Asst. Commissioner of Income Tax, Circle-1, Margao V. M/s Titan Time Products Ltd., Goa

ITA 180/PAN/2014

• Counselvise Citation: 18024114 RSA 2014
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR LD
• Assessee Lawyers: MELVYN J AGUIAR
• Keywords: Depreciation; Additional depreciation; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO.180/PNJ/2014 (ASSESSMENT YEAR - 2009 - 10) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1, MARGAO (APPELLANT) VS. M/S. TITAN TIME PRODUCTS LTD., L - 15, VERNA INDUSTRIAL CITY, VERNA, SALCETE, GOA - 403 722. PAN:AABCT1287A (RESPONDENT) AP PELLANT BY : SHRI B.BARTHAKUR , LD. DR RESPO NDENT BY : SHRI MELVYN J. AGUIAR , ADV. DATE OF HEARING : 07/08 /2014 DATE OF PRONOUNCEMENT : 14 /08/2014 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) - PANAJI, DATED 17.02.2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS ARE RAISED BY THE DEPARTMENT WHICH READ AS UNDER: 1 . THE ORDER OF LD. CIT(A) IS OPPOSED TO LAW AND FACT OF THE CASE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - PANAJI, HAS ERRED IN DELETING ADDITION OF RS. 43,71,601/ - MADE BY THE AO BY DISALLOWANCE OF EXCESS DEPRECIATION ON PLANT AND MACHINERY CLAIMED BY THE ASSESSEE. 2.1. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS CLAIMED DEPRECIATION ON OLD PLANT & MACHINERY @ 30% AND NEW PLANT & MACHINERY @ 50%. ON THIS ISSUE THE DEPARTMENT HAD EARLIER TAKEN A STAND THAT THE ASSESSEE IS NOT A SEMI CONDUCTOR INDUSTRY NOT ENGAGED IN ANY MANUFACTURING ACTIVITY AND 2 . ITA NO.180 /PNJ/2014 (A.Y.2009 - 10) ACIT VS. TITAN TIME PRODUCTS LTD. THEREFORE THE RATE OF DEPRECIATION IS T O BE RESTRICTED TO 15% ON OLD AND NEW PLANT & MACHINERY. THE ASSESSEE COMPANY HAS NOT IS NOT SEMI CONDUCTOR INDUSTRY AND MERELY BECAUSE IT USES SEMI CONDUCTOR DEVICES AS RAW MATERIALS FOR MANUFACTURING THE ELECTRONIC CIRCUIT BOARDS, IT DOES NOT MEAN THAT T HE ASSESSEE IS A PART OF SEMI CONDUCTOR INDUSTRY. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE FROM ANY COMPETENT AUTHORITY THAT IT IS THE SEMI CONDUCTOR INDUSTRY. THEREFORE, THE HIGHER RATE OF DEPRECIATION @ 30% CLAIMED BY THE ASSESSEE WAS REJEC TED AND THE CLAIM OF THE ASSESSEE IS RESTRICTED ONLY TO 15% FOR THE OLD PLANT AND MACHINERY. THE ASSESSEE HAS ALSO MAKING SOME VALUE ADDITION TO THE SEMI CONDUCTOR DEVICES PURCHASED BY THE ASSESSEE, BUT IT CANNOT BE CLAIMED THAT IT IS SEMI CONDUCTOR INDUST RY MANUFACTURING ANY SEMI CONDUCTOR DEVICES. THEREFORE, ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE @ 15 % WAS REJECTED AND IT WAS RESTRICTED TO 15% ONLY. THEREFORE, DEPRECIATION ON PLANT AND MACHINERY CLAIMED BY THE ASSESSEE COMPANY @ 30% (OLD) AND 50 % (NEW) AMOUNTING TO RS.72,56,471/ - IS RESTRICTED TO THE NORMAL RATE OF DEPRECIATION @ 15% WHICH COMES TO RS. 28,84, 870/ - . THUS, THE DIFFERENCE OF EXCESS CLAIM OF DEPRECIATION AMOUNTING TO RS. 43,71,602/ - WAS DISALLOWED. 2.2 . THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. AS REGARDS THE CLAIM OF DEPRECIATION, IT IS SEEN THAT IDENTICAL ISSUE WAS INVOLVED IN EARLIER ASSESSMENT YEARS I.E. 2005 - 06, 2001 - 02, 1997 - 98 AND 2008 - 09 WHEREIN MY PREDECESSORS HAD DIRECTED THE A.O. TO ALLOW DEPRECIATION @ 40% AND 30% AS APPLICABLE FOR RESPECTIVE ASSESSMENT YEARS ON PLANT AND MACHINERY WHICH IS APPLICABLE IN SEMI - CONDUCTOR INDUSTRY WHICH FACT HAS BEEN ELABORATELY DISCUSSED IN THE APPELLATE ORDER OF THE CIT (A), PANAJI AT PARAS 4.4 TO 4.4.7 AT PAGES 10 TO 14 IN ITA NO.138/MRG/03 - 04 DATED 01.12.2004. THE SAID DECISION OF THE CIT(A) HAS BEEN UPHELD BY THE ITAT, PANAJI BENCH, PANAJI IN ITS ORDER FOR A .YR. 2005 - 06 VIDE ITA NO. 46/PNJ/2009 DATED 03.12.2009. I HAVE ALSO GONE THROUGH THE SAID ITATS ORDER AND ALSO EARLIER DECISIONS OF ITAT FOR A.YR. 2001 - 02 AND 1997 - 98. FOLLOWING THE DECISION OF ITAT FOR A.YR. 2005 - 06, 2001 - 02 AND 1997 - 98, DEPRECIATION ON PLANT AND MACHINERY IS DIRECTED TO BE ALLOWED ACCORDINGLY. 3 . ITA NO.180 /PNJ/2014 (A.Y.2009 - 10) ACIT VS. TITAN TIME PRODUCTS LTD. 2.3 DURING THE COURSE OF HEARING, LEARNED AR SUBMITTED THAT THE ISSUE IN CONTROVERSY IS COVERED BY DECISION OF ASSESSEES OWN CASE IN ITA NO. 184 & 185/ PNJ/ 2011 WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE AND RESTORE THIS MATTER TO FILE OF THE CIT(A) TO DECIDE AND ALLOW THE DEPRECIATION AS PER AMENDED ITAT RULES. WE FIND THAT LEARNED AR HAS NO OBJECTION IF THE MA TTER IS RESTORED TO FILE OF THE CIT(A) TO DECIDE THE MATTER AS PER NEW AMENDMENT RULE S. 2.4. THE LEARNED DR RELIED UPON T HE ORDER OF THE AO. 3. HAVING HEARD BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF ASSESSE ES OWN CASE FOR A.Y.2007 - 08 & 2008 - 09 WHEREIN THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE CIT(A) BY OBSERVING AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTS OF BOT THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT ASSESSEE COMPANY COMES WITHIN THE PARAMETER OF SEMI CONDUCTOR INDUSTRY AS MENTIONED IN NEW APPENDIX I EFFECTIVE FROM ASSESSMENT YEAR 2006 - 07 ONWARDS IN PART A III(XI). WE FIND THAT CIT(A) HAS DIRECTED TO ALLOW DEPRECIATION @ 30% FOR THE YEAR UNDER CONSIDERATION KEEPING IN VIEW THE REVISION BY I.T. (TWENTY - FIRST AMENDMENT) RULES, 1993,(W.E.F, 22.12.1993) AND I.T(SIXTH AMENDMENT) RULES, 2005 (W..F.2.42005). WE FIND THAT THERE IS AN AMENDMENT IN THESE RULES W.E.F ASSESSMENT YEAR 2006 - 07 ONWARD AND CIT(A) HAS DIRECTED TO FOLLOW THE OLD PROVISI ONS FOR DEPRECIATION THEREFORE, WE REVERSE THE FINDING OF CIT(A) AND RESTORE THIS MATTER TO THE FILE OF CIT(A) TO DECIDE THE MATTER AS PER AMENDMENT WHICH IS EFFECTIVE FROM ASSESSMENT YEAR 2006 - 07 AND CIT(A) IS DIRECTED TO DECIDE THE MATTER AS PER NEW AMEN DMENT RULE . CIT IS DIRECTED TO GIVE NOTICE TO ASSESSEE BEFORE DECIDING THIS APPEAL. WE RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THIS MATTER BACK TO FILE OF THE CIT(A) TO DECIDE THE DEPRECIATION AS PER NEW AMENDED DEPRECIATION. 4 . ITA NO.180 /PNJ/2014 (A.Y.2009 - 10) ACIT VS. TITAN TIME PRODUCTS LTD. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED I N THE OPEN COURT ON 1 4 .8.2014. S D / - S D / - ( P.K. B ANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 4 .8.2014 P.S. - *PK* COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER