The DCIT, Circle-5, Ahmedabad V. Rasna Ltd., Ahmedabad

ITA 1951/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5633 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 27-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Depreciation
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMBER DATE OF HEARING :6- 7- 2010 DRAFTED ON :6-7-2010 ITA NO.1951 /AHD/2008 ASSESSMENT YEAR :2005-06 DEPUTY COMMISSIONER OF INCOME-TAX,CIR-5, C.U.SHAH BUILDING, ASHRAM ROAD, AHMEDABAD. VS. RASNA LTD., RASNA HOUSE, BESIDES IIPM, OPP.SEAVES TOWER, PANCHVATI, AHMEDABAD. PAN/GIR NO. : AABCR 5577 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI B.D.GAHLOT, CIT(LEARNED DEPARTMENTAL REPRESENTATIVE) RESPONDENT BY: SHRI P.F. JAIN. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XI ,AHM EDABAD DATED 19-3-2008. 2. THE GROUND NO.1 OF THE APPEAL READS AS UNDER:- 1. THE LD. COMMISSISOINER OF INCOME TAX(A)- XI,AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELET ING THE ADDITION MADE OF RS.1,64,57,674/- ON ACCOUNT OF DIS ALLOWANCE OF LIABILITY FOR DAMAGED GOODS. - 2 - 3. PERUSAL OF THE APPELLATE ORDER PASSED BY THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) FOR ASSESSMENT YEAR 2005- 06 SHOWS THAT HE HAS DELETED THE IMPUGNED DISALLOWA NCE FOLLOWING THE ORDERS OF THIS TRIBUNAL IN THE ASSESSEES OWN C ASE WHICH IS EVIDENT FROM THE FOLLOWING OBSERVATIONS MADE IN HIS ORDER. 2.1. DURING THE COURSE OF APPEAL PROCEEDINGS, OBJE CTING TO THE AOS ACTION THE AR HAS FILED WRITTEN SUBMISSION S.THE SAME IS REPRODUCED HEREUNDER FOR CONVENIENCE SAKE:- THE BIFURCATION OF THIS EXPENDITURE IS AS UNDER. PROVISION FOR A.Y.05-06. RS. 54,41,218 ADD:-ACTUAL AMOUNT OF DGR REMAINING UNABSORBED FROM PROVISION ALREADY MADE IN EARLIER YEARS. RS.1,10,16,457/- --------------------- TOTAL. RS.1,64,57,675/- ============ THE A.O. HAS DISALLOWED THE ABOVE EXPENSES BECAUSE SUCH DISALLOWANCE WAS MADE ION A.Y.2003-04 AND 2004-05 A ND THE FACTS OF THE CASE ARE SAME AS WERE IN THE PAST YEAR S. HE HAS ALSO OBSERVED THAT DETAILS OF ACTUAL EXPENSES HAS N OT BEEN FURNISHED WHICH IS FACTUALLY INCORRECT BECAUSE SUCH DETAILS WAS FURNISHED ALONG WITH SUBMISSION DATED 17-12-07. THE ABOVE ISSUE IS COVERED IN FAVOUR OF ASSESSEE AS PER THE DECISION OF ITAT AND COMMISSIONER OF INCOME TAX(APP EALS)S ORDER FOR PRECEDING YEARS. IN THE A.Y. 04-05 ION TH E APPEAL ORDER DATED 10-10-06 IN PARA 2.2, 2.2.1 AND 2.2.2 I T WAS HELD AS UNDER :- 2.2. I HAVE PERUSED THE SUBMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO GONE THROUGH THE O BSERVATIONS OF THE A.O. IN THE ASSESSMENT ORDER. 2.2.1 IT MAY BE SEEN THAT THIS ISSUE IS NOT NEW IN APPELLANTS CASE. IN THE PAST THE ACTUAL DAMAGED GOODS RETURNED WERE - 3 - ALLOWED BY THE A.O. AND ONLY PROVISION WAS NOT ALLO WED AS IT COULD BE SEEN FOR THE A.Y. 1997-98. HOWEVER, COMMI SSIONER OF INCOME TAX(APPEALS) AND HON'BLEBLE ITAT,AHMEDAB AD HAS ALLOWED THE SAME. FOR PREVIOUS A.Y. 2000-01, 2001-0 2 AND 2003-04 ALSO THIS ISSUE WAS THERE AND THE ISSUE IS DECIDED IN APPELLANTS FAVOUR BY MY PREDECESSOR AS WELL AS BY UNDERSIGNED FOR A.Y. 2003-04. 2.2.2 THEREFORE, IN VIEW OF THE DECISION OF THE HON 'BLE ITAT AS DISCUSSED ABOVE AND ALSO HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF ABOVE DISCUSSION, I AM OF THE VIEW THAT THE A.O. IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,13,05,721/-.THEREFORE, THIS GROUND OF APPEAL IS ALLOWED. IN VIEW OF ABOVE FINDINGS AND THE FACTS REMAINING T HE SAME THE DISALLOWANCE OF RS. 1,64,57,574/- RELATING TO DAMAG E GOODS LIABILITIES MAY KINDLY BE DELETED. 2.2. THE SUBMISSIONS MADE BY THE A.R.OF THE APPELLA NT HAVE BEEN PERUSED,. THE OBSERVATIONS OF THE ASSESSING OF FICER IN THE ASSESSMENT ORDER HAVE ALSO BEEN PERUSED. 2.2.1. HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, IN VIEW OF MY FINDINGS GIVEN IN THE APPELLANTS OWN CASE, FOR PRECEDING ASSESSMENT YEAR, I AM OF THE VIEW THAT TH E ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,64,57,574/-.THEREFORE, THIS GROUND OF APPEAL I S ALLOWED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. ASSESSEE HAS DEBITED RS.54,41, 218/- UNDER THE HEAD LIABILITY FOR DAMAGED GOODS. THE ASSESSEE CLAI MED DEDUCTION OF THE AFORESAID PROVISION MADE IN THE BOOKS. THE LEAR NED ASSESSING OFFICER OBSERVED THAT APART FORM THIS PROVISION OF RS.54,41,218/- MADE THIS YEAR THE ASSESSEE HAD UNABSORBED PROVISIO N MADE IN EARLIER YEARS OF RS. 1,10,16,457/- UNDER THIS HEAD. THUS TH E TOTAL PROVISION INCLUDING OPENING BALANCE WAS RS.1,64,57,675/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE FACT RELATING T O THIS ISSUE WERE - 4 - SIMILAR AS IN EARLIER ASSESSMENT YEARS 2003-04 AND 2004-05 WHEREIN THE SIMILAR PROVISION MADE BY THE ASSESSEE WAS DISA LLOWED IN THE ASSESSMENT MADE. HE THEREFORE DISALLOWED THE AMOUNT OF RS. 1,64,57,675/- FOLLOWING THE ORDER OF THE EARLIER YE ARS AND ALSO OBSERVED THAT DETAILS OF ACTUAL EXPENSES HAVE NOT B EEN FURNISHED. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE DISALLOWANCE BY FOLLOWING HIS OWN ORDER PASSED IN T HE CASE OF THE ASSESSEE IN ASSESSMENT YEARS 2003-04 AND 2004-05. W E FIND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS 54,41,218/- ON LY DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF PROVISION FO R DAMAGED GOODS. THEREFORE THE MAXIMUM DISALLOWANCE WHICH THE LEARN ED ASSESSING OFFICER COULD HAVE MADE WAS OF RS 54,41,218/- ONLY AND THERE WAS NO JUSTIFICATION FOR MAKING DISALLOWANCE OF RS 1,64,57 ,574/-. THE DISALLOWANCE OF RS 1,10,16,457/- WHICH WAS NEVER CL AIMED AS EXPENDITURE OF THE YEAR UNDER CONSIDERATION BY THE ASSESSEE COULD NOT BE JUSTIFIED. THUS THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS 1,10,16,457/-. IN RESPECT OF BALANCE AMOUNT OF RS 5 4,41,218/- WE FIND THAT ON THE SIMILAR FACTS THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 IN ITA NO. 2164 AND 2834/AHD/2006 ORDER DATED 24-10-2008 HELD AS UNDER :- 6. AT THE TIME OF HEARING, IT WAS SUBMITTED THAT B OTH THE AFORESAID ISSUES ARE COVERED BY THE ORDER OF TH IS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02 (ITA NO.2555/A/2004), WHICH HAS FOLLOWED TH E ORDER OF THIS TRIBUNAL NO.1728/AHD/2000). IN ITA NO.2555/A/2004, THIS TRIBUNAL HAS TAKEN NOTE OF ITS EARLIER ORDER DISPOSING OF SIMILAR ISSUE IN ASSESSM ENT YEAR 1997-98 AND HELD AS UNDER: - 5 - 7. BEFORE US, THE ASSESSEE HAS PRODUCED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN PARA 4 OF ITS ORDER BY OBSERVING AS UNDER: WE HAVE HEARD THE PARTIES AND CONSIDERED THEIR RIV AL SUBMISSIONS. THE EARLIER YEARS EXPENDITURE WAS ON ACTUAL BASIS AND IN FACT, THE ASSESSEE HAS ALSO CLA IMED A SUM OF RS.19,86,517 FOR EARLIER YEARS. THE PROVISION HAS BEEN MADE BY THE ASSESSEE AFTER TAKIN G INTO CONSIDERATION THE PAST PRACTICE. HOWEVER, FO RM THE DETAILS SUBMITTED BY THE ASSESSEE, WE FIND THAT OUT OF RS.17,70,777/-, THE ASSESSEE HAD RECEIVED CLAIM FOR 4,10,363/- IN FINANCIAL YEAR 1997-98, RS.65,544/- I N FINANCIAL YEAR 1998-99 AND RS.10,16,673/- IN FINANC IAL YEAR 1999-2000. IN ASSESSMENT YEAR 2000-01, A SU M OF RS.2,32,925/- WAS WRITTEN BACK. THIS SHOWS THAT THE P0ROVISION MADE BY THE ASSESSEE WAS NOT ACCURATE AN D THE ASSESSEE HAD TO WRITE OFF THE SUM OF RS.2,32,92 5/-. TO THIS EXTENT, THE CLAIM OF THE ASSESSEE FOR MAKIN G THE PROVISION IS NOT JUSTIFIED. WE ACCORDINGLY, RESTO RE THE ADDITION OF RS.2,32,925/- AND LEAVE IT OPEN TO THE ASSESSEE TO CLAIM NECESSARY RELIEF IN THE ASSESSMEN T YEAR RELEVANT TO THE FINANCIAL YEAR 2000-01 IF THE SAME HAS BEEN OFFERED FOR TAXATION AND ASSESSED AS SUCH. VARIOUS DECISIONS HAVE BEEN RELIED UPON BY BOTH THE SIDES. IN VIEW OF THE FACTUAL POSITION, WE NEED N OT CONSIDER THOSE DECISIONS IN DETAIL AND THE MATTER I S BEING DISPOSED OF ON THE FACTUAL ASPECT OF THE MATT ER. 8. THE LEARNED DR RELIED ON THE ASSESSMENT ORDER. ON THE OTHER HAND, THE LEARNED AR FOR THE ASSESSEE STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSE E BY THIS DECISION OF THE TRIBUNAL CITED SUPRA IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1997-98 IN ITA NO.1728/AHD/2000. AS THE ISSUE IS SQUARELY COVERED BEING THE FACTS EXACTLY I DENTICAL IN THE PRESENT CASE ALSO, WE ALLOW THE CLAIM OF THE ASSESS EE IN TERMS OF THE ORDER OF THE TRIBUNAL IN EARLIER YEARS. 7. BOTH THE PARTIES AGREE THAT THE FACTS OF THE CAS E IN THE YEARS UNDER APPEAL ARE SIMILAR AND ARE COVERED BY T HE AFORESAID ORDER OF THIS TRIBUNAL. FOLLOWING THE A FORESAID ORDERS PASSED BY THIS TRIBUNAL, BOTH THE APPEALS FI LED BY THE DEPARTMENT ARE DISMISSED SUBJECT TO THE OBSERVATION S MADE IN - 6 - PARA 7 OF THE ORDER OF THIS TRIBUNAL IN ITA NO.2555 /A/2004 FOR ASSESSMENT YEAR 2001-02. 5. WE FIND THAT THE DETAILS OF ACTUAL EXPENDITURE I NCURRED IN THE SUBSEQUENT YEAR BY THE ASSESSEE OUT OF THE PROVISIO N OF RS.54,41,218/- MADE DURING THE YEAR HAVE NOT BEEN BROUGHT ON RECORD. IN ABSENCE OF THE ABOVE, WE ARE UNABLE TO ADJUDICATE THE ISSUE COMPLETELY. WE, THEREFORE, RESTORE THE ISSU E BACK TO THE OF THE LEARNED ASSESSING OFFICER AND DIRECT HIM TO ADJUDI CATE THE ISSUE AFRESH IN LIGHT OF THE DECISION OF THE TRIBUNAL QU OTED ABOVE AND AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSES SEE. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. 6. THE GROUND NO.2 OF THE APPEAL READS AS UNDER :- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.COMMISSIONER OF INCOME TAX(A) HAS ERRED IN NOT ADJUDICATING THE DISALLOWANCE OF DEPRECIATION OF RS.64,59,961/- ON FACTS AND IN MERITS. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)HAS HAS ERRED IN ALLOWING THE GROUND OF APPEAL AND IN DIRECTING THE ASSESSING OFFICER TO DECIDE IN THE LIGHT OF FINAL DECISION IN SCA PENDING BEFORE THE HIGH COURT . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSE SSEE CLAIMED DEPRECIATION OF RS.64,59,961/- ON NON-COMPETE TERRI TORY RIGHTS AT THE RATE OF 25%. THESE NON-COMPETE TERRITORY RIGHTS WAS SHOWN IN THE BLOCK OF ASSETS OF THE COMPANY FOR THE FIRST TIME IN THE ASSESSMENT YEAR 2002-03 ON WHICH DEPRECIATION OF RS.65,62,500/ - WAS CLAIMED BY THE ASSESSEE. ON SCRUTINY OF ANNEXURE-C OF C LAUSE-14 OF THE PARTICULARS OF DEPRECIATION ALLOWANCE, THE LEARNED ASSESSING OFFICER - 7 - NOTICED THAT NO DETAILS/PARTICULARS HAD BEEN FURNIS HED FOR THE CLAIM OF DEPRECIATION OF INTANGIBLE ASSETS. THUS, PRIMA-FACIE THE ASSESSEE DID NOT FURNISH NECESSARY DETAILS SO AS TO VERIFY THE C ORRECTNESS OF THE CLAIM OF DEPRECIATION. AFTER RECORDING REASONS UND ER SECTION 147 OF THE INCOME TAX ACT, 1961 ASSESSMENT WAS RE-OPENED F OR ASSESSMENT YEAR 2002-03. ASSESSEE FILED SPECIAL LEAVE APPLIC ATION NO.375 OF 2005 BEFORE THE HON'BLE GUJARAT HIGH COURT CHALLENG ING THE LEGALITY AND JURISDICTION OF ISSUANCE OF NOTICE UNDER SECTIO N 148 OF THE INCOME TAX ACT, 1961 FOR THE ABOVE ASSESSMENT YEAR. THE HON'BLE GUJARAT HIGH COURT VIDE ITS ORDER DATED 01/02/2005 ADMITTE D ASSESSEES SPECIAL LEAVE APPLICATION AND GRANTED INTERIM RELI EF AS PRAYED BY THE ASSESSEE BY DIRECTING TO STAY IMPLEMENTATION A ND OPERATION OF THE NOTICE AND STAYED FURTHER PROCEEDINGS FOR ASSESSMEN T YEAR 2002-03 PENDING FURTHER ORDERS OR TILL DISPOSAL OF THIS PET ITION. SINCE THE DEPARTMENT DID NOT ACCEPT THE ASSESSEES CLAIM OF D EPRECIATION, THE SAME WAS DISALLOWED IN THE ASSESSMENT YEARS 2003-0 4 & 2004-05. THEREFORE, THE LEARNED ASSESSING OFFICER ALSO DISAL LOWED THE CLAIM FOR DEPRECIATION IN THE PRESENT ASSESSMENT YEAR 200 5-06. 8. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED AS UNDER : 3.1. THE SUBMISSIONS MADE BY THE A.R. OF THE APPEL LANT HAVE BEEN PERUSED. THE OBSERVATIONS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER HAVE ALSO BEEN PERUSED. 3.1.2. HAVING VERIFIED THE FACTS AND CIRCUMSTANCE S OF THE CASE, IN VIEW OF MY FINDINGS GIVEN IN THE APPELLANTS OWN CASE, FOR PRECEDING ASSESSMENT YEAR, I AM OF THE OPINION THAT THE MATTER IS SUB-JUDICE WITH GUJARAT HIGH COURT. THE OUTCOME OF THE SCA ARE AWAITED. THEREFORE, THIS ISSUE HAS TO BE DE CIDED BY THE LEARNED ASSESSING OFFICER IN THE LIGHT OF FINAL DEC ISION OF - 8 - HON'BLE HIGH COURT. HENCE, THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO FINAL DECISION OF HON'BLE GUJARAT HIGH C OURT. 9. WE FIND THAT ON THE SAME ISSUE ON THE IDENTICAL FACTS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAD GIV EN THE SAME FINDING AS QUOTED ABOVE IN THE ASSESSMENT YEAR 2003 -04 AND 2004- 05. THE REVENUE IN THOSE YEARS HAD ACCEPTED THE FIN DING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND HAD NOT FILED APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDING OF T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LEARNED DE PARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY DISTINGUISHI NG FEATURES IN THE ABOVE YEAR UNDER APPEAL. THEREFORE, WE DO NOT FIN D ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS T REATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 9TH DAY OF JULY-2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 9TH DAY OF JULY-2010 - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVE NUE. 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-XI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH .6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 06/07/2010 ------------ ------ 2. DRAFT PLACED BEFORE AUTHORITY 07/07/2010 ---- --------------- 3. DRAFT PROPOSED & PLACED --------------- ------ ------------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED --------------- ----- -------------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------