The ACIT Corporate, Cochin V. M/s.Kitex Garments, Cochin

ITA 216/COCH/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7749 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 30-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2015
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: RADHESH BHAT
• Keywords: Depreciation; Additional depreciation

Judgement Text

ITA NO.216/COCH/2015 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.216/COCH/2015 ( #$ % /ASSESSMENT YEAR : 2009-10) THE ASSISTANT COMMISSIONER OF INCOME-TAX, CORPORATE, CIRCLE-1(2), KOCHI. VS M/S. KITEX GARMENTS LTD., KITEX HOUSE, 9/536A, PB NO. 5, KIZHAKKAMBALAM, KOCHI. ( &' &' &' &' /REVENUE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /ASSESSEE -RESPONDENT) & . . ' ./PAN NO. AABCK 0714F &' * + /REVENUE BY SHRI A. DHANARAJ, SR. DR ( ) &' * + /ASSESSEE BY SHRI RADHESH BHAT, CA ,- * ./ / DATE OF HEARING 02/08/2016 0 % * ./ /DATE OF PRONOUNCEMENT 03/08/2016 1 1 1 1 /ORDER PER B.P. JAIN, AM: THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, KOCHI DATED 14/01/2015. THE RELEVANT ASSESSMENT YEAR IS 2009-10. 2. THE SOLITARY EFFECTIVE GROUND READS AS FOLLOWS : WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN ALLOWING THE ADDITIONAL DEPRECIATION AT THE RATE OF 10% AMOUNTING TO RS. ITA NO.216/COCH/2015 2 32,13,947/- HOLDING THAT AS 10% WAS ALLOWED IN EARL IER ASST. YEAR, REMAINING 10% SHOULD BE ALLOWED IN SUBSEQUENT ASST. YEAR, WHE N SECTION 32(1)(IIA) DOES NOT SPEAK ABOUT CARRYING FORWARD THE DEPRECIATION T O THE NEXT ASST. YEAR? 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION AMOUNTING TO RS.1,73,77,521 /- ON ITS PLANT AND MACHINERY. SECTION 32(1)(IIA) OF THE ACT PROVIDE S FOR ADDITIONAL DEPRECIATION @ 20%, THAT IS TO BE ALLOWED ON NEW PLANT AND MACHINE RY ACQUIRED AND INSTALLED AFTER 31/03/2005. OUT OF THE TOTAL SUM OF ADDITION AL DEPRECIATION, IT WAS SEEN BY THE ASSESSING OFFICER THAT AN AMOUNT OF RS. 32,13,9 47/- REPRESENTED THE LEFT OVER ADDITIONAL DEPRECIATION ON ADDITIONS MADE IN THE SE COND HALF OF THE EARLIER YEAR, NAMELY AY 2008-09. ACCORDING TO THE ASSESSIN G OFFICER SECTION 32(1)(IIA) OF THE ACT EMPHASIZES ON ACQUISITION AND INSTALLATION OF NEW MACHINERY. T HEREFORE, ACCORDING TO THE ASSESSING OFFICER, ADDITIONAL DEPR ECIATION IS ALLOWABLE ONLY IN THE YEAR IN WHICH SUCH ASSET WAS INSTALLED AND RS.3 2,13,947/- WAS DISALLOWED BY THE ASSESSING OFFICER. IN DOING SO, THE ASSESSING OFFICER HAS ALSO REFERRED TO THE ASSESSMENT COMPLETED FOR THE ASSESSMENT YEAR 2008-0 9 WHERE A SIMILAR ISSUE WAS NOT ALLOWED. 4. AGGRIEVED BY THE DISALLOWANCE OF ADDITIONAL D EPRECIATION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTH ORITY. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) RELIED UPON THE ORDER OF THE ITAT, COCHIN BENCH IN ASSESSEES OWN CASE IN I.T.A.NO.75/ COCH/2012 DATED ITA NO.216/COCH/2015 3 31/12/2013 WHEREIN THE CLAIM OF ADDITIONAL DEPRECIA TION WAS ALLOWED. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS FOLLOWS: 4.3 IT IS SEEN THAT THE ISSUE OF ADDITIONAL DEPREC IATION ON THE PLANT AND MACHINERY, WHICH WAS INSTALLED IN THE YEAR RELEVANT TO AY 2008-09 AND, WAS USED FOR LESS THAN 180 DAYS; 50% OF THE DEPRECIATIO N ALLOWABLE @ 20% HAS ALREADY BEEN ALLOWED. THE APPELLANTS CLAIM FOR ADD ITIONAL DEPRECIATION OF THE REMAINING 50% OF THE DEPRECIATION ALLOWABLE @ 2 0% IN THE NEXT ASSESSMENT YEAR I.E. FOR THE AY 2009-10; IT HAS BEE N HELD BY THE ASSESSING OFFICER THAT NEW ASSETS HAVE BEEN INSTALLED ONLY IN THE ASSESSMENT YEAR RELEVANT TO AY 2008-09, THE CLAIM IS NOT ALLOWABLE IN THE CURRENT YEAR. FOR THE AY 2008-09, IT HAS BEEN HELD BY THE CIT( A) VIDE I.T.A. NO.85/R- 1/E/CIT(A)-II/10-11 DATED 20.12.2011 THAT THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF REMAINING 50% OF 20% OF ADDITIONAL DEPRECIATION CLAIMED IN THE YEAR UNDER CONSIDERATIO N BY THE APPELLANT ON INSTALLATION OF ASSETS ELIGIBLE FOR ADDITIONAL DEPR ECIATION. THE CLAIM IS ACCORDINGLY ALLOWED AND ADDITION IS DELETED. THE O RDER OF THE CIT(A) HAS BEEN UPHELD BY THE ITAT, COCHIN BENCH IN I.T.A. NO .75/COCH/2012 DATED 31.12.2013, HOLDING THAT THE APPELLANT IS ENTITLED FOR ADDITIONAL DEPRECIATION OF 10% IN THE YEAR UNDER CONSIDERATION. THE LEARNE D BENCH HAS RELIED UPON THE DECISION OF DELHI TRIBUNAL IN SIL INVESTMENTS L TD. THE BRIEF GIST IS REPRODUCED AS UNDER: THIS ISSUE WAS ALSO CONSIDERED BY ANOTHER BENCH OF THE TRIBUNAL AT DELHI IN SIL INVESTMENT LTD. (SUPRA). AT PAGE 233 OF THE TTJ, THE TRIBUNAL HAS OBSERVED AS FOLLOWS: THERE IS NOTHING ON RECORD TO SHOW THAT THE DIRECTI ONS GIVEN BY THE LEARNED CIT(A) ARE NOT PROPER. THE ELIGIBILITY FOR DEDUCTION OF ADDITIONAL DEPRECIATION STANDS ADMITTED, SINCE 50 PERCENT THER EOF HAD ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER IN THE A.Y,. 2005- 06, I.E. THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THEREFORE, OBVIOUSLY, T HE BALANCE 50% OF THE DEDUCTION IS TO BE ALLOWED IN THE CURRENT YEAR, I.E . ASST. YEAR 2006-07. THE LEARNED CIT(A) HAS MERELY DIRECTED THE VERIFICATION OF THE CONTENTIONS OF THE ASSESSEE AND TO ALLOW THE BALANCE ADDITIONAL DE PRECIATION AFTER SUCH FACTUAL VERIFICATION. ACCORDINGLY, FINDING NO MERI T THEREIN, GROUND NO. 3 RAISED BY THE DEPARTMENT IS REJECTED. IN VIEW OF THE DISCUSSION MADE AS ABOVE, AND A S HELD BY THE LEARNED COCHIN BENCH OF TRIBUNAL, THAT THE APPELLANT IS ENT ITLED FOR THE BALANCE 50% ITA NO.216/COCH/2015 4 ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEAR, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE AND HENCE, DELETED. ACCORDINGLY, APPEAL ON THIS GROUND IS ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE BY TH E ORDER OF THE ITAT, COCHIN BENCH IN ASSESSEES OWN CASE. THE LD. DR WAS UNABLE TO CONTROVERT THE SUBMISSION MADE BY THE LD. AR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE FACTS OF THE CASE. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY WHICH WAS ENTIT LED IN THE PREVIOUS ASSESSMENT YEAR, NAMELY AY 2008-09 AND WHICH WAS US ED FOR LESS THAN 180 DAYS IS ENTITLED FOR LEFT OVER OF ADDITIONAL DEPRECIATIO N IN THE CURRENT ASSESSMENT YEAR. IN THE PREVIOUS ASSESSMENT YEAR, THE ASSESSEE HAD I NSTALLED NEW MACHINERY WHICH WAS USED FOR LESS THAN 180 DAYS AND CLAIMED 5 0% DEPRECIATION WHICH WAS ALLOWED. THE ASSESSEE WAS ALSO ALLOWED 10% AS ADDI TIONAL DEPRECIATION. THE BALANCE ADDITIONAL DEPRECIATION OF 10% AMOUNTING TO RS.32,13,947/- WAS CLAIMED IN THE CURRENT ASSESSMENT YEAR. THE ABOVE I SSUE OF ALLOWANCE OF LEFT OVER OF THE ADDITIONAL DEPRECIATION IN THE CURRENT YEAR HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN I. T.A. NO. 75/COCH/2012 (SUPRA). THE ABOVE ORDER OF THE ITAT, COCHIN BENCH IN THE AS SESSEES OWN CASE HAS NOT BEEN REVERSED BY THE HONBLE JURISDICTIONAL HIGH CO URT. HENCE, IN VIEW OF THE ITA NO.216/COCH/2015 5 ORDER OF THE ITAT, COCHIN BENCH IN ASSESSEES OWN C ASE CITED SUPRA, WE HOLD THAT THE LD. CIT(A) IS JUSTIFIED IN GRANTING ADDITI ONAL DEPRECIATION OF RS. 32,13,947/-. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-08-2016. SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER & /PLACE: /COCHIN 2 /DATED: 3RD AUGUST, 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' / M/S. KITEX GARMENTS LTD., KITEX HOUSE, 9/536A, PB N O. 5, KIZHAKKAMBALAM, KOCHI. 2. () &' /THE ASSISTANT COMMISSIONER OF INCOME-TAX, CORPORAT E, CIRCLE-1(2), KOCHI., 3. ,5 . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS)-I,KOCHI. 4. ,5 . /THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. 367 (. , /THE DR/ITAT, COCHIN BENCH. 6. 79 :- /GUARD FILE. 1, /BY ORDER ; /ASSISTANT REGISTRAR - .