M/s.Amalgam Foods Ltd, Cochin V. The DCIT, Alappuzha

ITA 17/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77442 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 01-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 16,17&18/COCH/2014 ASSESSMENT YEARS : 2004-05, 2007-08 & 2009-10 M/S. AMALGAM FOODS LTD., AMALGAM HOUSE, BRISTOW ROAD, WILLINGDON ISLAND, KOCHI-3. [PAN: AABCA 8283D] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, ALLEPPEY. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI R. SREENIVASAN, CA REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 01/05/2014 DATE OF PRONOUNCEMENT 09/05/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGA INST THE ORDERS PASSED BY THE LD. CIT(A)-IV, KOCHI AND THEY RELATE TO THE ASSESSMENT YEARS 2004-05, 2007-08 AND 2009-10. 2. SINCE THE ISSUES URGED IN THESE APPEALS ARE IDEN TICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NOS. 16,17&18/COCH/2014 2 3. THE DEPRECIATION CLAIMED BY THE ASSESSEE IN ALL THESE YEARS WERE DISALLOWED BY THE ASSESSING OFFICER AND THE SAID DI SALLOWANCE WAS ALSO CONFIRMED BY THE LD. CIT(A). HENCE, THE ASSESSEE HAS FILED T HESE APPEALS BEFORE US. 4. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR T HE ASSESSMENT YEAR 2004-05, THE AO NOTICED THAT THE ASSESSEE DID NOT C ARRY ON ANY MANUFACTURING OPERATION. THE ASSESSEE HAD CARRIED ON A SMALL TRA DING ACTIVITY ONLY. HOWEVER, THE ASSESSEE CLAIMED DEPRECIATION U/S. 32 OF THE AC T EVEN THOUGH THE ASSETS WERE NOT PUT TO USE FOR MANUFACTURING ACTIVITIES. HENCE, THE ASSESSING OFFICER RE- OPENED THE ASSESSMENT TO WITHDRAW THE DEPRECIATION CLAIM ALLOWED TO THE ASSESSEE EARLIER. IN THE RE-ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION MADE BY THE AS SESSEE BY FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. ORIENTAL COMPANY LTD. (206 ITR 682). THE ASSESSING OFFICER ALSO PLA CED RELIANCE ON THE FOLLOWING CASE LAWS: (A) HINDUSTAN CHEMICAL WORKS LTD. VS. CIT (124 ITR 561) (CAL.). (B) HYDERABAD CONSTRUCTION CO. LTD. VS. CIT (129 I TR 81) (A.P.). (C) CIT VS. JIWAJI RAO SUGAR CO. LTD. (71 ITR 319) (M.P.). (D) CIT VS. J.K. TRANSPORT (231 ITR 798) (M.P.). 5. IN THE ASSESSMENT YEAR 2007-08 AND 2009-10, THE ASSESSEE HAS CLAIMED BEFORE THE ASSESSING OFFICER THAT IT HAS LEASED OUT BUILDING ON RENT TO A COMPANY NAMED M/S. ZIM INTEGRATED SHIPPING SERVICES (INDIA) PVT. LTD. DURING THIS YEAR, THE ASSESSEE DID NOT CARRY ON ANY TYPE OF BUSINESS ACTIVITY. HOWEVER, THE I.T.A. NOS. 16,17&18/COCH/2014 3 ASSESSEE DECLARED LEASE RENTAL INCOME UNDER THE HEA D INCOME FROM BUSINESS AND ACCORDINGLY CLAIMED DEPRECIATION ON THE ASSETS. THE ASSESSING OFFICER HELD THAT THE RENT RECEIVED IS CHARGEABLE TO TAX UNDER T HE HEAD INCOME FROM HOUSE PROPERTY. IN THIS REGARD, THE ASSESSING OFFICER PL ACED RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. NEW INDIA INDUSTRIES LTD. (201 ITR 208). ACCORDINGLY, THE AS SESSING OFFICER ASSESSED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND ALS O DISALLOWED THE CLAIM OF DEPRECIATION MADE IN BOTH THE YEARS. 6. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BY FI LING THE APPEALS BEFORE THE LD. CIT(A), BUT THE FIRST APPELLATE AUTHORITY CONFI RMED THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE HAS FILED THESE AP PEALS BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. THE LD A.R SUBMITTED BEFORE US THAT THE ASSESSEE HAD BEEN DECL ARING THE RENTAL INCOME IN ALL THESE YEARS UNDER THE HEAD INCOME FROM BUSINESS A ND HENCE IT HAS CLAIMED DEPRECIATION ON THE ASSETS. IT WAS BROUGHT TO OUR NOTICE BY BOTH THE PARTIES THAT THIS BENCH OF TRIBUNAL CONSIDERED AN IDENTICAL ISSU E IN THE ASSESSEES OWN CASE IN ITA NO.435/COCH/2010 RELATING TO ASSESSMENT YEAR 20 05-06. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE RECEIVED LEASE RENTAL I NCOME ON LETTING OUT OF PLANT AND MACHINERY IN THAT YEAR AND THE TRIBUNAL HAS TAK EN THE VIEW THAT THE SAID RENTAL INCOME RECEIVED BY THE ASSESSEE IS ASSESSABL E UNDER THE HEAD INCOME I.T.A. NOS. 16,17&18/COCH/2014 4 FROM OTHER SOURCES AND THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION U/S 57(II) OF THE ACT. 8. THE LD D.R POINTED OUT THAT THE ASSESSEE HERE IN HAS LET OUT ONLY THE BUILDING DURING THE YEARS RELEVANT TO THE ASSESSMEN T YEARS 2007-08 AND 2009-10 AND HENCE THE ASSESSING OFFICER HAS ASSESSED THE RE NTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ACCORDINGLY DENIED THE DEPRECIATION BENEFITS. THE LD A.R ALSO FAIRLY CONCEDED THAT THE ASSESSEE H AS LET OUT BUILDING ONLY DURING THE ABOVE SAID YEARS AND HENCE THE DECISION RENDERE D BY THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06 IS NOT APPLICABLE IN THESE TWO YEARS. 9. SINCE BOTH THE PARTIES HAVE ACCEPTED THAT TH E ASSESSEE HEREIN HAS LEASED OUT ONLY BUILDING DURING THE YEARS RELEVANT TO THE ASSESSMENT YEARS 2007-08 AND 2009-10, THE RENTAL INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN CONFIRMING THE ASSESSMENT OF RENTAL INCOME UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, WE CONFIRM HIS ORDER PASSE D FOR THE ABOVE SAID TWO YEARS. 10. WITH REGARD TO THE ASSESSMENT YEAR 2004-05, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS LEASED OUT PLANT AND MACHINERY ALS O ALONG WITH THE BUILDING AND THE LEASE RENTALS WERE COLLECTED ON THE BASIS OF WE IGHT OF THE PRODUCT PROCESSED. I.T.A. NOS. 16,17&18/COCH/2014 5 ACCORDINGLY HE SUBMITTED THAT THE DECISION RENDERED BY THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06 (SUPRA) IS APPLICABLE TO TH IS YEAR. HOWEVER, THE LD D.R DISPUTED THE SAME BY STATING THAT THE LD A.R IS PUT TING FORTH NEW ARGUMENTS, WHICH WERE NOT PUT BEFORE THE ASSESSING OFFICER. O N A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ABOVE SAID CONTENTIONS DO N OT FIND PLACE THEREIN. WHEN A SPECIFIC QUERY WAS PUT TO LD A.R AS TO WHETHER THE ASSESSEE IS HAVING LEASE RENTAL AGREEMENTS, THE LD A.R SUBMITTED THAT THERE IS NO AGREEMENT, BUT SUBMITTED THAT HIS CLAIM CAN BE VERIFIED BY EXAMINI NG THE BILLS RAISED BY THE ASSESSEE. THE LD D.R SUBMITTED THAT THE NEW CLAIM PUT FORTH BY THE LD A.R REQUIRES VERIFICATION AT THE END OF THE ASSESSING O FFICER. 11. WE FIND FORCE IN THE CONTENTIONS OF LD D.R . ADMITTEDLY, THE ASSESSEE IS SUBMITTING CERTAIN FACTS WHICH WERE NOT CONSIDERED BY THE ASSESSING OFFICER. ACCORDING TO LD A.R, THE ASSESSEE HAS LEASED OUT BU ILDING AND PLANT AND MACHINERY DURING THE YEAR RELEVANT TO THE ASSESSMEN T YEAR 2004-05. HOWEVER, THE ASSESSMENT ORDER IS SILENT ABOUT THE RECEIPT OF RENTAL INCOME. IT IS SEEN THAT THE ASSESSING OFFICER HAS DISALLOWED THE DEPRECIATI ON ONLY FOR THE REASON THAT THE ASSESSEE DID NOT CARRY ON ANY MANUFACTURING ACTIVIT Y AND HENCE THE ASSETS WERE NOT PUT TO USE. IF THE ASSESSEE HAS LET OUT THE BU ILDING AND PLANT & MACHINERY TOGETHER, THEN THE DECISION RENDERED BY THIS BENCH OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 IS APPLICABLE TO THIS YEAR. HOWEVER, AS STATED EARLIER, THE ASSESSING OFFICER HAS NOT EXAMI NED THESE ASPECTS. HENCE, WE I.T.A. NOS. 16,17&18/COCH/2014 6 ARE OF THE VIEW, THE FACTS PREVAILING IN THIS YEAR NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE ORDER PASSED BY LD CIT(A) FOR ASSESSMENT YEAR 2004-05 AND RESTORE THE MATTER TO T HE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE FACTS PRE VAILING IN THIS YEAR AND THE CONTENTIONS OF THE ASSESSEE AND TAKE APPROPRIATE DE CISION IN ACCORDANCE WITH THE LAW. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE FOR ASSESSMENT YEAR 2004- 05 IS TREATED AS ALLOWED. THE OTHER TWO APPEALS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 09-05-2014. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 9TH MAY, 2014 GJ COPY TO: 1. M/S. AMALGAM FOODS LTD., AMALGAM HOUSE, BRISTOW ROAD, WILLINGDON ISLAND, KOCHI-3. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, ALLEPPEY. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN