The ITO, Ward-8(1), Ahmedabad V. Twinkle Techplast Pvt.Ltd., Ahmedabad

ITA 2208/AHD/2012

• Counselvise Citation: 220820514 RSA 2012
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: B K BAHETI
• Keywords: Capital asset; Depreciation; Wrong claim; Difference of opinion
• Section: 115JB

Judgement Text

IT , , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER 1. ./ I.T.A.NO.2208/AHD/2012 - & ' & ' & ' & '/ // / A.Y. 2005-06 2. ./ I.T.A.NO.2209/AHD/2012 - & ' & ' & ' & '/ // / A.Y. 2008-09 1-2. THE ITO WARD-8(1) AHMEDABAD & & & & / VS. 1-2.TWINKLE TECHPLAST PVT.LTD. A-8, JALDHARA SOCIETY PARAS NAGAR ISANPUR AHMEDABAD ( '# ./)* ./ PAN/GIR NO. : AABCT 0086 D ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) REVENUE BY : SHRI Y.P. VERMA, SR.D.R. ASSESSEE BY : SHRI B.K. BAHETI &. / # / / / / DATE OF HEARING : 03/12/2012 01' / # / DATE OF PRONOUNCEMENT : 7.12.12 '2 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD.CIT(A)-XIV, AHMEDABAD DATED 30.07. 2012 PASSED FOR A.YS 2005-06 & 2008-09 AGAINST THE DELETION OF PEN ALTY LEVIED U/S.271(1)(C) AND THE FOLLOWING GROUND HAS BEEN RAI SED: 1) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.4,1 4,754/- (FOR A.Y. 2005-06) AND RS.1,20,105/- (FOR A.Y.: 2008-09). ITA NOS.2208 & 2209/AH D/2012 ITO VS. TWINKLE TECHPLAST PVT.LTD. AYS 2005-06 & B2008-09 (RESPECTIVELY) - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ORDERS ARE IDENTICAL FOR BOTH THE YEARS, THEREFORE, THE REVENUE HAS RAIS ED A COMMON GROUND AS REPRODUCED ABOVE. THE ONLY ISSUE IS THAT WHILE F RAMING THE ASSESSMENT U/S.143(3) R.W.S.147 VIDE AN ORDER DATED 30.11.2010 FOR A.YS. 2005-06 AND 2008-09, IT WAS NOTICED BY THE AO THAT THE ASSE SSEE HAD RECEIVED A SUBSIDY TOWARDS PURCHASE OF A CAPITAL ASSET. THE A SSESSEE HAS VOLUNTARILY EXPLAINED THAT THE SUBSIDY WAS CAPITAL IN NATURE RE CEIVED FROM THE GOVERNMENT OF GUJARAT GRANTED AS AN INCENTIVE TO PR OMOTE THE INDUSTRIAL GROWTH. DURING THE ASSESSMENT PROCEEDINGS, A REVI SED CHART OF CLAIM OF DEPRECIATION WAS FURNISHED BY THE ASSESSEE. THE AO HAS NOTED ON VERIFICATION FROM DEPRECIATION CHART THAT THE ASSES SEE HAD CLAIMED DEPRECIATION OF RS.20,08,174/- IN A.Y. 2005-06 ON T HE BLOCK OF ASSETS, HOWEVER, THE ACTUAL COST WAS NOT REDUCED BY THE AMO UNT OF THE CAPITAL SUBSIDY RECEIVED BY THE ASSESSEE. AS PER AO, IN TE RMS OF SUB-CLAUSE(B) OF CLAUSE(1) OF SECTION 43, THE DEPRECIATION WAS TO BE WORKED OUT ON THE ACTUAL COST OF THE ASSETS. IT WAS NOTED THAT WH ILE COMPUTING THE DEPRECIATION FOR A.Y. 2003-04, THE ASSESSEE HAD TAK EN THE WDV OF ALL THE ASSETS AT THEIR ORIGINAL VALUE. HOWEVER, SECTION 4 3(6) STIPULATES THAT WHILE COMPUTING THE DEPRECIATION THE AMOUNT OF SUBS IDY WAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DETERMINING THE ACT UAL COST OF AN ASSET. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE FACT THAT THE INCOME DETERMINED AS PER THE NORMAL PROVISIONS OF IT ACT WAS NIL, THE REFORE THE TAX WAS CHARGED AS PER THE PROVISIONS OF SECTION 115JB OF I T ACT ON THE BOOK PROFIT AS COMPUTED BY THE AO. BECAUSE OF THE WRONG CLAIM OF THE DEPRECIATION, THE AO HAD LEVIED PENALTY U/S.271(1)( C) RESPECTIVELY FOR BOTH THE YEARS. ITA NOS.2208 & 2209/AH D/2012 ITO VS. TWINKLE TECHPLAST PVT.LTD. AYS 2005-06 & B2008-09 (RESPECTIVELY) - 3 - 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELL ATE AUTHORITY, LD.CIT(A) HAS DELETED THE PENALTY FOLLOWING CIT VS. P.G.CHEMICALS LTD. (1994)210 ITR 830(SC) AND CIT VS. RELIANCE PETROPRO DUCTS (P) LTD. (2010) 322 ITR 158 (SC). 4. FROM THE SIDE OF THE REVENUE, LD.DR MR.Y.P.VERMA HAS PLACED RELIANCE ON CIT VS. ZOOM COMMUNICATION (P) LTD. (20 10)327 ITR 510(DELHI) AND GUJARAT STATE FINANCIAL SERVICES LTD . VS. ACIT (2010) 39 SOT 570 (AHD). ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE, LD.AR MR.B.K.BAHETI APPEARED AND PLACED RELIANCE ON PRICE WATER HOUSE 348 ITR 306 AND RELIANCE PROTROPRODUCTS (P) LTD. (S UPRA). 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THE ISSUE ABOUT THE NATURE OF THE SUBSIDY HAD ALWAYS BEEN A SUBJECT MATTER OF CONTROVERSY. HOWEVER, IN THE PRESENT CAS E THE ASSESSEE HAD ADMITTED THAT THE NATURE OF THE SUBSIDY WAS CAPITA L RECEIPT, THEREFORE REQUIRED TO BE REDUCED FROM THE COST OF THE ASSET. THE ONLY PLEA OF THE ASSESSEE WAS THAT AS SOON AS THE LEGAL POSITION WAS CLEAR TO THE ASSESSEE ABOUT THE NATURE OF THE SUBSIDY, THE CLAIM OF DEPRE CIATION WAS MODIFIED SUO MOTU . OTHERWISE ALSO, THE RELEVANT INFORMATION IN RES PECT OF THE SUBSIDY AMOUNT RECEIVED BY THE ASSESSEE HAD DULY BE EN DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THEREFORE, THE HONBLE COURTS IN SUCH CIRCUMSTANCES HAVE HELD THAT ONE OF THE FACTS ARE DULY BEEN DISCLOSED BY THE ASSESSEE AND THOSE FACTS HAVE NOT BEEN FOUND TO BE FALSE OR FABRICATED, THEN MERELY BECAUSE OF DIFFERENCE OF OPINION ABOUT THE CLAIM OF DEPRECIATION, THE ASSESSEE IS NOT REQUIRED TO BE PENALIZED ITA NOS.2208 & 2209/AH D/2012 ITO VS. TWINKLE TECHPLAST PVT.LTD. AYS 2005-06 & B2008-09 (RESPECTIVELY) - 4 - U/S.271(1)(C) OF IT ACT. RESULTANTLY, WE HEREBY AF FIRM THE FINDINGS OF THE LD.CIT(A) AND DISMISS THE GROUND OF THE REVENUE FOR BOTH THE YEARS. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. SD/- SD/- ( .. ) ( ) '# ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 7/ 12 /2012 ..&, .&../ T.C. NAIR, SR. PS '2 / ,3 4'3' '2 / ,3 4'3' '2 / ,3 4'3' '2 / ,3 4'3'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. 5 / CONCERNED CIT 4. 5() / THE CIT(A)-XIV, AHMEDABAD 5. 389 ,& , , / LEARNED DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD 6. 9: ;. / GUARD FILE. '2& '2& '2& '2& / BY ORDER, -3 , //TRUE COPY// < <<