ACIT Corporate Range 1, CHENNAI V. Deepa Panels Pvt. Ltd., CHENNAI

ITA 2114/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6877 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Depreciation
• Section: 143(3); 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2114/CHNY/2018 ( / ASSESSMENT YEAR: 2011-12) THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE RANGE-1, CHENNAI - 34. VS M/S. DEEPA PANELS PVT. LTD., 184/3C, METTUPALAYAM PARIVAKKAM ROAD, METTUPALAYAM, CHENNAI 600 007. PAN: AACCD2054L ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI GURU BASHYAM, JCIT / RESPONDENT BY : SHRI A.S.SRIRAMAN, ADVOCATE /DATE OF HEARING : 01.01.2019 /DATE OF PRONOUNCEMENT : 07.01.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-4, CHENNAI, DATED 26.04.2018 IN ITA NO.140/2014-15/A.Y.2011- 12/CIT(A)-4 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT. 2 ITA NO.2114 /CHNY /2018 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN RELYING ON THE DECISION OF THE HON'BLE ITAT'S DECISION IN THE ASSESSEE'S OWN CASE FOR AY 2005-06 TO 2008-09 IN ITA NO. 2219,2220 & 2221/MDS/20L3 IN HOLDING THAT THE ASSESSMENT YEAR 2005-06 IS ONLY THE 4TH YEAR OF CLAIM OF DEDUCTION U/S.10B AND NOT NINTH YEAR AS HELD BY THE ASSESSING OFFICER & HENCE SEC. LOB DEDUCTION IS AVAILABLE FOR THE PRESENT AY VIZ. 2011-12? 2.2 THE LEARNED CIT(A) ERRED IN RELYING ON THE DECISION OF THE ITAT CHENNAI IN THE REFERENCE IN GROUND 2.1 ABOVE, & THEREBY PLACING RELIANCE ON THE ORDER OF THE ITAT, COCHIN BENCH IN ITA NO.676/COCH/2010 DATED 01-06-2012 WHEN THE ITAT, COCHIN,(IN THEIR DECISION BASED ON WHICH THE ITAT, CHENNAI HAS GRANTED RELIEF TO ASSESSEE), HAS NOT DECIDED THE ISSUE UNDER CONSIDERATION IN FAVOUR OF ASSESSEE BUT HAS ONLY REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER IT AFRESH IN ACCORDANCE WITH LAW? 2.3 WHETHER THE LD.CIT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT DEDUCTION U/S.10B IS ALLOWABLE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE? 2.4 FOR THESE AND ANY OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THE ASSESSMENT ORDER OF THE A.O. BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING WOODEN DOORS, PANELS & HAMMOCKS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 30.09.2010 DECLARING LOSS OF RS.36,75,042/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS 3 ITA NO.2114 /CHNY /2018 AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 01.08.2012. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 27.03.2011 WHEREIN THE LD.AO WITHDREW THE CLAIM OF DEDUCTION U/S.10A / 10B OF THE ACT. 4. ON APPEAL, THE LD.CIT(A) GRANTED DEDUCTION U/S.10B OF THE ACT TO THE ASSESSEE BY OBSERVING AS UNDER:- 6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND HAVE ALSO CONSIDERED THE RIVAL SUBMISSIONS. IN VIEW OF THAT, THE CASE IS DISCUSSED AS FOLLOWS. THE ASSESSEE COMPANY WHILE CALCULATING THE PROFIT ELIGIBLE FOR DEDUCTION U/S 10B, HAD ADDED BACK THE DEPRECIATION AMOUNT OF RS. 36, 88, 130/-TO THE AMOUNT OF NET PROFIT OF RS.5,47,527/-. ACCORDINGLY, THE ELIGIBLE PROFIT U/S 10B WAS ARRIVED AT RS.36,88,130/-. ON THE OTHER HAND, THE CONTENTION OF THE AO IS THAT THE AMOUNT OF DEPRECIATION HAS TO BE MANDATORILY REDUCED BEFORE COMPUTING DEDUCTION U/S 10. ACCORDINGLY, THE ELIGIBLE PROFIT FOR DEDUCTION U/S 10B WAS RE-WORKED AT RS. 13, 088/-. 7. THE CONTENTION OF THE LD. AR. IS THAT THE COMPUTATION OF THE ELIGIBLE PROFITS IN QUANTIFYING THE DEDUCTION U/S 10B SHOULD BE ON STANDALONE BASIS AND, THEREFORE, ONLY THE DEPRECIATION PERTAINING TO THE UNIT UNDER CONSIDERATION SHOULD BE CONSIDERED FOR QUANTIFYING THE ELIGIBLE DEDUCTION U/S10B. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AR. ON PERUSAL OF THE FACTS OF THE CASE, IT IS NOTICED THAT THE APPELLANT ASSESSEE IS 100% EOU. THE ENTIRE INCOME REFLECTED BY THE APPELLANT ASSESSEE PERTAINS TO EOU ONLY. THEREFORE, UNDER THE CIRCUMSTANCES, THE CONTENTION OF THE APPELLANT THAT ONLY THE DEPRECIATION PERTAINING TO THE UNIT UNDER CONSIDERATION SHOULD BE CONSIDERED IS MISPLACED. HENCE, THE ISSUE OF BIFURCATION OF DEPRECIATION BETWEEN THE ELIGIBLE PROFIT AND THE NON-ELIGIBLE PROFIT DOES NOT ARISE. IN VIEW OF THESE FACTS OF THE CASE, I DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE AO. THE SAME IS CONFIRMED. THIS GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. 8. THE OTHER ISSUE RAISED BY THE APPELLANT IS THAT THE AO HAS WRONGLY DISALLOWED DEDUCTION U/S 10B. SINCE THE APPELLANT ASSESSEE DID NOT FURNISH THE RELEVANT DOCUMENTARY EVIDENCES BEFORE THE AO TO SUBSTANTIATE THE CLAIM OF DEDUCTION U/S 10B, THE CLAIM WAS REJECTED. IN THE COURSE OF THE APPELLATE PROCEEDING, THE 4 ITA NO.2114 /CHNY /2018 LD.A.R. HAS FURNISHED COPIES OF RELEVANT DOCUMENTS WHICH CLEARLY REVEAL THAT THE APPELLANT ASSESSEE WAS 100% EOU ELIGIBLE FOR DEDUCTION U/S10B OF THE ACT. MOREOVER, THE ORDER OF THE HONBLE ITAT, B BENCH, CHENNAI IN ITA NOS.2219,2220 & 2221/MD/2013 FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 DATED 29/05/2015, WHILE DECIDING THE ISSUE OF 'INITIAL ASSESSMENT YEAR', HAS CATEGORICALLY HELD THE APPELLANT ASSESSEE AS ELIGIBLE FOR DEDUCTION U/S 10B. THE TRIBUNAL HAS ALSO HELD A.Y. 2002 -03 TO BE THE INITIAL ASSESSMENT YEAR. THEREFORE, THE PRESENT ASSESSMENT YEAR 2011 - 12 FALLS WITHIN THE PERIOD OF 10 YEARS FROM THE INITIAL ASSESSMENT YEAR 2002-03. HENCE, THE APPELLANT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. 5. SINCE THE LD.CIT(A) HAS ONLY FOLLOWED THE DECISION RENDERED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 TO 2008-09 IN ITA NO.2219, 2220 & 2221/MDS/2013 WHILE ARRIVING AT THE DECISION FOR THE RELEVANT ASSESSMENT YEAR, WE DO NOT FIND IT NECESSARY TO INTERFERE IN HIS ORDER. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 7 TH JANUARY, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 7 TH JANUARY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) /ACCOUNTANT MEMBER