M/s. Shasun Chemicals and Drugs Ltd. (Now known as M/s.Shasun Pharmaceuticals Ltd.), CHENNAI V. ITO (OSD), CHENNAI

ITA 1858/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61324 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-07-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Assessee Lawyers: V JAGADISAN
• Keywords: Depreciation; Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A. NOS. 1857 TO 1859/MDS/2010 ASSESSMENT YEARS : 1999-2000, 2000-01 & 2004-05 M/S. SHASUN CHEMICALS AND DRUGS LTD., (NOW KNOWN AS M/S.SHASUN PHARMACEUTICALS LTD.), C/O M/S. JAGADISAN & CO., CAS, RESIDENCY APARTMENTS,245,T.T.K.ROAD, ALWARPET,CHENNAI 600 018. (APPELLANT) VV VS. THE INCOME-TAX OFFICER (OSD), COMPANY CIRCLE VI(2), CHENNAI 600 034. PAN AAACS5031L (RESPONDENT) APPELLANT BY : SHRI V. JAGA DISAN, CA RESPONDENT BY : SHRI ANIRUDH RAI, IRS, CIT DATE OF HEARING : 10 TH JULY, 2012 DATE OF PRONOUNCEMENT : 10 TH JULY, 2012 O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THESE THREE APPEALS ARE FILED BY THE ASSESSEE. TH E RELEVANT ASSESSMENT YEARS ARE 1999-2000, 2000-01 AN D 2004-05. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF TH E I TA 1857 TO 1859/10 :- 2 -: COMMISSIONER OF INCOME-TAX (APPEALS)-V, AT CHENNAI DATED 30.8.2010. THE APPEALS FOR THE ASSESSMENT YEARS 19 99-2000 AND 2000-01 ARISE OUT OF THE PROCEEDINGS UNDER SEC.154 OF THE INCOME-TAX ACT, 1961. THE APPEAL FOR THE ASSESSMEN T YEAR 2004- 05 ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SEC .143(3). 2. THE ASSESSEE HAS RAISED A COMMON GROUND FOR ALL THE THREE ASSESSMENT YEARS UNDER APPEAL. THE SAID COMMON GRO UND IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS NO T CONSIDERED THE MERITS OF THE ISSUE ON THE QUANTIFIC ATION OF DEDUCTION UNDER SEC.80HHC. IT IS THE CASE OF THE A SSESSEE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT CORR ECT IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER TO RES TRICT THE QUANTUM OF RELIEF UNDER SEC.80HHC. 3. IN FACT, THIS IS THE ONLY ISSUE RAISED BY THE AS SESSEE FOR THE FIRST TWO ASSESSMENT YEARS 1999-2000 AND 2000-01. 4. WE HEARD BOTH SIDES IN DETAIL ON THIS ISSUE. 5. THE ISSUE RELATES TO THE SCOPE OF RETROSPECTIVE AMENDMENT MADE TO SEC.80HHC BY THE TAXATION LAWS (SECOND AMEN DMENT) ACT, 2005. IN THE LIGHT OF THE ABOVE AMENDMENT, WR IT PETITIONS I TA 1857 TO 1859/10 :- 3 -: WERE FILED BEFORE DIFFERENT HIGH COURTS CHALLENGING THE RETROSPECTIVITY OF THE SAID AMENDMENT MADE TO SEC.8 0HHC. THE HONBLE SUPREME COURT DIRECTED THE HONBLE GUJARAT HIGH COURT TO CLUB ALL SUCH WRIT PETITIONS PENDING BEFORE DIFF ERENT HIGH COURTS AND THEREAFTER TO HEAR AND DISPOSE THEM OFF. ACCOR DINGLY, THE HONBLE GUJARAT HIGH COURT HAS DECIDED THE MATTER H OLDING THAT THE AMENDMENT DOES NOT HAVE RETROSPECTIVE EFFECT. THE SAID JUDGMENT HAS BEEN DELIVERED BY THE HONBLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO.7926 OF 2006 ON 2.7.20 12 IN THE CASE OF AVANI EXPORTS & OTHERS VS. CIT RAJKOT & OTHERS. 6. AS THE HONBLE COURT HAS HELD THAT THE AMENDMENT CANNOT HAVE RETROSPECTIVE OPERATION, THE STAND TAKEN BY TH E ASSESSING OFFICER IN THESE APPEALS IS NOT SUSTAINABLE IN LAW. AS THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER SEC.80HHC IS N OT HIT BY THE AMENDMENT BROUGHT IN BY THE TAXATION LAWS (SECO ND AMENDMENT) ACT, 2005, THE DEDUCTIONS SHOULD BE ALLO WED IN THE LIGHT OF OTHER PROVISIONS OF LAW. ACCORDINGLY, WE DELETE ALL THE RESTRICTIONS MADE BY THE ASSESSING AUTHORITY IN GRA NTING DEDUCTION UNDER SEC.80HHC, ON THE GROUND THAT THE AMENDMENT W AS RETROSPECTIVE. WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE I TA 1857 TO 1859/10 :- 4 -: DEDUCTION AS PER PRE AMENDED LAW AND AS CLAIMED BY THE ASSESSEE. THIS ISSUE IS ACCORDINGLY DECIDED IN FA VOUR OF THE ASSESSEE. 7. THE ASSESSEE HAS RAISED ONE MORE GROUND IN ITS A PPEAL FOR THE ASSESSMENT YEAR 2004-05. THE SAID GROUND IS RE GARDING WRITTEN DOWN VALUE OF THE ASSETS TO BE CONSIDERED F OR GRANTING DEPRECIATION ALLOWANCE FOR THE ASSESSMENT YEAR 2004 -05. THE ASSESSEE HAS NOT BEEN CLAIMING DEPRECIATION ALLOWAN CE FROM ASSESSMENT YEAR 1996-97 TO 2003-04. BUT THE ASSESS EE COMPANY HAD CLAIMED DEPRECIATION FOR THE ASSESSMENT YEAR 2004- 05. IN VIEW OF THE AMENDMENT BROUGHT IN SEC.32 WIT H EFFECT FROM 1 ST APRIL, 2000, GRANT OF DEPRECIATION ALLOWANCE IS CO MPULSORY. THE SAID AMENDMENT HAS NULLIFIED THE EFFECT OF THE JUDGMENT DELIVERED BY THE HONBLE APEX COURT IN THE CASE OF MAHINDRA MILLS (243 ITR 56). THE GRIEVANCE OF THE ASSESSEE IS NOT ON GRANTING DEPRECIATION ALLOWANCE BUT ON THE QUESTION OF WHAT IS THE OPENING VALUE OF THE ASSETS ON WHICH THE DEPRECIATION ALLOW ANCE SHOULD BE GRANTED. THE CASE OF THE REVENUE IS THAT THE WR ITTEN DOWN VALUE SHOULD BE TAKEN FOR THE IMPUGNED ASSESSMENT Y EAR, AS IF DEPRECIATION HAS BEEN ALLOWED FOR ALL THE EARLIER A SSESSMENT I TA 1857 TO 1859/10 :- 5 -: YEARS. THE ARGUMENT OF THE ASSESSEE COMPANY IS THA T NO DEPRECIATION ALLOWANCE WAS GRANTED FOR THE EARLIER ASSESSMENT YEARS AND, THEREFORE, DEPRECIATION ALLOWANCE FOR TH E IMPUGNED ASSESSMENT YEAR SHOULD BE ALLOWED ON THAT WRITTEN D OWN VALUE AS BROUGHT DOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOU NT, NOT DILUTED BY THE PRESUMPTIVE ALLOWANCE OF DEPRECIATION. 8. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSE ES INCOME IS BOUND TO BE COMPUTED AFTER GRANTING DEPRECIATION ALLOWANCE. ON THE QUESTION OF WRITTEN DOWN VALUE, WE FIND THAT THE ARGUMENT OF THE ASSESSEE IS SUSTAINABLE IN LAW. THE DEPRECI ATION IS TO BE ALLOWED ON THE WRITTEN DOWN VALUE OF THE BLOCK OF A SSETS BROUGHT DOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AT THE BEGINNING OF THE PREVIOUS YEAR. THE ASSESSING OFFICER IS NOT JU STIFIED IN REDUCING THAT WRITTEN DOWN VALUE BY THE AMOUNT OF D EPRECIATION ALLOWANCE PERTAINING TO THE EARLIER ASSESSMENT YEAR S ON A PRESUMPTIVE BASIS. WRITTEN DOWN VALUE CAN BE REDUC ED ONLY ON THE ALLOWANCE OF ACTUAL DEPRECATION AND NOT ON PRES UMPTIVE DEPRECIATION. THEREFORE, THE ASSESSING AUTHORITY I S DIRECTED TO GRANT DEPRECIATION TO THE ASSESSEE ON THE WRITTEN D OWN VALUE BROUGHT DOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUN T. NO I TA 1857 TO 1859/10 :- 6 -: ADJUSTMENT WILL BE MADE TOWARDS PRESUMPTIVE DEPRECI ATION PERTAINING TO EARLIER ASSESSMENT YEARS. THIS GROUN D IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. IN RESULT, THESE APPEALS FILED BY THE ASSESSEE A RE ALLOWED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 10 TH OF JULY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED THE 10 TH JULY, 2012 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR