DCIT CENT. CIR. 3(2), CENT. RANGE - 3, MUMBAI V. EUROTECH CYLINDERS PVT. LTD., MUMBAI

ITA 187/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4978 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 08-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: P DANIEL
• Keywords: Depreciation; Rule of consistency

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E BENC H MUMBAI BEFORE SHRI G. S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 187/MUM/2018 (ASSESSMENT YEAR 2013-14 ITA NO. 188/MUM/2018 (ASSESSMENT YEAR 2014-15 DCIT, CC-3(2), CENTRAL RANGE-3, ROOM NO. 1913, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. M/S EUROTECH CYLINDERS PVT. LTD. EL-29, TTC INDUSTRIAL AREA, MAHAPE, MUMBAI-400701. P AN: AABCE4390B APPELLANT RESPONDENT CROSS OBJECTION NO. 16/MUM/2019 (ITA NO. 187/M/18) (ASSESSMENT YEAR 2013-14) CROSS OBJECTION NO. 17/MUM/2019 (ITA NO. 188/M/18) (ASSESSMENT YEAR 2014-15) M/S EUROTECH CYLINDERS PVT. LTD. EL-29, TTC INDUSTRIAL AREA, MAHAPE, MUMBAI-400701. P AN: AABCE4390B VS. DCIT, CC-3(2), CENTRAL RANGE-3, ROOM NO. 1913, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN P OINT, MUMBAI-400021. APPELLANT RESPONDENT APPELLANT BY : SHRI D.G. PANSARI (DR) RESPONDENT BY : SHRI P. DANIEL (AR) DATE OF HEARING : 22.01.2019 DATE OF PRONOUNCEMEN T : 22.01.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEAL BY REVENUE AND CROSS OBJECTIONS TH EREIN BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-51, MUMBAI (THE LD. CIT(A) DATED 03.10.20 17 FOR ASSESSMENT YEAR 2013-14 & 2014-15. IN BOTH THE APPEALS, THE RE VENUE HAS RAISED THE ITA NO. 187-188 MUM 18 & C.O. 16-17 MUM 19-M/S EUROTECH CYLINDERS P VT. LTD. 2 IDENTICAL GROUNDS OF APPEAL EXCEPT VARIATION OF FIG URES. THE ASSESSEE HAS ALSO RAISED CERTAIN COMMON GROUNDS OF APPEAL IN ITS CROSS OBJECTIONS. THUS, WITH THE CONSENT OF PARTIES, BOTH THE APPEALS /CROSS OBJECTIONS WERE HEARD TOGETHER AND ARE DECIDED BY A CONSOLIDATED OR DER. IN APPEAL FOR ASSESSMENT YEAR 2013-14, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER U/S 36(L)(III) OF THE IT ACT OF RS. 1,07,59,000/- WITHO UT APPRECIATING THE FACT THAT THE ASSESSEE HAS DIVERTED INTEREST BEARING FUND TO ADVANCE INTEREST FREE LOANS/ ADVANCES TO SISTER CONCERNS AND THEREFORE THE SAID EXPENDITURE WAS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER U/S 36(1)(III) OF THE IT ACT, 1961'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER U/S 36(1)(III) OF THE IT ACT OF RS. 1,07,59,000/- WITHO UT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE COMMERCIAL EXP EDIENCY IN ADVANCING INTEREST FREE LOANS AND ADVANCES TO SISTER CONCERN' . 2. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY REVENUE IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY TH E ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13, WH EREIN APPEAL OF REVENUE ON IDENTICAL GROUNDS WAS DISMISSED IN ITA N O. 2866/MUM/2017. 3. ON THE CONTRARY, GOING THROUGH THE ORDER OF CO-ORDI NATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. ITA NO. 187-188 MUM 18 & C.O. 16-17 MUM 19-M/S EUROTECH CYLINDERS P VT. LTD. 3 2866/MUM/2017, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE SUBMITS THAT HE RELIED UPON THE ORDER OF AS SESSING OFFICER. 4. WE HAVE CONSIDERED THE CONTENTION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE DEC ISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 12-13 AND FIND THAT DURING THE ASSESSMENT FOR ASSESSMENT YEAR 2012-13, SIMILAR DISALLOWANCE WAS MADE BY ASSESSING OFFICER UNDER SE CTION 36(1)(III) OF RS. 1.30 CRORE AND ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS DELETED. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE ORDER OF LD. CIT(A) WAS AFFIRMED WITH THE FOLLOWING OBSERVATIONS: 9. UPON CAREFUL CONSIDERATION, WE FIND THAT THE LD . CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE OWN FUNDS TO MAKE THE INTEREST FREE ADVANCES. THIS IS DULY CORROBORATED BY THE FIN ANCIAL STATEMENT. THIS HAS NOT BEEN DISPUTED. IT IS SETTLED LAW ALSO THAT IN C ASE OF MIXED FUNDS RIGHT OF ATTRIBUTION IS WITH THE ASSESSEE. IN THIS VIEW OF T HE MATTER, ON THE BASIS OF UNDISPUTED FACT THAT THE ASSESSEE HAD SUFFICIENT IN TEREST FREE FUND TO MAKE THESE ADVANCES, WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONED ORDER OF THE LD. CIT(A). THE CASE LAW FROM THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF RELIANCE POWER AND UTILITIES LTD. (SUPRA) DULY S UPPORT THE PROPOSITION. HENCE, THIS GROUND RAISED BY THE REVENUE IS DISMISS ED. 5. CONSIDERING THE DECISION OF TRIBUNAL FOR IMMEDIATE ASSESSMENT YEAR 2012-13 IN ITA NO. 2866/MUM/2017 AND RESPECTFULLY F OLLOWING THE DECISION OF CO-ORDINATE BENCH, WE AFFIRM THE ORDER OF LD. CIT(A). NO CONTRARY FACTS OR LAW IS BROUGHT TO OUR NOTICE TO T AKE OTHER VIEW. THEREFORE, WE AFFIRM THE ORDER OF LD. CIT(A). ITA NO. 187-188 MUM 18 & C.O. 16-17 MUM 19-M/S EUROTECH CYLINDERS P VT. LTD. 4 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 188/MUM/2018 BY REVENUE 7. WE HAVE NOTED THAT REVENUE HAS RAISED IDENTICAL GRO UNDS OF APPEAL AS RAISED IN APPEAL FOR ASSESSMENT YEAR 2013-14, WHICH WE HAVE DISMISSED BY FOLLOWING THE DECISION OF ASSESSMENT YEAR 2012-1 3, THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, THE GROUND OF APPEAL RAISED BY REVENUE IN THIS APPEAL IS ALSO DISMISSED. CROSS OBJECTION NO.16/MUM/2019 BY ASSESSEE 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF CR OSS OBJECTION: 1. THE LD. A.O. AND LD. CIT(A) ERRED IN DISALLOWING TH E DEPRECIATION OF RS. 7,36,465/- ON FURNITURE AND FIXTURE WITHOUT ANY VAL ID OR COGENT REASON. 2. THE LD. A.O. AND LD. CIT(A) ERRED IN DISALLOWING TH E CONVEYANCE AND TRAVELLING EXPENSE OF RS. 50,000/- WITHOUT ANY VALI D OR COGENT REASON. 9. THE LD. AR OF THE ASSESSEE SUBMITS THAT GROUND NO.1 OF CROSS OBJECTION OF ASSESSEE IS ALSO COVERED IN FAVOUR OF ASSESSEE BY T HE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 2866/MUM/2017. THE LD. DR FOR THE REVENUE AFTER GOI NG THROUGH THE DECISION OF TRIBUNAL FOR ASSESSMENT YEAR 2012-13 SU BMITS THAT THE SIMILAR GROUND OF APPEAL WAS DECIDED AGAINST THE RE VENUE. THE LD. DR FURTHER SUBMITS THAT HE STRONGLY RELIED ON THE ORDE R OF ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE CONTENTION OF BOTH THE PARTI ES AND FIND THAT SIMILAR GROUND OF CROSS OBJECTION WAS DECIDED BY CO -ORDINATE BENCH OF ITA NO. 187-188 MUM 18 & C.O. 16-17 MUM 19-M/S EUROTECH CYLINDERS P VT. LTD. 5 TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 AND DELETED THE SIMILAR DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS: 16. AS REGARDS THE DEPRECIATION ON FURNITURE IS CO NCERNED, THE LD. COUNSEL OF THE ASSESSEE PLEADED THAT THE ASSESSEE HAS DULY INC URRED THE EXPENSES ON FURNITURE WHICH WERE ACQUIRED FOR THE PURPOSE OF BU SINESS. HE SUBMITTED THAT THE ASSESSEE HAS ALSO SUBMITTED CA CERTIFICATE IN T HIS REGARD. HENCE, HE CLAIMED THAT THE CLAIM OF DEPRECIATION IS FULLY JUS TIFIED. 17. UPON CAREFUL CONSIDERATION, WE FIND THAT THE DI SALLOWANCE ON ACCOUNT OF BUSINESS PROMOTION AND CONVEYANCE AND TRAVELLING EX PENSES HAVE BEEN DONE ON ESTIMATED BASIS ON THE GROUND THAT SOME OF THE V OUCHERS ARE SELF MADE AND ARE NOT PROPER. HENCE, THE A.O. HAD MADE ADHOC DISA LLOWANCE WHICH HAS BEEN CONSIDERABLY REDUCED BY THE LD. CIT(A). IN OUR CONS IDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) S ORDER IN THIS REGARD HAS NO INFIRMITY. 18. AS REGARDS THE CLAIM OF DEPRECIATION OF FURNITU RE IS CONCERNED, WE FIND THAT THE SAID DISALLOWANCE HAS BEEN DONE ON SURMISE AND CONJECTURE. THE ASSESSEE HAS DULY SUBMITTED THE BILLS AND CERTIFICATE OF THE CA THAT THE ASSETS ACQUIRED WERE BEING USED BY THE BUSINESS. THIS HAS NOT BEEN COGENTLY CONTROVERTED. HENCE, WE DIRECT TO DELETE THE DISALLOWANCE OF DEPR ECIATION. 11. CONSIDERING THE DECISION OF TRIBUNAL ON IDENTICAL F ACT IN PRECEDING ASSESSMENT YEAR, WHEN NO MATERIAL CHANGE IN THE FAC TS IS BROUGHT TO OUR NOTICE, THEREFORE, BY FOLLOWING THE PRINCIPLE OF CO NSISTENCY, THE GROUND NO.1 OF CROSS OBJECTION IS ALLOWED. 12. GROUND NO.2 RELATES TO DISALLOWANCE ON CONVEYANCE A ND TRAVELLING EXPENSES. THE LD. AR OF THE ASSESSEE SUBMITS THAT H E IS NOT PRESSING THIS GROUND DUE TO SMALLNESS OF AMOUNT. CONSIDERING THE SUBMISSION OF LD. AR ITA NO. 187-188 MUM 18 & C.O. 16-17 MUM 19-M/S EUROTECH CYLINDERS P VT. LTD. 6 OF THE ASSESSEE, THIS GROUND OF APPEAL IN CROSS OBJ ECTION IS DISMISSED AS NOT PRESSED. CROSS OBJECTION NO. 17/MUM/2019 BY ASSESSEE. 13. WE HAVE NOTED THAT THE ASSESSEE HAS RAISED THE IDEN TICAL GROUNDS OF CROSS OBJECTION AS RAISED IN ASSESSMENT YEAR 2013-14, WHI CH WE HAVE ALLOWED BY FOLLOWING THE DECISION OF TRIBUNAL FOR ASSESSMEN T YEAR 2012-13, THEREFORE, THIS GROUND OF CROSS OBJECTION IS ALSO A LLOWED. 14. IN THE RESULT, APPEALS OF THE REVENUE FOR BOTH THE YEARS ARE DISMISSED AND CROSS OBJECTION FOR ASSESSMENT YEAR 2013-14 IS PART LY ALLOWED AND CROSS OBJECTION FOR ASSESSMENT YEAR 2014-15 IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/ 01/2019. SD/ SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUD ICIAL MEMBER MUMBAI, DATE: 22.01.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI