Petronet VK Ltd., JAMNAGAR V. The Assistant Commissioner of Income Tax, Circle-2, JAMNAGAR

ITA 215/RJT/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72565 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE DR N
• Assessee Lawyers: VIMAL DESAI CA H N
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

I , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . . A OR . . BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO S . 1042/RJT/2010, 1213 /RJT/201 0 & 215/RJT/2011 C / ASSESSMENT YEAR S : 200 5 - 0 6, 2006 - 07 & 2007 - 08 PETRONET VK LIMITED, PLOT 11/2, DEV PARK, B/H. ATUL PETROL PUMP, MEHULNAGAR, JAMNAGAR PAN: AABCP 6350 J ( 6 / APPELLANT) THE ACIT, CIRCLE - 2, JAMNAGAR R6 / RESPONDENT CAN / ASSESSEE BY SHRI VIMAL DESAI, CA H N / REVENUE BY SHRI VILAS V SHINDE, DR N / DATE OF HEARING 22.08.2013 N / DATE OF PRONOUNCEMENT 23 .08.2013 / ORDER . . A , OR / T. K. SHARMA, J. M. : TH ESE THREE APPEAL S FILED BY THE ASSESSEE ARE AGAINST THREE SEPARATE ORDERS OF THE CIT (A) - JAMNAGAR DATED 14.05.2010, 10.08.2010 AND 29.03.2011 FOR THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 & 2007 - 08 RE SPECTIVELY. ALL THESE APPEALS WERE HEARD ON THE SAME DATE, ARGUED BY COMMON REPRESENTATIVE; THEREFORE THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUNDS RAISED BY THE ASSESSEE IN THE AFORESAID APPEALS, ASSESSMENT Y EAR - WISE ARE AS UNDER: - AY 2005 - 06 1. THE ASSESSMENT ORDER U/S 143(3) IS BAD IN LAW. 2. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON PIPELINES AMOUNTING TO RS.1,58,20,313/ - ON THE BASIS OF THE CIT(A)S ORDE R FOR A.Y. 2001 - 02, A.Y. 2002 - 03 TO AY. 2004 - 05. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 3. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON TELECOM SYSTEM OF RS.1,67,03,338/ - ITA NOS. 1042/RJT/2010, 1213/RJT/2010 & 215/RJT/2011 - PETRONET VK LIMITED 2 CONTENDING THAT THE SAME WAS NOT PUT TO USE. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 4. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING DISALLOWANCE OF PRIOR PERIOD EXPENSES OF RS.1,56,676/ - . THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 5. THE LEARNED ASSESSI NG OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING LUMP SUM DISALLOWANCE OF RS.50,000/ - OUT OF VEHICLE AND OFFICE EXPENSES. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME AY 200 6 - 0 7 1. THE ASSESSMENT ORDER U/S 143(3) IS BAD IN LAW. 2. THE LEARNED ASSESS ING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON PIPELINES AMOUNTING TO RS. 71,19,141 / - ON THE BASIS OF THE CIT(A)S ORDER FOR EARLIER YEARS. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 3. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON TELECOM SYSTEM OF RS. 75,16,502 / - CONTENDING THAT THE SAME WAS NOT PUT TO USE. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. AY 200 7 - 0 8 1. THE ASSESSMENT ORDER U/S 143(3) IS BAD IN LAW. 2. THE LEARNED AS SESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON PIPELINES AMOUNTING TO RS. 60,51,270 / - ON THE BASIS OF THE CIT(A)S ORDER FOR EARLIER YEARS. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 3. THE LEARNED ASSESSING OFFICER HAS ERRE D ON FACTS AND IN LAW IN DISALLOWING DEPRECIATION ON TELECOM SYSTEM OF RS. 63,89,027 / - CONTENDING THAT THE SAME WAS NOT PUT TO USE. THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. 3. GROUND NO.1 OF ALL THE THREE APPEALS IS GENERAL IN NATURE, THEREFORE NEEDS NO ADJUDICATION. 4. GROUND NO.2 OF ALL THE THREE APPEALS , REGARDING DISALLOWANCE OF DEPRECIATION ON PIPELINES , IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON MINIMUM AMOUNT OF RS.10 CRORES EACH WHICH HAS BEEN COMMITTED BY THE ASSESSEE - COMPANY TO GUJARAT MARITIME BOARD AND KANDLA PORT TRUST. AS THE MINIMUM AMOUNT WAS PAY ABLE BY THE ASSESSEE - COMPANY OF RS.10 CRORES EACH TO THESE TWO INSTITUTIONS, THE AMOUNT PAYABLE WAS ITA NOS. 1042/RJT/2010, 1213/RJT/2010 & 215/RJT/2011 - PETRONET VK LIMITED 3 A CONTRACTUAL LIABILITY AND THEREFORE THE AMOUNT WAS PROVIDED FOR AND DEPRECIATION ON THE SAME WAS CLAIMED. HE ACCORDINGLY CONTEND ED THAT SINCE EVERY YEAR I S A SEPARATE AND INDEPENDENT YEAR, AND THEREFORE ANY DECISION TAKEN IN THE PAST CANNOT IPSO FACTO BE APPLIED TO THE YEAR UNDER CONSIDERATION WITHOUT EXAMINING THE FACT S OF THE ISSUE . 5. AS AGAINST THIS, THE LD DEPARTMENTAL REPRESENTATIVE POINTED OUT THA T SINCE THE MATTER IS CLEARLY COVERED AGAINST THE ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER YEARS, THEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD. 6. WE FIND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD DEPAR TMENTAL REPRESENTATIVE. ADMITTEDLY, THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 , ITA NO.531/RJT/2007 DTD. 08.06.2010; THEREFORE WE DECLINE TO INTERFERE. THE GROUND NO.2 OF ALL THE THREE APPEALS IS REJECTED. 7. GROUND NO.3 IN RESPECT OF ALL THE THREE ASSESSMENT YEARS IS AGAINST CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON TELECOM SYSTEM OF RS.1,67,03,338/ - FOR ASSESSMENT YEAR 2005 - 06, RS.75,16,502/ - FOR ASSESSMENT YEAR 2006 - 07 AND RS.63,89,027/ - FOR THE ASSESSMENT YEAR 2007 - 08. 8. SHRI VIMAL DESAI, CA APPEARED ON BEHALF OF THE ASSESSEE, EXPLAINED THAT THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION OF TELECOM SYSTEM IN THE ASSESSMENT YEAR 2004 - 05 AS IT WAS NOT PUT TO USE. HE SUBMITTED THAT THE TELECOM SYSTEM WAS CAPITALIZED DURING ASSESSMENT YEAR 2004 - 05 AND ACCORDINGLY DEPRECIATION WAS CLAIMED THEREON. THE ASSESSEE ALSO FURNISHED THE COMPLETION CERTIFICATE OF TELECOM SYSTEM FROM INDIAN OIL CORPORATION LIMITED (IOCL). HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION CONTENDING THAT THE COMPLETION CERTIFICATE DOES NOT STATE THAT THE TELECOM SYSTEM WAS PUT TO USE AND IT IS NOT CLEAR THAT THE TELECOM SYSTEM IS INSTALLED AND PUT TO USE. THE DIS ALLOWANCE OF DEPRECIATION IS MADE ON THE BASIS OF ITA NOS. 1042/RJT/2010, 1213/RJT/2010 & 215/RJT/2011 - PETRONET VK LIMITED 4 PAST YEARS ASSESSMENT ORDER. HE FURTHER EXPLAINED THAT THE CIT(A) CONFIRMED THE DISALLOWANCE OF DEPRECIATION IN ASSESSMENT YEAR 2004 - 05 ON THE GROUND THAT DATE OF PUT TO USE OF SUCH TELECOM SYSTEM WAS INAD VERTENTLY MENTIONED AS 30.09.2004 INSTEAD OF 30.09.2003 IN THE AUDIT REPORT WHICH FALLS IN ASSESSMENT YEAR 2005 - 06 . THIS FACT HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER WHILE MAKING DISALLOWANCE OF DEPRECIATION ON THE TELECOM SYSTEM ON THE BASIS OF EARLIER YEARS. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE FACT THAT EVERY YEAR IS A SEPARATE AND INDEPENDENT ASSESSMENT YEAR AND THEREFORE ANY DECISION TAKEN IN THE PAST CANNOT IPSO FACTO BE APPLIED TO TH E YEAR UNDER CONSIDERATION WITHOUT EXAMINING THE FACTS OF THE ISSUE. TO SUM UP, HE CONCLUDED THAT AS PER AUDIT REPORT THE TELECOM SYSTEM IS PUT TO USE ON 30.09.2004 THE ASSESSING OFFICER BE DIRECTED TO ALL DEPRECIATION OF FULL YEAR OF THIS YEAR AND IN SUB SEQUENT YEARS. 9. SHRI VILAS V. SHINDE, LD DEPARTMENTAL REPRESENTATIVE APPEARED FOR THE REVENUE , COULD NOT CONTROVERT THE ABOVE AND STATED THAT THIS ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ALLOWING THE DEPRECIATION IN ACCORDANCE WITH T HE LAW. 10. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOT E THAT IN THE ASSESSMENT YEAR 2004 - 05 THE DEPRECIATION WAS NOT ALLOWED ON THE GROUND THAT IN THE TAX AUDIT REPORT IT WAS S TATED THAT TELECOM SYSTEM IN QUESTION WAS PUT TO USE ON 30.09.2004. THERE IS NO DISPUTE THAT THE SYSTEM IN QUESTION WAS PUT TO USE BY THE ASSESSEE WHICH IS EVIDENT FROM THE CERTIFICATE OF IOCL DATED 07.05.2003 . WE ARE, THEREFORE, OF THE VIEW THAT THE ASSE SSEE IS ENTITLED TO FULL DEPRECIATION FOR THE ASSESSMENT YEARS 2005 - 06 AND SUBSEQUENT YEARS IN ACCORDANCE WITH THE LAW. WE ARE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO ALLOW THE SAME. WE ALSO DIRECT THE ASSESSEE TO FURNISH THE WORKING OF DEPRECIATION T O THE ASSESSING OFFICER WHO WILL VERIFY AND ALLOW THE SAME IN ACCORDANCE WITH LAW. THE GROUND NO.3 IN RESPECT OF ALL THE THREE APPEALS IS ALLOWED. ITA NOS. 1042/RJT/2010, 1213/RJT/2010 & 215/RJT/2011 - PETRONET VK LIMITED 5 11. GROUND NO.4 OF THE ASSESSMENT YEAR 2005 - 06 IS AGAINST DISALLOWANCE OF PRIOR PERIOD EXPENSES OF RS.1,56, 676/ - . THE LD CIT(A) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF THE CLAIM THAT THOSE EXPENSES WERE CRYSTALLIZED DURING THE YEAR. BEFORE US ALSO THE LD COUNSEL OF THE ASSESSEE COULD NOT PRODUCE AN Y EVIDENCE IN SUPPORT OF THE CLAIM THAT THOSE EXPENSES WERE CRYSTALLIZED DURING THE YEAR. THEREFORE, WE DECLINE TO INTERFERE. GROUND NO.4 IS DISMISSED. 12. GROUND NO.5 OF THE ASSESSMENT YEAR 2005 - 06 IS AGAINST THE LUMP SUM DISALLOWANCE OF RS.50,000/ - OU T OF VEHICLE AND OFFICE EXPENSES ON THE GROUND THAT NO SUPPORTING DETAILS ARE FURNISHED. THE LD COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS DISALLOWANCE CANNOT BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT. AS AGAINST THIS, THE LD DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ORDER OF LD CIT(A). 13. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT PRODUCED VOUCHER OF THESE EXPENSES BEFORE THE ASSESSING OFFICER. KEEPING IN VIEW OF THIS CONSPICUOUS FACTS, THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS.50 ,000/ - . THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS EITHER EXCESSIVE OR UNREASONABLE. WE, THEREFORE, DECLINE TO INTERFERE. GROUND NO.5 IS DISMISSED. 14 . IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. THIS O RDER PRONOUNCED IN O P EN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . H D. K. SRIVASTAVA ) ( . . / T. K. SHARMA) / ACCOUNTANT MEMBER C H / JUDICIAL MEMBER / ORDER DATE 23 . 0 8 . 2013. /RAJKOT *BT ITA NOS. 1042/RJT/2010, 1213/RJT/2010 & 215/RJT/2011 - PETRONET VK LIMITED 6 3 RJ / COPY OF ORDER FORWARDED TO: - 6 . 6 / APPELLANT - PETRONET VK LIMITED, PLOT 11/2, DEV PARK, B/H. ATUL PETROL PUMP, MEHULNAGAR, JAMNAGAR 2 . R6 / RESPONDENT - THE A CIT, CIRCLE - 2, JAMNAGAR 3 . I T / CONCERNED CIT - JAMNAGAR 4 . T - / CIT (A) - JAMNAGAR 5 . CCI , I , / DR, ITAT, RAJKOT 6 . / GUARD FILE. / BY ORDER TRUE COPY PRIVATE SECRETARY, IT AT, RAJKOT