PLASTIBLENDS INDIA LTD, MUMBAI V. ACIT CIR 8(2), MUMBAI

ITA 1933/MUM/2009

• Counselvise Citation: 193319914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: NITESH S JOSH I
• Keywords: Depreciation; Rule 8D; Set aside
• Section: 14A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI, J. SUDHAKAR REDDY, ACCOUNTANT MEMBER A ND SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER ITA NO. 1933/MUM./2009 (ASSESSMENT YEAR : 2005-06 ) DATE OF HEARING: 4.5.2011 PLASTIBLENDS INDIA LIMITED B-45, MAHASHREE COMPOUND NEW LINKING ROAD, ANDHERI (W) MUMBAI 400 058 AAACP6287B .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-8(2), MUMBAI .... RESPONDENT ASSESSEE BY : MR. NITESH S. JOSHI REVENUE BY : MR. S.S. RANA O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL FILED BY THE ASSESSEE, IS DIRECTED AGAI NST THE IMPUGNED ORDER DATED 7 TH JANUARY 2009, PASSED BY THE COMMISSIONER (APPEALS) -VIII, MUMBAI, FOR ASSESSMENT YEAR 2005-06. GROUNDS RAISED BY THE ASSESSEE, READ AS FOLLOWS:- 2. GROUND NO.1, IS ON THE ISSUE OF DETERMINATION OF EX ACT QUANTUM OF DEPRECIATION TO BE ALLOWED FOR COMPUTING THE PROFIT OF THE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). PLASTIBLENDS INDIA LIMITED ITA NO.1933/MUM./2009 2 3. HAVING HEARD THE LEARNED COUNSEL, MR. NITESH S. JOS HI, APPEARING ON BEHALF OF THE ASSESSEE AS WELL AS THE LEARNED DEPAR TMENTAL REPRESENTATIVE, MR. S.S. RANA, AND ON PERUSAL OF THE MATERIAL ON RE CORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ISSUE BE FORE US IS MUTATIS MUTANDIS IDENTICAL TO THE ISSUE DECIDED BY A CO-ORDINATE BEN CH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1957/MUM./2008, FOR A SSESSMENT YEAR 2004- 05, WHEREIN THE TRIBUNAL, VIDE ORDER DATED 30 TH JUNE 2009, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS FOL LOWS:- 2. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND A LSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS OBSER VED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2003-04 IN AN APPEAL FILED BEFORE THE TRIBUNAL AND WHILE DISPOSIN G OF THE SAME, THE TRIBUNAL HAS DECIDED THE SAID ISSUE IN PARA-2 OF IT S ORDER DATED 27.7.2007, PASSED IN ITA NO.2757/MUM./2006, AS UNDE R:- DURING THE COURSE OF HEARING, THE LEARNED COUNSEL POINTED OUT THAT IN THE YEAR IN QUESTION THE ASSESS EE HAS CLAIMED DEPRECIATION AND THERE IS NO QUESTION OF TH RUST OF ANY DEPRECIATION BUT ITS GRIEVANCE IS THAT THE FINA L ORDERS OF THE EARLIER YEARS WHICH HAVE NOT BEEN PROPERLY IMPLEMENTED. THE ASSESSEE DESIRES THERE SHOULD BE A SPECIFIC DIRECTION TO THE ASSESSING OFFICER ON THIS BEHALF SO AS NOT TO DISTURB THE FINALITY OF THE ORDERS OF THE EARLIER YEARS. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, HAS NO OBJECTION IF THE SPECIFIC DIRECT ION IS GIVEN TO THE ASSESSING OFFICER. WE, THEREFORE, DIRE CT THE ASSESSING OFFICER THAT THE WRITTEN DOWN VALUE AS AT THE BEGINNING OF THE YEAR SHALL BE COMPUTED ONLY ON THE BASIS OF THE ORDERS WHICH HAVE ALREADY REACHED THE FINALI TY. IN OTHER WORDS, THE DEPRECIATION ACTUALLY CLAIMED OR D IRECTED TO BE ALLOWED ONLY SHALL BE TAKEN INTO CONSIDERATIO N BEFORE ARRIVING THE WRITTEN DOWN VALUE OF THE ASSETS IN QU ESTION. 3. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AND ALL THE MATERIAL FACTS RELEVANT THERE ARE ADMITTEDLY SIMILA RLY TO A.Y. 2003-04, WE RESPECTFULLY FOLLOW THE AFORESAID ORDER OF THE T RIBUNAL FOR A.Y. 2003- 04 AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE DEPRECIATION AS PER THE SIMILAR DIRECTION AS HAS BEEN GIVEN BY THE TRIB UNAL IN A.Y. 2003- 04. 4. KEEPING IN VIEW THE AFORESAID DECISION OF THE TRIBU NAL, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND DIRECT THE PLASTIBLENDS INDIA LIMITED ITA NO.1933/MUM./2009 3 ASSESSING OFFICER TO RE-COMPUTE THE DEPRECIATION IN LINE WITH THE AFORESAID DIRECTIONS OF THE TRIBUNAL. THIS GROUND OF APPEAL I S, THUS, ALLOWED. 5. GROUND NO.2, IS ON THE ISSUE OF DISALLOWANCE US/ 14 A OF THE ACT R/W RULE-8D. 6. LEARNED COUNSEL CONTENDS BEFORE US THAT THE COMMISS IONER (APPEALS), RELYING ON THE MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ITO V/S DAGA CAPITAL MANAGEMENT PVT. LTD., ITA NO.8057/MUM./2003 , ORDER DATED 20 TH OCTOBER 2008, COMPUTED THE DISALLOWANCE AS PER RUL E8D, HOWEVER, IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE LTD. VS ACIT, (2010) 234 CTR 001 (BOM.), WHEREIN, I T HAS BEEN HELD THAT RULE 8D IS PROSPECTIVE IN OPERATION, THEREFORE, THE SAID RULE 8D COULD NOT BE APPLIED FOR THE YEAR UNDER ASSESSMENT, AS THE SAID RULE WAS BROUGHT ON STATUTE BY THE INCOME TAX (FIFTH) AMENDMENT RULES, 2008, W.E.F. 24 TH MARCH 2008. HE FURTHER SUBMITTED THAT THE ASSESSING OFFIC ER HAS EXERCISED HIS MIND AND DECIDED THE DISALLOWANCE @ 1% OF DIVIDEND INCOM E AS ALLOCABLE EXPENSES. HE SUBMITTED THAT THE SAME IS ACCEPTABLE TO THE ASSESSEE AND THE ASSESSING OFFICER NEED NOT REVIEW HIS VIEW ON THE M ATTER. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, COU LD NOT BRING ON RECORD ANY CONTRARY EVIDENCE WHICH CAN PROVE ASSESSEES CO NTENTIONS AS OTHERWISE. HE RELIED ON THE ORDER OF THE COMMISSIONER (APPEALS ). 7. HAVING HEARD BOTH THE PARTIES AND HAVING PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON REC ORD, WE FIND THAT THE QUESTION OF MAKING DISALLOWANCE UNDER SECTION 14A I S NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD., (SUPRA), WHEREIN THEIR LORDSHI PS HAVE HELD THAT RULE 8D IS PROSPECTIVE AND IS APPLICABLE FROM ASSESSMENT YE AR 2008-09 AND THAT IN OTHER CASES, THE DISALLOWANCE HAS TO BE WORKED OUT BY THE ASSESSING OFFICER ON SOME REASONABLE BASIS. THE ASSESSING OFFICER, IN THIS CASE, HAS ALREADY EXERCISED HIS MIND AND QUANTIFIED THE DISALLOWANCE. IN VIEW OF THIS, WE SET PLASTIBLENDS INDIA LIMITED ITA NO.1933/MUM./2009 4 ASIDE THE IMPUGNED ORDER OF THE COMMISSIONER (APPEA LS) AND RESTORE THE ORDER OF THE ASSESSING OFFICER THIS GROUND IS, THUS , ALLOWED IN PART I.E., TO THE EXTENT OF DELETING THE ENHANCEMENT MADE BY THE COMM ISSIONER (APPEALS). 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.5.2011 SD/- ASHA VIJAYRAGHAVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 13.5.2011 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, C BENCH, ITAT, MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI