M/s. The South India Flour Mills Ltd., CHENNAI V. JCIT, CHENNAI

ITA 1742/CHNY/2003

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6505 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-06-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 15-09-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: R PADMANABHAN
• Keywords: Capital asset; Depreciation; Principle of natural justice; Fair market value; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 1742/MDS/2003 ASSESSMENT YEAR : 1998-99 THE SOUTH INDIA FLOUR MILLS LTD 19/20 ROYAPURAM BEACH ROAD CHENNAI 13 VS THE JT. CIT SPECIAL RANGE VII CHENNAI [PAN AABPS1858B] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.PADMANABHAN, CA RESPONDENT BY : DR. I.VIJAYAKUMAR, CIT O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSESSMENT YEA R 1998-99, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), CHENN AI, DATED 11.7.2003. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT ON THE RETURN FILED BY THE ASSESSEE, ASSESSMENT WAS PASSED U/S 143(3) ON 23.3.2001 ASSESSING TOTAL INCOME OF ` 80,46,499/- AS AGAINST LOSS RETURNED AT ` 1,03,73,206/- AFTER ADJUSTING THE CARRIED FORWARD L OSS, THE FINAL ASSESSMENT WAS MADE AT NIL FIGURE. WHILE DOING SO, THE ASSESSING OFFICER HAS MADE THE FOLLOWING TWO ADDITIONS: ITA 1742/03 :- 2 -: (I) DEPRECIATION AMOUNTING TO ` 22,01,500/- ADDED BACK ON ROLLERS. (II) LONG TERM CAPITAL GAINS OF ` 1,62,18,305/- 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) BUT IT COULD NOT GET THE REQUIRED RELIEF AND HENCE, THIS A PPEAL HAS BEEN FILED BY TAKING THE FOLLOWING GROUNDS: THE COMMISSIONR OF INCOME-TAX(APPEALS) ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE, IN SUSTAINING THE FOLLOWI NG ADDITIONS: 1. COST OF ROLLERS TREATED AS AS CAPITAL EXPENDITURE ` 22,01,500 2. LONG TERM CAPITAL GAINS ` 1,62,18,305 ` 1,84,19,805 1. HE ERRED IN HOLDING THAT THE ROLLERS PURCHASED BY THE APPELLANT DURING THE YEAR WERE NOT REPLACEMENTS, B UT WERE CAPITAL ASSETS ENTITLED TO DEPRECIATION. 2. HE FAILED TO APPRECIATE THAT THE FACTORY WAS IN POSSESSION FOR OVER SEVERAL YEARS AND THAT, THEREFORE, THE ROL LERS PURCHASED DURING THE YEAR WERE ONLY REPLACEMENTS AND NOT CAPI TAL ASSETS. 3. HE ALSO FAILED TO APPRECIATE THAT THE INTENTI ON OF PROVIDING THE RATE OF DEPRECIATION AT 100% WAS TO WRITE IT OF F AS AN EXPENDITURE OF THE YEAR OF PURCHASE. 4. HE ERRED IN HOLDING THAT THE FAIR MARKET VALUE OF THE PROPERTY AT NO.86 SURYANARAYANA CHETTV STREET,. CHE NNAI -13 WAS ONLY ` 35,000/- PER GROUND AS AGAINST ` 1,80,000/- PER GROUND CLAIMED BY THE APPELLANT. 5. HE FAILED TO APPRECIATE THAT THE APPELLANT WAS NOT AWARE OF THE INFORMATION GATHERED BY THE ASSESSING OFFICE R WHILE COMPLETING THE ASSESSMENT AND THAT THEREFORE, TH AT INFORMATION SHOULD NOT HAVE BEEN USED WITHOUT PROVIDING AN OPPO RTUNITY TO THE APPELLANT. ITA 1742/03 :- 3 -: 6. THE APPELLANT SUBMITS THAT, IN ANY CASE, THE GUIDELINE VALUE WOULD NOT REPRESENT THE FAIR MARKET VALUE. 7. THE APPELLANT FURTHER SUBMITS THAT THE FAI R MARKET VALUE OF ` 1,80,000/- IS BASED ON THE REPORT OF AN APPROVED V ALUER. 8. THE APPELLANT FURTHER SUBMITS THAT IN ANY C ASE, THE ADDITION MADE IS EXCESSIVE AND UNREASONABLE. 8. THE APPELLANT THEREFORE PRAYS THAT THE ADDITIO N OF ` 1,84.19,805/- MAY BE DELETED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE RECORD. IT WAS NOTICED THAT THE ASSESSEE WA S NOT GIVEN PROPER OPPORTUNITY OF HEARING [IN RE. GROUND NO.5] WHICH I S ANTITHESIS OF NATURAL JUSTICE. THE ASSESSEE REQUIRES TO BE GIVEN AMPLE OPPORTUNITY OF HEARING SO THAT THE FULL AND FINAL FACTS CAN COM E UP ON RECORD AND JUSTICE CAN BE RENDERED TO BOTH THE PARTIES. WHEN THE BENCH PROPOSED TO REMIT THE APPEAL BACK TO THE FILE OF THE ASSESSI NG OFFICER FOR FRESH INVESTIGATION/VERIFICATION, THERE WAS NO EFFECTIVE OBJECTION FROM ANY SIDE. THEREFORE, AFTER SETTING ASIDE THE ORDER THE LD. CIT(A), THE ENTIRE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFF ICER WITH A DIRECTION THAT HE SHALL DECIDE THE IMPUGNED ISSUES, AFRESH, A FTER ACCORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. THE APPELL ATE FINDINGS QUA THE IMPUGNED GROUNDS ARE SET ASIDE AND RESULTANTLY THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA 1742/03 :- 4 -: 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.6.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 30 TH JUNE, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR