Tibrewala Industries Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 1727/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69479 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Depreciation; Rectification of order; Reassessment proceedings
• Section: 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER ITA NO. 1727 / DEL/ 2012 (ASSESSMENT YEAR 2003-04) TIBREWALA INDUSTRIES PVT. LTD., VS ITO, WARD 16(3 ), 38, HARSH VIHAR, DELHI PITAMPURA, DELHI-110034 PAN : AAACT0907E (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI VINOD GUPTA, CA DEPARTMENT BY: MS. Y KAKKAR, SR. DR ORDER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY LD. CIT(A) XIX, NEW DELHI DATED 05.01.2012 RELEVANT TO THE ASSESSMENT YEAR 2003-04 WHEREIN THE FOLLOWING EFFECTIVE GROUND HAS BEEN RAISED. ON THE FACTS AN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DISALLOWING THE DEPRECIATION OF RS.43,63,392/- W HILE COMPUTING HT TOTAL INCOME OF THE ASSESSEE MERELY ON THE GROUND T HAT THE SAME HAS NOT BEEN CLAIMED IN THE ITR FILED AND OVERLOOKED TH E EXPLANATION 5 OF THE PROVISO OF SECTION 32(1) WHICH SAYS THAT FOR T HE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE PROVISIONS O F THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCO ME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED A RETURN OF INCOME ON 01.12.2003 FOR IMPUGNED ASSESSMENT YEAR 2 003-04 DECLARING AN INCOME OF RS.20,404/-. THE CASE WAS SELECTED FOR S CRUTINY AND AN ASSESSMENT WAS MADE ON 31.01.2006 DETERMINING THE T OTAL INCOME AT I.T.A. NOS.1727 /DEL/2012 2 RS.2,43,850/- AFTER MAKING CERTAIN DISALLOWANCES/ A DDITIONS. THE ASSESSEE HAD FILED AN APPLICATION U/S 154 DATED 16.02.2006 B EFORE THE A.O. REQUESTING FOR ALLOWING DEPRECIATION FOR RS.43,53,392/-. THE A.O. VIDE ORDER DATED 22.02.2006 PASSED U/S 154/155, ALLOWED THE CLAIM OF ASSESSEE AND DETERMINED THE TOTAL LOSS AT RS.41,09,542/-. THE A .O. ISSUED A NOTICE U/S 148 ON 31.03.2010 AND COMPLETED THE REASSESSMENT ON 20. 12.2010 IN WHICH DEPRECIATION ALLOWED IN THE RECTIFICATION ORDER WAS WITHDRAWN WITH THE FOLLOWING OBSERVATIONS: SINCE, THE ASSESSEE FAILED TO CLAIM THE DEPRECIATI ON IN THE RETURN OF INCOME, THERE WAS NO MISTAKE APPARENT FROM RECORD W HICH COULD BE RECTIFIED U/S 154 OF THE I. T. ACT, 1961. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO SHOW CAUSE WHY DEPRECIATION AMOUNTING TO RS.43,53,392/- SHOULD NOT BE WITHDRAWN. THE ASSESSEE HAS NOT SUBMITTED PLAUSIBLE EXPLANATIO N, THEREFORE, DEPRECIATION AMOUNTING TO RS.43,543,392/- IS NOT AL LOWED. 3. AGAINST THE ACTION OF THE A.O., THE ASSESSEE HAS FILED APPEAL AND CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT HE A.O. HAD DISALLOWED THE DEPRECIATION OF RS.43,53,392/- MERELY ON THE GROUND THAT THE SAME HAS NOT BEEN CLAIMED IN THE INCOME TAX RETURN FILED AND HAS OVERLOOKED THE EXPLANATION 5 OF THE PROVISO TO SECTION 32(1) WHICH SAYS THAT FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE P ROVISIONS OF THIS SUB- SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCO ME. IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3), ALL THE DOCUMENT S HAD BEEN FILED AS ASKED FOR AND THOSE ARE ON RECORD. SO, IT CANNOT B E SAID THAT THIS IS NOT A I.T.A. NOS.1727 /DEL/2012 3 MISTAKE APPARENT FROM RECORD WHICH CANNOT BE RECTIF IED. THIS WAS RECTIFIABLE MISTAKE AND IT WAS LATER GOT RECTIFIED U/S 154. SO , DISALLOWANCE OF DEPRECIATION IS ERRONEOUS AND ILLEGAL. HENCE, IT W AS REQUESTED TO ALLOW DEPRECIATION OF RS.43,53,392/-. 4. LD. A.R. ALSO FILED WRITTEN SUBMISSIONS IN THIS REGARD AND RELIED UPON VARIOUS CASE LAWS WHICH HAVE BEEN REPRODUCED BY LD. CIT(A) IN HIS ORDER AT PARA 6.1 & 6.2 AS UNDER: IN THE ASSESSMENT PROCEEDING ALL THE DETAILS AS RE QUIRED BY THE A.O. WAS GIVEN ALONG WITH DEPRECIATION CHART FOR CLAIMIN G THE DEPRECIATION. IT HAS ALSO BEEN TOLD IN THE ASSESSMENT PROCEEDING THAT DEPRECIATION WAS NOT PROVIDED IN THE BOOKS DUE TO THE FACT OF LO W PROFIT, THIS IS MANUFACTURING UNIT AND ALL THE PLANTS AND MACHINERY WAS USED FOR PRODUCTION, THEREFORE, DEPRECIATION HAS TO BE ALLOW ED. THE A.O. HAS TO ALLOW DEPRECIATION IN COMPUTING TOTAL INCOME EVEN I F THE ASSESSEE HAS NOT CLAIMED IT AS PER THE EXPLANATION 5 OF THE PROV ISO OF SECTION 31(1) OF THE I. T. ACT, 1961. THE EXPLANATION IS BEING G IVEN AS UNDER FOR YOUR READY REFERENCE. EXPLANATION 5 OF PROVISO OF SECTION 31(1) FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASS ESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTI NG HIS TOTAL INCOME. THE LD. A.R. RELIED ON THE FOLLOWING CASE LAWS: CIT VS SOUTHERN PETRO CHEMICALS 233 ITR 400 (MAD.) CIT VS MOTHER INDIA REFRIGERATION INDUSTRIES (P) LT D. CIT VS ANDHRA COTTON MILLS LTD. 219 ITR 404 CIT VS ASCHARAJLAL RAM PRAKASH 90 ITR 477. I.T.A. NOS.1727 /DEL/2012 4 5. LD. CIT(A) WHILE CONSIDERING BUT NOT ACCEPTING T HE PLEA OF THE ASSESSEE HAS CONCLUDED TO CONFIRM THE ACTION OF THE A.O. AFTER GOING THROUGH THE ASSESSMENT ORDER, THE WRITTEN SUBMISSIONS TO CO NCLUDE AS PARA 8 OF HIS ORDER AS UNDER: 8. THE APPELLANT COMPANY HAS NOT PROVIDED DEPRECIA TION IN THE BOOKS OF ACCOUNT ADMITTEDLY. AT THE SAME TIME, NO CLAIM HAS BEEN MADE WHILE COMPUTING ITS INCOME FOR TAX PURPOSES. IT IS FURTHER SEEN THAT NO RETURN HAS BEEN FILED IN RESPONSE TO NOTICE U/S 148 CLAIMING DEPRECIATION. IN THE LIGHT OF THE DECISION OF HON BLE ITAT IN THE CASE OF JAY BHARAT CO-OP. HOUSING SOCIETY LTD. VS ITO (1 0 ITR 717) (MUM.) DEPRECIATION CANNOT BE ALLOWED WHEN THERE IS NO CLAIM EITHER IN THE ORIGINAL RETURN OR IN THE COURSE OF REASSESS MENT PROCEEDINGS. IN THIS CASE THE RETURNED INCOME BY THE APPELLANT COMP ANY IS RS.20,404/- . IF THE DEPRECIATION CLAIM IS ALLOWED THE DETERMI NED INCOME WOULD BE LESSER THAN THE RETURNED INCOME. INCOME CANNOT BE DETERMINED LESSER THAN THE RETUNED INCOME UNLESS THERE IS REVISED RET URN OF INCOME OR REVISED COMPUTATION OF INCOME AS PER THE PROVISIONS OF THE ACT. THE ACTION OF THE A.O. IS UPHELD. 6. AGGRIEVED, THE ASSESSEE HAS COME IN FURTHER APPE AL BEFORE THE TRIBUNAL AND WHILE REITERATING THE SUBMISSIONS AS M ADE BE FORE THE AUTHORITIES BELOW, IT WAS PLEADED FOR ALLOWING DEPR ECIATION OF RS.43,53,392/- . FURTHER CONTENDED THAT EVEN IF, IT HAS NOT BEEN PROVIDED IN THE BOOKS OF ACCOUNTS AND CLAIMED IN THE COMPUTATION OF INCOME B ECAUSE AS PER THE LATEST POSITION OF LAW, THE ASSESSEE CAN BE ALLOWED DEPREC IATION EVEN IF IT HAS NOT MADE A CLAIM IN RESPECT OF SUCH DEPRECIATION IN VIE W OF EXPLANATION 5 TO LAST I.T.A. NOS.1727 /DEL/2012 5 PROVISO TO SECTION 32(1) OF THE I. T. ACT, 1961 WHI CH WAS INSERTED BY FINANCE ACT (2001) W.E.F. 01.04.2002 AND THE YEAR O F CONSIDERATION IS ASSESSMENT YEAR 2003-04, THEREFORE, THE CLAIM OF TH E ASSESSEE IS ALLOWABLE WHICH HAS NOT BEEN ALLOWED. RELIANCE WAS PLACED ON THE BOMBAY BENCH DECISION AS REPORTED IN (2009) 31 SOT 38 (MUM.) IN THE CASE OF DR. MRS. SUDHA S TRIVEDI VS ITO. BY FILING A COPY OF THE SA ID ORDER, IT WAS PLEADED FOR ALLOWING DEPRECIATION. 7. LD. D.R. STRONGLY OPPOSED THE MOVE OF THE LD. CO UNSEL FOR THE ASSESSEE AND PLEADED THAT DEPRECIATION COULD ONLY B E ALLOWED IF IT HAS BEEN PROVIDED IN THE BOOKS OF ACCOUNT AND IN THIS CASE, THE ASSESSEE HAS NOT ONLY OMITTED TO PROVIDE THE CLAIM OF DEPRECIATION IN THE BOOKS OF ACCOUNTS, SUCH CLAIM HAS EVEN NOT BEEN CLAIMED IN THE COMPUTATION OF INCOME AT THE TIME OF FILING OF RETURN OF INCOME. THEREFORE, THE ACTION OF THE AUTHORITIES BELOW IN THIS REGARD IS JUSTIFIED AND CALLS FOR NO INTERFERE NCE WHICH SHOULD BE CONFIRMED AND THE APPEAL OF THE ASSESSEE MAY BE DIS MISSED. SO FAR AS THE PRECEDENT RELIED UPON BY THE LD. A.R. IS CONCERNED, THE SAME IS NOT APPLICABLE AND FOR THIS, RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT VS SUN ENGINEERING PVT. LTD. AS REPORTED IN 198 ITR 297 (S.C.) TO PLEAD THAT PRECEDENT APPLIES IF IT IS PRONOUNCED FOR WHIC H PROPOSITION THE OBSERVATION WAS MADE IN THE PRECEDENT IS TO BE UNDE RSTOOD IN THE LIGHT OF THE QUESTION BEFORE THE COURT AND CANNOT BE DIVORCED FR OM THE CONTEXT AND SINCE, THE PRECEDENT RELIED UPON BY THE LD. A.R. IS NOT TH E SAME FOR SUCH PROPOSITION AS IS BEFORE THIS BENCH, THEREFORE, THE SAME CANNOT BE APPLIED. 8. I HAVE HEARD THE RIVAL SIDES AND CONSIDERED MATE RIAL ON RECORD AS WELL AS RELEVANT PROVISIONS OF LAW AND THE PRECEDENTS RE LIED UPON BY THE RIVAL SIDES AND FIND THAT IT IS UNDISPUTED FACT THAT ASSE SSEE IN THIS CASE HAS NEITHER I.T.A. NOS.1727 /DEL/2012 6 PROVIDED FOR ANY DEPRECIATION NOR ANY CLAIM HAS BEE N MADE IN THE COMPUTATION SHEET ANNEXED WITH THE RETURN OF INCOME . IN THIS CASE, EVEN DEPRECIATION WAS NOT CLAIMED EITHER IN THE RETURN O F INCOME OR IN THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT BEEN CLAIMED IN R ETURN AGAINST NOTICE U/S 148 OR IN REASSESSMENT PROCEEDINGS. THEREFORE, IN VIEW OF THESE FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD, IT IS HELD TH AT THE ORDER OF A.O. AS WELL AS OF LD. CIT(A) IS PROPER AND JUSTIFIED AND CALLS FOR NO INTERFERENCE AT THIS LEVEL. AS SUCH, THE IMPUGNED ORDER OF LD. CIT(A) I S UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, APPLE OF THE ASSESSEE STANDS DISM ISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 08.11.201 3 SD./- (U.B.S.BEDI) JUDICIAL MEMBER SP. DATED: 08.11.2013 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI