K.Mohamed Hyder, Erode V. ITO, Erode

ITA 1868/CHNY/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68895 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K RAGHU
• Keywords: Depreciation
• Section: 143(3); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1868/MDS/2012 (ASSESSMENT YEAR: 2004-05) MR. K.MOHAMED HYDER, 69, E.M.BALASUBRAMANIAM STREET, THIRUNAGAR COLONY, ERODE-638 003. PAN: ALDPK7862Q VS. THE INCOME TAX OFFICER, WARD-I(1), ERODE. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.RAGHU, C.A. RESPONDENT BY : MR. S.DAS GUPTA, JCIT DATE OF HEARING : 9 TH DECEMBER, 2013 DATE OF PRONOUNCEMENT : 20 TH DECEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE DATED 18.09.2012 FOR THE ASSESSMENT YEAR 2004-05. 2. THE MAIN ISSUE IN THE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (AP PEALS) ERRED IN UPHOLDING THE RESTRICTION OF DEPRECIATION ON WINDMILLS INSTALLED IN THE FINANCIAL YEAR 2003-04 TO 7.69% AND ITA NO.1868/MDS//2012 2 DISALLOWING THE CLAIM FOR HIGHER DEPRECIATION. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTI ON 143(3) OF THE ACT DISALLOWED HIGHER DEPRECIATION OF ` 1,06,98,568/- CLAIMED ON THE WINDMILLS INSTALLED DURING THE ASSES SMENT YEARS 2000-01 AND 2004-05 ON THE GROUND THAT THE ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2004-05 BELATE DLY AND THE ASSESSEE DID NOT EXERCISE OPTION OF CLAIMING HI GHER DEPRECIATION AS PER RULE 5(1A) OF THE INCOME-TAX R ULES. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) IN SOFAR AS HIGHER DEPRECIATION ON WINDMILLS INSTALLED IN THE A SSESSMENT YEAR 2000-01 IS CONCERNED, ALLOWED THE CLAIM OF THE ASSESSEE HOLDING THAT THE OPTION EXERCISING FOR HIGHER DEPR ECIATION HAS BEEN MADE BY THE ASSESSEE IN THE INITIAL ASSESSMENT YEAR AND THEREFORE NO FRESH OPTION IS REQUIRED TO BE EX ERCISED IN SUBSEQUENT YEARS. HOWEVER, INSOFAR AS WINDMILLS ER ECTED DURING THE ASSESSMENT YEAR 2004-05 ARE CONCERNED, T HE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSEE DID NOT EXERCISE OPTION BEFORE THE DUE DAT E FOR FILING OF RETURN AS THE RETURN OF INCOME WAS FILED BELATED LY AND THEREFORE ASSESSEE IS NOT ENTITLED FOR HIGHER DEPR ECIATION FOR ITA NO.1868/MDS//2012 3 THE WINDMILLS INSTALLED IN THE ASSESSMENT YEAR 2004 -05 AND DISALLOWANCE OF HIGHER DEPRECIATION TO THAT EXTENT IS UPHELD. 3. THE COUNSEL SUBMITS THAT IN THE CASE OF THE ASSE SSEE THOUGH THE RETURN WAS FILED BELATEDLY, AUDIT REPORT EXERCISING OPTION FOR HIGHER DEPRECIATION WAS FILED BEFORE DUE DATE FOR FILING OF RETURN FOR THE ASSESSMENT YEAR 2004-05, T HEREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN RESTRICTING T HE DEPRECIATION ON WINDMILLS TO ONLY 7.69% AS AGAINST 80%. THE COU NSEL FOR THE ASSESSEE FURTHER SUBMITS THAT EVEN THOUGH THE COMMISSIONER OF INCOME TAX (APPEALS) STATES THAT IN COME- TAX ACT SPECIFICALLY STIPULATES THAT TO CLAIM HIGHE R RATE OF DEPRECIATION RETURN OF INCOME SHOULD BE FILED WITHI N THE DUE DATE, NO SUCH REQUIREMENT IS PRESCRIBED IN THE ACT. THE COUNSEL SUBMITS THAT THE ONLY REQUIREMENT FOR CLAIM ING HIGHER RATE OF DEPRECIATION AS PROVIDED UNDER RULE 5(1A) A ND SECOND PROVISO TO SUCH RULE IS THAT THE ASSESSEE SHOULD EX ERCISE OPTION FOR CLAIMING HIGHER DEPRECIATION BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139 OF THE ACT. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ALMOST SIMILA R SITUATION ITA NO.1868/MDS//2012 4 HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF K.K.S.K. LEATHER PROCESSORS (P) LTD. VS. ITO (126 ITD 215). REFERRING TO THE SAID DECISI ON, THE COUNSEL SUBMITS THAT THIS TRIBUNAL HAS HELD THAT FI LING OF AUDIT REPORT WITHIN THE DUE DATE AMOUNTS TO EXERCISING OP TION AS REQUIRED UNDER THE SECOND PROVISO TO RULE 5(1A) OF INCOME- TAX RULES FOR CLAIMING HIGHER DEPRECIATION. THE CO UNSEL SUBMITS THAT IN THE CASE OF THE ASSESSEE BEFORE TH E DUE DATE FOR FILING OF RETURN, ASSESSEE FILED THE AUDIT REP ORT WHEREIN HE HAS CLAIMED HIGHER DEPRECIATION AND THIS AMOUNTS TO EXERCISING OPTION FOR HIGHER DEPRECIATION AS PROVID ED UNDER RULE 5(1A). THEREFORE COUNSEL SUBMITS THAT HIGHER DEPRECIATION IS TO BE ALLOWED ON THE WINDMILLS EREC TED IN THE ASSESSMENT YEAR 2004-05. 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE OR DERS OF LOWER AUTHORITIES IN DISALLOWING HIGHER RATE OF DEPRECIATION. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE CASE LAW RELIED ON. ON GOING TH ROUGH THE ITA NO.1868/MDS//2012 5 ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE FIND THAT THERE IS A FINDING BY THE COMMISSIONER THAT AS SESSEE HAD FILED RETURN OF INCOME ON 29.03.2005 AFTER A DELAY OF FIVE MONTHS FROM THE DUE DATE OF FILING OF RETURN. IT WA S ALSO SUBMITTED BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS) THAT AUDIT REPORT IN FORM 3CB AND 3CD WERE FILED O N 22.10.2004 WHICH IS BEFORE THE DUE DATE OF FILING O F RETURN I.E. 31.10.2004. WE HAVE GONE THROUGH THE ORDER OF THE C O- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF K.K .S.K. LEATHER PROCESSORS (P) LTD. VS. ITO (SUPRA), WHEREI N THE CO- ORDINATE BENCH HELD THAT WHEN THERE IS NO SPECIFIC FORM OR METHOD PRESCRIBED FOR EXERCISING THE SAID OPTION FO R CLAIMING HIGHER DEPRECIATION, THEN THE CLAIM MADE IN THE RET URN OF INCOME AS WELL AS REFLECTED IN THE BOOKS OF ACCOUNT AND AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME IS MOR E THAN THE EXERCISE OF OPTION AS REQUIRED UNDER THE SECOND PRO VISO TO RULE 5(1A) OF INCOME TAX RULES. HERE, IN THE CASE O F THE ASSESSEE, THE ASSESSEE CONTENDS THAT HE HAS EXERCIS ED OPTION BY FILING AUDIT REPORT AND CLAIMED HIGHER RA TE OF DEPRECIATION ON THE WINDMILLS ERECTED DURING THE AS SESSMENT ITA NO.1868/MDS//2012 6 YEAR 2004-05. THE SECOND PROVISO TO RULE 5(1A) PRES CRIBES THAT THE ASSESSEE SHOULD EXERCISE OPTION BEFORE THE DUE DATE FOR FILING OF RETURN FOR CLAIMING HIGHER DEPRECIATI ON. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS FILED AUDIT REPORT BEFORE THE DUE DATE FOR FILING OF RETU RN CLAIMING HIGHER RATE OF DEPRECIATION ON THE WINDMILLS. FOLLO WING THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL CIT ED ABOVE, WE HOLD THAT EXERCISING OPTION BY FILING AUDIT REP ORT BEFORE THE DUE DATE FOR FILING OF RETURN FOR CLAIMING HIGHER D EPRECIATION ON THE WINDMILLS, THE ASSESSEE IS ENTITLED FOR HIGHER DEPRECIATION EVEN THOUGH THE RETURN WAS FILED BELATEDLY. HOWEVER , WE DIRECT THE ASSESSING OFFICER TO VERIFY WHETHER THE AUDIT REPORT IN FORM 3CB AND 3CD WAS FILED ON 22.10.2004 AS CLA IMED BY THE ASSESSEE CLAIMING HIGHER RATE OF DEPRECIATION ON WINDMILLS ERECTED EXERCISING OPTION. IN CASE THE AU DIT REPORT IS FILED BEFORE THE DUE DATE FOR FILING OF RETURN EXER CISING SUCH OPTION FOR HIGHER DEPRECIATION, THE ASSESSEE SHALL BE ALLOWED HIGHER DEPRECIATION ON THE WINDMILLS ERECTED IN THE ASSESSMENT YEAR 2004-05. THE APPEAL IS DISPOSED OFF ON THE ABOVE DIRECTIONS. ITA NO.1868/MDS//2012 7 6. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 2 0 TH DAY OF DECEMBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 20 TH DECEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.