Hindumal Balmukund Investment Co. Pvt.Ltd, Pune V. Income-tax Officer, Ward - 11(1), Pune

ITA 1855/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4392 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATHAMESH J LAWAND
• Assessee Lawyers: V L JAIN
• Keywords: Depreciation; Set aside
• Section: 80HH; 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM . / I TA NO. 1855 /PUN/20 17 / ASSESSMENT YEAR : 2014 - 15 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD. LOHIYA JAIN HOUSE, BHANDARKAR ROAD, PUNE - 411 004. PAN : AAACH4226Q ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 11(1), PUNE. / RESPONDENT A SSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI PRATHAMESH J. LAWAND / DATE OF HEARING : 21 . 10 .2020 / DATE OF PRONOUNCEMENT : 21 .10 .2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM: THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 1, PUNE DATED 20.06.2017 FOR THE ASSESSMENT YEAR 2014 - 15 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMIN G THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIM ON MOTOR VEHICLES OF RS.10,12,764/ - . 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.4,44,39,344/ - ON ACCOUNT OF DISALLOWANCE OF CLAIM U/S.80IA(4) OF THE I NCOME TAX ACT, 1961 FOR THE REASON THAT THE CONDITIONS OF THE NOTIFICATION HAVE NOT BEEN COMPLIED WITH. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL, IF DEEMED NECESSARY. 2. THE BRIEF FACTS IN THIS CASE A RE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, OPERATING A BUSINESS CENTRE AND IT PARK AND TRADING IN SHARES, FILED ITS E - RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 23.09.2014 DECLARING TOTAL INCOME AT RS.4,44 ,39,344/ - . SUBSEQUENTLY RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT ORDER U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS PASSED ON 30.12.2016 AT THE TOTAL INCOME OF RS.5,82,73,571/ - AFTER MAKING CERTAIN ADDITIONS/ DISALLOWANCES . 3. GROUND NO.1 PERTAINS TO CONFIRMATION OF DISALLOWANCE BY THE LD. CIT(APPEALS) ON ACCOUNT OF DEPRECIATION CLAIMED ON MOTOR VEHICLES OF RS.10,12,764/ - . 4. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE AT PARA 3 OF HIS ORDER. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON THE FACT THAT HE I S OF THE OPINION THE OWNERSHIP OF THE ASSET IS THE MANDATORY COMPLIANCE OF THE PROVISIONS U/S.32 OF THE ACT FOR C LAIM OF THE DEPRECIATION ALLOWANCE. IN THIS CASE VEHICLES WERE PURCHASED IN THE NAME OF THE DIRECTORS OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER OPINED THAT THE COMPANY IS LEGAL ENTITY 3 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 INCORPORATED UNDER THE COMPANIES ACT, 1956. THE OWNER OF THE ASSET S MEANS THE PERSON HAVING LEGAL TITLE AND NOT THE PERSON HAVING POSSESSION OF THE ASSET. WITH THESE OBSERVATIONS, THE ASSESSING OFFICER DISALLOWED THE CLAIM ON DEPRECIATION. 5 . AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSU E IS COVERED BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 569/PUN/2017 FOR THE ASSESSMENT YEAR 2012 - 13 DATED 30.01.2019. THE FACTS BEFORE THE TRIBUNAL WERE IDENTICALLY SIMILAR. IN THAT CASE, THE ASSESSEE COMPANY CLAIM ED DEPRECIATION ON CARS WHICH WERE NOT PURCHASED IN THE NAME OF THE ASSESSEE BUT IN THE NAME OF ITS DIRECTORS. INVOKING THE PROVISIONS OF SECTION 38(2) OF THE ACT, THE ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF CARS AT HALF OF THE AM OUNT OF DEPRECIATION CLAIMED. ON THIS ISSUE, THE TRIBUNAL HELD AS FOLLOWS: 5. NOW TURNING TO THE DISALLOWANCE ON ACCOUNT OF PERSONAL USE OF CARS U/S. 38(2) OF THE ACT, WE FIND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THERE IS NO DEARTH OF JUDICIAL PRECEDENTS HOLDING THAT THERE CANNOT BE ANY DISALLOWANCE OF EXPENSES IN THE HANDS OF COMPANY ON ACCOUNT OF PERSONAL USE EVEN BY ITS DIRECTORS. THE HONBLE GUJARAT HIGH COURT IN SAYAJI IRON AND ENGINEERING COMPANY VS. CIT (2002) 253 ITR 749 (GUJ) HAS HELD THAT THERE CANNOT BE ANY DISALLOWANCE OF PERSONAL EXPENSES FOR CARS ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR. IT HAS BEEN FURTHER HELD THAT NO DISALLOWANCE CAN BE MADE EVEN BY TREATING SUCH EXPENDITURE AS NOT HAVING BEEN INCURRED FOR THE BUSINESS PURPOSE . SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN SEVERAL CASES INCLUDING DY. CIT VS. HARYANA OXYGEN LTD. (2001) 76 ITD 32 (DEL). THUS IT IS EVIDENT THAT THERE CAN BE NO DISALLOWANCE ON ACCOUNT OF PERSONAL USE BY THE DIRECTOR - EMPLOYEES OF THE ASSESSEE. SUCH AN AMOUNT CAN BE TREATED AS A PERQUISITE IN THE HANDS OF THE EMPLOYEES. IN VIEW OF THE ABOVE DECISIONS, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO THIS EXTENT. THE ADDITION IS DELETED. 4 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 RESPECTFULLY FOLLOWING OUR DECISION IN ASSESSEES OWN CASE (SUPRA.) WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND ALLOW THIS GROUND OF APPEAL. THUS, GROUND NO.1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 6. GROUND NO.2 REFERS TO CONFI RMATION OF ADDITION OF RS.4,44,39,344/ - ON ACCOUNT OF DISALLOWANCE CLAIMED U/S.80IA(4) OF THE ACT BY THE LD. CIT(APPEALS) . 7. THE FACTS ON THIS ISSUE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, OPERATING A BUSINESS CENTRE AND IT PARK HAS CLAIMED DEDUCTION OF RS.7,64,02,293/ - ( REVISED AND RECOMPUTED TO RS.4,44,39,344/ - ) U/S. 80IA(4)(III) OF THE ACT. THIS ISSUE HAS BEEN DISCUSSED IN PARA 8 OF THE ASSESSMENT ORDER. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSING OFFICER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.4,44,39,344/ - U/S.80IA(4)(III) OF THE ACT WITHOUT COMPLYING WITH THE PROVISIONS OF THE ACT AND INCOME TAX RULES. CONSEQUENTLY, THE ASSESSEE WAS ASKED TO JUSTIFY IT S CLAIM WITH SUPPORTING DOCUMENTS. THE ASSESSEE FILED BEFORE THE ASSESSING OFFICER ITS DETAILED SUBMISSIONS WHICH WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND ACCORDINGLY, THE DISALLOWANCE OF DEDUCTION OF RS.4,44,39,344/ - U/S.80IA(4)(III) OF THE ACT WAS MADE BY THE ASSESSING OFFICER. 8. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF PUNE BENCH OF THE TRIBUNAL IN ITA NO. 266 & 267/PUN/2015 FOR THE ASSESSMENT YEARS 2010 - 11 & 2011 - 12 DATED 24.08.2018 WHEREIN PLACING RELIANCE ON THE DECISION OF 5 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS REPORTED IN 216 ITR 548, THE TRIBUNAL HELD AS FOLLOWS: 6. WE H EARD BOTH THE PARTIES ON THIS LEGAL ISSUE OF APPLICABILITY OF THE RATIO OF THE BINDING JUDGMENT OF HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA). THE SAID JUDGMENT IS RELEVANT FOR THE FOLLOWING PROPOSITION: 6. EITHER IN SECTI ON 80HH OR IN SECTION 80J, THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. HENCE UNLESS THE RELIEF GRANTED FOR THE ASSESSMENT YEAR 1980 - 81 WAS WITHDRAWN, THE INCOME - TAX OFFICER COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. FROM THE ABOVE, IT IS EVIDENT THAT UNLESS THE RELIEF CLAIMED IN THE FIRST YEAR OF UNDERTAKING IS WITHDRAWN, THE AO CANNOT WITHHOLD THE RELIEF FOR THE SUBSEQUENT YEARS. IN THE PRESENT CASE, THOUGH AN ATTE MPT IS MADE TO WITHDRAW THE CLAIM OF DEDUCTION THROUGH THE INVOKING OF THE PROVISIONS OF SECTION 148 OF THE ACT, THE SAME DID NOT FRUCTIFY FOR ONE REASON OR THE OTHER AND THE JUDGMENT OF THE HONBLE HIGH COURT IN THE WRIT PROCEEDINGS EVIDENCES THE SAME. IN EFFECT, THE CLAIM OF THE ASSESSEE U/S.80IA(4) OF THE ACT STANDS ALLOWED IN THE FIRST YEAR OF UNDERTAKING. CONSIDERING THE FACT THAT THE SAME IS ALLOWED IN THE FIRST YEAR OF UNDERTAKING, THE AO CANNOT WITHDRAW THE DEDUCTION WHEN THE FACTS ARE IDENTICAL. T HEREFORE, WE ARE OF THE OPINION THAT THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA) STANDS APPLICABLE TO THE FACTS OF THE PRESENT CASE LEGALLY. 7. FURTHER, FOR COMMENTING OUR VIEW ON THE ISSUE, WE ALSO PERUSED THE JUDGMENT IN THE CASE OF CIT VS. WESTERN OUTDOOR INTERACTIVE PVT. LTD. REPORTED IN 349 ITR 309 (BOM .) WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: 6) WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THAT THE SUBMISSIONS MADE BY MR. PARDIWALLA ON THE BASIS OF THE DECISION OF THIS COURT IN THE MATTER OF PAUL BROTHERS (SUPRA) AND DIRECTOR OF INFORMATION PVT. LTD. (SUPRA) MERITS ACCEPTANCE. THEREFORE, IN THIS CASE, IT IS NOT NECES SARY FOR US TO DECIDE WHETHER SEEPZ UNIT WAS SET UP/FORMED BY SPLITTING UP OF THE FIRST UNIT. IN BOTH THE ABOVE DECISIONS, THIS COURT HAS HELD THAT WHERE A BENEFIT OF DEDUCTION IS AVAILABLE FOR A PARTICULAR NUMBER OF YEARS ON SATISFACTION OF CERTAIN CONDIT IONS UNDER THE PROVISIONS OF THE INCOME TAX ACT, THEN UNLESS RELIEF GRANTED FOR THE FIRST ASSESSMENT YEAR IN WHICH THE CLAIM WAS MADE AND ACCEPTED IS WITHDRAWN OR SET ASIDE, THE INCOME TAX OFFICER CANNOT WITHDRAW THE RELIEF FOR SUBSEQUENT YEARS. MORE PARTI CULARLY SO, WHEN THE REVENUE HAS NOT EVEN SUGGESTED THAT THERE WAS ANY CHANGE IN THE FACTS WARRANTING A DIFFERENT VIEW FOR SUBSEQUENT YEARS. IN THIS CASE FOR THE ASSESSMENT YEARS 2000 - 01 AND 2001 - 02 THE RELIEF GRANTED UNDER 6 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 SECTION 10A OF THE ACT TO SEEPZ UNIT HAS NOT BEEN WITHDRAWN. THERE IS NO CHANGE IN THE FACTS WHICH WERE IN EXISTENCE DURING THE ASSESSMENT YEAR 2000 - 01 VIS A VIS THE CLAIM TO EXEMPTION UNDER SECTION 10A OF THE ACT. THEREFORE, IT IS NOT OPEN TO THE DEPARTMENT TO DENY THE BENEFIT OF SECTIO N 10A FOR SUBSEQUENT ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 AND 2004 - 05. BESIDES THAT, ON CONSIDERATION OF THE FACTS INVOLVED BOTH THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL HAVE RECORDED A FINDING OF FACT THAT THE SEEPZ UNIT IS NOT FORMED BY SPLITTING UP OF THE FIRST UNIT. 8. FURTHER, IN THE CASE OF M/S. YGYAN CONSULTING PVT. LTD. VS. DCIT IN ITA NO.65/PUN/2015 DATED 13 - 10 - 2017, THE PUNE BENCH OF THE TRIBUNAL OBSERVED AS UNDER : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE FIRST GROUND RAISED IN APPEAL BY ASSESSEE IS WITH RESPECT TO ASSESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION U/S. 10A OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 1991. THE DOCUMENTS ON RECORD SHOW THAT THE ASSESSEE WAS GRANTED STPI APPROVAL ON 30 - 03 - 2000. BEFORE GRANT OF APPROVAL THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION U/S. 10A OF THE ACT. THE LD. AR HAS STATED AT THE BAR THAT FIRST YEAR FOR CLAIMING DEDUCTION U/S. 10A WAS ASSESSMENT YEAR 2001 - 02. THOUGH THE LD. AR COULD NOT PLACE ON RECORD ASSESSEE'S RETURN OF INCOME IN ASSESSMENT YEAR 2001 - 02 AND THE ASSESSMENT ORDER FOR THE SAID ASSESSMENT YEAR, HOWEVER, THE ASS ESSEE HAS FURNISHED A COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004 - 05. A PERUSAL OF THE SAID ASSESSMENT ORDER AT PAGES 30 TO 40 OF THE PAPER BOOK CLEARLY INDICATE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10A IN RESPECT OF PROFITS FROM STPI UNIT AN D THE SAME HAS BEEN ALLOWED BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT. ONCE HAVING ACCEPTED THE CLAIM OF ASSESSEE, THE REVENUE CANNOT QUESTION ASSESSEE'S ELIGIBILITY FOR CLAIMING SUCH DEDUCTION IN SUBSEQUENT ASSESSMENT YEARS. THE HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PAUL BROTHERS (SUPRA) HAS OBSERVED THAT THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. UNLESS THE RELIEF ITA NO. 65/PUN/2015, A.Y. 2005 - 06 GRANTED FOR THE INITIAL ASSESSMENT YEAR IS WITHDRAWN, THE ITO COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. THUS, IN VIEW OF THE FACT THAT THE ASSESSEE'S CLAIM OF DEDUCTION U/S. 10A WAS NEVER QUESTIONED BY THE REVENUE IN INITIA L ASSESSMENT YEAR, THE ASSESSING OFFICER CANNOT RAISE QUESTION OVER ASSESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION IN ANY OF THE SUBSEQUENT ASSESSMENT YEARS. THE LD. DR HAS ALSO ACCEPTED THE FACT THAT IN ASSESSMENT YEAR 2004 - 05, ASSESSEE'S CLAIM OF DEDUCTIO N U/S. 10A WAS ALLOWED BY ASSESSING OFFICER IN SCRUTINY ASSESSMENT PROCEEDINGS. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT, GROUND NO. 1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 7 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 CONSIDERING T HE ABOVE, WE ARE OF THE CONSIDERED OPINION, IN VIEW OF THE BINDING RATIO IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA) THAT THE ASSESSEE IS ENTITLED TO RELIEF FOR BOTH THE YEARS ON THIS LEGAL ISSUE ALONE. RESPECTFULLY FOLLOWING OUR DECISION AND THE RELIE F PROVIDED TO THE ASSESSEE ON THIS ISSUE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND ALLOW THIS GROUND. THUS, GROUND NO.2 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 21 ST DAY OF OCTOB ER, 20 20 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 21 ST OCTOBER , 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 1, PUNE. 4. THE PR. CIT - 1, PUNE. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 8 ITA NO. 1855 /PUN/20 17 A.Y. 2014 - 15 DATE 1 DRAFT DICTATED ON 21 .10 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21 .10 .2020 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER