KABRA EXTUSIONTECHNIK LTD, MUMBAI V. ACIT RG 8(2), MUMBAI

ITA 1934/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55644 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHSARTHI NAIK
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1934/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. KABRA EXTRUSIONTECHNIK LTD. ACIT, RANGE 8(2) 31, SHAH INDUSTRIAL ESTATE MUMBAI VEERA DESAI ROAD, ANDHERI (W) VS. MUMBAI 400058 PAN - AAACK 4289 L APPELLANT RESPONDENT APPELLANT BY: SHRI NITESH JOSHI RESPONDENT BY: SHRI PARTHSARTHI NAIK DATE OF HEARING: 17.10.2011 DATE OF PRONOUNCEMENT: 25.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-VIII, MUMBAI DATED 07.01.2009. 2. ASSESSEE HAS RAISED TWO DETAILED GROUNDS ON THE ISS UE OF RECOMPUTATION OF DEPRECIATION BY THE ASSESSING OFFI CER AND THE ISSUE OF DISALLOWANCE UNDER SECTION 14A. 3. ON THE ISSUE OF RECOMPUTATION OF DEPRECIATION, THE A.O. NOTICED THAT ASSESSEE HAS CLAIMED DEPRECIATION OF ` 1,09,52,876/- PERTAINING TO DIVISION III UNIT OF THE COMPANY AT DAMAN. IN THE EARLIER YE ARS ASSESSEE HAS NOT CLAIMED DEPRECIATION IN CERTAIN YEARS AND THE DEPRE CIATION WAS THRUSTED UPON THE ASSESSEE. THESE MATTERS WERE SUBJECT MATTE R OF APPEAL BEFORE HIGHER AUTHORITIES AND AS PER ASSESSEE DEPRECIATION IN CERTAIN YEARS WERE ALLOWED AND IN CERTAIN YEARS IT WAS NOT ALLOWED. AS SESSING OFFICER, BASED ON THE PAST RECORD, REQUESTED THE ASSESSEE TO WORKOUT THE DEPRECIATION AS PER WDV ON RECORD. ASSESSEE FURNISHED A CHART WHEREIN A S PER THE DEPRECIATION THRUSTED UPON THIS DIVISION FROM THE YEAR OF OPERAT ION, THE ACTUAL CLAIM FOR ITA NO. 1934/MUM/2009 M/S. KABRA EXTRUSIONTECHNIK LTD. 2 THE YEAR UNDER CONSIDERATION WAS ONLY ` 64,87,172/-. THEREFORE, THE DIFFERENCE OF ` 44,65,704/- WAS DISALLOWED AS EXCESS DEPRECIATION. IN ORDER TO KEEP THE MATTER ALIVE ASSESSEE PREFERRED APPEAL TO THE CIT(A). FOLLOWING THE ORDER OF THE ITAT IN ITA NO. 1766/MUM/2004 DATED 30 .04.2007 WHEREIN THE ITAT UPHELD THE GRANTING OF DEPRECIATION TO THE ASS ESSEE, THE CIT(A) DISMISSED THE GROUNDS OF THE ASSESSEE. 4. IT WAS SUBMITTED THAT AS FAR AS THE WORKING OF THE A.O. IS CONCERNED ASSESSEE HAS FURNISHED THE CHART AS PER THE DEPRECI ATION ALLOWED IN EARLIER YEARS BUT WANTED A DIRECTION TO BE GIVEN THAT IN CA SE THE DEPRECIATION ISSUES WHICH ARE PENDING BEFORE THE HON'BLE HIGH COURT WER E FINALISED THE A.O. SHALL RECOMPUTE THE WDV BY TAKING INTO ACCOUNT THE ACTUAL COST OF THE ASSETS INCREASED BY THE ADDITIONS AND THEN REDUCED BY DEPRECIATION ACTUALLY ALLOWED IN EARLIER YEARS. THE LEARNED COUNSEL SUBMI TTED THAT NECESSARY DIRECTIONS MAY BE ISSUED IN THIS REGARD. 5. WE HAVE CONSIDERED THE ISSUE. THE DISPUTE IS ONLY W ITH REFERENCE TO THE WDV OF THE ASSETS TO BE TAKEN INTO ACCOUNT WHIL E CALCULATING DEPRECIATION FOR THE YEAR UNDER CONSIDERATION. AS A LREADY STATED THE A.O. OBTAINED THE CORRECT WORKING OF DEPRECIATION BASED ON THE PAST RECORD WITH THE I.T. DEPARTMENT FROM THE TIME OF INCEPTION OF D IVISION III AND ACCORDINGLY CALCULATED DEPRECIATION ALLOWABLE AT ` 64,87,172/- TO WHICH THERE IS NO DISPUTE. IT IS ASSESSEES SUBMISSION THAT IN CASE I N EARLIER YEARS THE DEPRECIATION WAS WITHDRAWN THE WDV HAS TO BE CHANGE D. ACCORDINGLY THE DEPRECIATION IS TO BE REWORKED OUT FOR THE YEAR UND ER CONSIDERATION. THE INCOME TAX ITSELF PROVIDED FOR RECOMPUTATION OF TOT AL INCOME VIDE SECTION 153 SUB-CLAUSE (3) WHEREIN IN IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER UNDER SE CTION 250, 254, 260, 262, 263 OR 264 OR ANY ORDER OF NAY COURT IN ANY PROCEED ING THE ORDER CAN BE MODIFIED AND THE LIMITATIONS PLACED UNDER SECTION 1 53(1) ARE NOT APPLICABLE SUBJECT TO THE PROVISIONS OF SUB-SECTION 2(A). IN V IEW OF THIS IN CASE OF ANY DEPRECIATION THRUSTED UPON BY HE ASSESSEE WAS WITHD RAWN, AUTOMATICALLY THE WDV OF THE YEARS UNDER CONSIDERATION HAVE TO BE RECOMPUTED. THEREFORE THE A.O. IS DIRECTED TO KEEP IN MIND THE PAST RECOR D AND SHALL COMPUTE THE WDV BY TAKING INTO ACCOUNT THE ACTUAL COST OF THE A SSETS AS ENHANCED BY THE ITA NO. 1934/MUM/2009 M/S. KABRA EXTRUSIONTECHNIK LTD. 3 ADDITION MADE TO IT AND THEN REDUCED BY THE DEPRECI ATION ACTUALLY CLAIMED AND ALLOWED IN EARLIER YEARS. WITH THESE OBSERVATIO NS, ASSESSEES GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT ISSUE FOR CONSIDERATION IS THE DISALLOWANC E MADE UNDER SECTION 14A BY THE A.O. THE A.O. WHILE COMPLETING T HE ASSESSMENT HAS NOTICED THAT ASSESSEE HAS SHOWN DIVIDEND INCOME OF ` 1,09,08,746/- AS NO EXPENSES WERE ALLOCATED. HE CONSIDERED AN AMOUNT OF 1%, I.E. ` 1,09,087/- AS ALLOCABLE EXPENDITURE UNDER SECTION 14A AND INCR EASED THE TOTAL INCOME TO THAT EXTENT BY DISALLOWING UNDER SECTION 14A. HO WEVER, THE CIT(A) OPINED THAT THIS ISSUE WAS CONSIDERED BY THE ITAT SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. IN 199 TTJ 289 (S B) (MUM.), THEREFORE, THE A.O. CAN BE DIRECTED TO RECOMPUTE THE DISALLOWA NCE UNDER SECTION 14A. HOWEVER, SINCE THE COUNSEL OF THE ASSESSEE HAS NOT PRESSED THE GROUND THE SAME WAS DISMISSED. 7. AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED COUN SEL AND THE LEARNED D.R. WE ARE OF THE OPINION THAT THERE IS NO NEED TO ADJUDICATE THIS GROUND. FIRST OF ALL THE CIT(A) HAS NOT DIRECTED THE A.O. T O RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A BUT DISMISSED THE GROUND AS NOT P RESSED. EVEN OTHERWISE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE LTD. MFG. CO. VS. DCIT 328 ITR 81 DID NOT APPROVE RETROSPECTIVE A PPLICATION OF RULE 8D FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THERE IS N O NEED TO RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A AS PER RULE 8D. SINC E THE A.O. HAS CONSIDERED 1% OF THE DIVIDEND INCOME AS REASONABLE AMOUNT, WHICH THE LEARNED COUNSEL ALSO AGREED BEFORE US AS REASONABLE , WE UPHOLD THE ADDITION OF 1% OF DIVIDEND INCOME IN THIS CASE AS REASONABLE AMOUNT. ACCORDINGLY THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2011 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH OCTOBER 2011 ITA NO. 1934/MUM/2009 M/S. KABRA EXTRUSIONTECHNIK LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VIII, MUMBAI 4. THE CIT VIII, MUMBAI CITY 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.