Dy. CIT, Pune V. Inox Air Products Ltd, Pune

ITA 2229/PUN/2012

• Counselvise Citation: 222924514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Capital receipt; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2229/PN/2012 A.Y. 2008-09 ADDL. CIT, RANGE-1, PUNE APPELLANT VS. INOX AIR PRODUCTS LTD., OFFICE NO.4, 1 ST FLOOR, SOLITAIRE, PUNE NAGAR ROAD, NEAR AGA KHAN PALACE, PUNE - 411006 PAN: AAACI5569D RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI C.H . NANI WADEKAR DATE OF HEARING: 23.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, [SHORT CI T(A)-I] PUNE, DATED 24.05.2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED IN ALLOWING TO THE ASSESSEE DEPRECIAT ION @60% INSTEAD OF @15 % ON STORAGE TANKS, COLD CONVERTERS & TRANSPORT TANKS BY ERRONEOUSLY CONSIDERING THESE TO BE GAS CYLINDERS, THEREBY CONTRAVENING THE GUIDELINES GIVE N UNDER RULE 5 OF THE INCOME-TAX RULE. 2 3. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED, WHILE GRANTING DEPRECIATION AT 60% , IN RELYING UPON THE ORDER OF THE CIT(A) IN THE ASSESSE E'S OWN CASE FOR THE A.Y. 2005-06 AND ALSO ON THE ORDER OF THE HON'BLE ITAT IN THE ASSESSEE'S OWN CASE FOR THE A.Y . 2000- 01 WITHOUT APPRECIATING THAT THE ABOVE ORDERS HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE DEPARTMENT'S SPE CIAL LEAVE PETITION IN THIS MATTER IS PENDING BEFORE THE HON'BLE SUPREME COURT OF INDIA. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S GROUND OF APPEAL WITH REGARD TO EXTINGUISHMENT OF THE ASSESSEE'S LIA BILITY TO PAY THE DIFFERENTIAL SALES TAX OF RS.4,04,93,290/- INSTEAD OF CONFIRMING THE ASSESSING OFFICER'S STAND THAT THE A FORESAID AMOUNT REPRESENTED CESSATION / REMISSION OF THE ASS ESSEE'S LIABILITY AND HENCE TAXABLE U/S.41(L) OF THE INCOME -TAX ACT, 1961. 5. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S GROUND OF APPEAL ON THE ABOVE ISSUE EVEN WHILE HOLDING THAT 'I AM HUMBL Y OF THE VIEW THAT THE AMOUNT IS TAXABLE U/S.41(L) OF THE IN COME-TAX ACT, 1961.' 6. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S APPEAL IN THIS MATTER BY FOLLOWING THE DECISION OF THE ITAT SPEC IAL BENCH, MUMBAI IN THE CASE OF SUZLER INDIA LTD. (201 0) 134 TTJ (MUM)(SB) 385, AND THE DECISION OF THE ITAT, PU NE BENCH IN THE CASE OF RUCHA ENGINEERS PVT. LTD. IN I TA N0.667/PN/2006 AND 1338/PN/2007 : A.Y. 2003-04, WHI CH ARE NOT AT ALL APPLICABLE TO THE FACTS IN THE PRESE NT CASE SINCE IN THE ASSESSEE'S CASE THE LIABILITY IN RESPECT OF THE ENTIRE DEFERRED SALES TAX OF RS. 10,54,93,806/- HAD ALREADY ACCRUED AND HAD ALSO BEEN ALLOWED AS EXPEND ITURE OR TRADING LIABILITY; AND, THEREFORE, THE REMISSION / REDUCTION OF RS.4,04,93,290/- PATENTLY RESULTED IN DEEMED INC OME U/S.41(L) OF THE INCOME-TAX ACT, 1961. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE RAT IO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. THIRUMALAISWAMY NAIDU & SONS(1998), 236 ITR 534(SC) & THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS . MARIKAR(MOTORS) LTD.(1981) 129 ITR L(KER) CLEARLY A PPLIES TO THE PRESENT CASE. 3 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN NOT CONSIDERING THE RATIO OF THE D ECISION IN THE CASE OF CIT VS.SAHNEY STEEL & PRESS WORKS LTD.( 1985) 152 ITR 39(AP), WHEREIN IT WAS BEEN HELD THAT REFUN D OF SALES TAX CAN BE TAXED U/S.41(L) AND FOR THIS IT IS NOT NECESSARY THAT THE REFUND MUST HAVE BEEN OBTAINED B Y THE ASSESSEE IN THE FORM OF SALES TAX ONLY. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S CLAIM WITH REGARD TO EXTINGUISHMENT OF LIABILITY OF RS.4,04,93,290/- WIT HOUT APPRECIATING THAT IN THE RETURN OF INCOME FILED U/S . 139(1) THE ASSESSEE HAD ADMITTED AND OFFERED THE ABOVE AMO UNT AS ITS INCOME AND HAD NOT CLAIMED THE SAME AS CAPITAL RECEIPT OR AS A DEDUCTION EITHER IN THE ORIGINAL RETURN OR IN ANY SUBSEQUENT REVISED RETURN. 10. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT ( APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF INDUSTRIAL GASES SUCH AS OXYGEN, NITROGEN, LIQUID GASES, SPECIALITY GASES, AIR SEPAR ATION PLANTS ETC. THE ASSESSEE COMPANY HAS CLAIMED DEPRECIATION @ 60% ON STORAGE TANKS, COLD CONVERTERS AND TRANSPORT TANKS ETC. ON THE GROUND THAT THEY ARE OF THE NATURE OF GAS CYLINDERS AND HENCE SAME RATE SHOULD BE APPLIED. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND ALLOWED THE DEPRECIAT ION @ 15%. IN THE APPEAL, CIT(A) HAS GRANTED THE RELIEF TO THE AS SESSEE FOLLOWING THE ITAT ORDER ON THE ISSUE FOR A.Y. 2005-06. IT W AS POINTED OUT ON BEHALF OF LEARNED AUTHORIZED REPRESENTATIVE THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE IN A.Y. 2005-06, WHER EIN THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSE E BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT FOR A.Y. 2005-06 IN 4 ASSESSEES OWN CASE. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE S AME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF CIT(A), WHO HAS ALLOWED THE ASSESSEES CLAIM FOR DEPRECIATION @ 60% INSTEAD OF 15% ON STORAGE TANK, COLD CONVERTERS AND TRANSPORT TANKS ETC. SAME IS UPHELD. 3. NEXT ISSUE IS WITH REGARD TO ASSESSEE LIABILITY TO PAY DIFFERENTIAL SALES TAX OF RS.4,04,93,290/-. THE AS SESSING OFFICER HAS DISALLOWED THIS CLAIM. IN APPEAL, CIT(A) ALLOW ED THE SAME. IT WAS POINTED OUT ON BEHALF OF LEARNED AUTHORIZED REP RESENTATIVE THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF PUNE B BENCH IN ITA NO.667/PN/2006 AND ITA NO.1338/PN/2007 FOR A.Y. 2003-04 IN THE CASE OF RUC HA ENGINEERS PVT. LTD., WHEREIN A SIMILAR ISSUE HAS BE EN DECIDED IN FAVOUR OF ASSESSEE BY FOLLOWING THE SPECIAL BENCH M UMBAI IN THE CASE OF SUZLER INDIA LTD. (2010) 134 TTJ (MUM)(SB) 385 BY OBSERVING AS UNDER: 5. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E MATERIAL ON RECORD, WE FIND THAT THIS GROUND IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF SUZLER INDIA LTD. (SUPR A), WHEREIN THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: FOR THE REASONS AS STATED ABOVE, WE HOLD THAT THE DEFERRED SALES TAX LIABILITY RS.4,14,87,984/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE RS.3,37,13,393/- AGAINST THE FUTURE LIABILITY OF RS.7,52,01,378/- CREDITED BY THE ASSESSEE UNDER THE CAPITAL RESERVE ACCOUNT ON ITS BOOKS OF ACCOUNT IS A CAPITAL RECEIPT AND CANNOT BE TERMED AS REMISSION / CESSATION OF LIABILITY AND CONSEQUENTLY NO BENEFIT HAS ARISEN TO THE ASSESSEE IN TERMS OF SECTION 41(1)(A) OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, THE MODIFIE D QUESTION AS FRAMED IN PARA 5 OF THIS ORDER IS ANSWE RED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 5 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF CIT(A), WH O HAS ALLOWED THE GROUNDS OF APPEAL WITH REGARD TO EXTINGUISHMENT OF ASSESSEES LIABILITY TO PAY THE DIFFERENTIAL SALES TAX OF RS.4 ,04,93,290/-. THIS VIEW IS FORTIFIED BY THE DECISION OF ITAT, MUMBAI S PECIAL BENCH IN THE CASE OF SUZLER INDIA LTD. (SUPRA). ACCORDIN GLY, THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 24 TH OF DECEMBER, 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH DECEMBER 2013 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE