDER SECOND PROVISO TO RULE 5(1A) AND ACCORDINGLY THE AS SESSEE WAS HELD TO BE ENTITLED TO HIGHER RATE OF DEPRECIATION. IN VIEW OF ITA NO.1658/MDS/0122 : 5 : THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL, WE DISMISS THE REVENUES APPEAL. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THE 22 ND OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 22 ND JANUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE