Renold Chain India Ltd., Dindigul V. DCIT, CHENNAI

ITA 2285/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7649 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-08-2016
• Court: TRIBUNAL
• Department Lawyers: S SWAMINATHAN
• Assessee Lawyers: SHIVA SRINIVAS
• Keywords: Depreciation; Additional depreciation; Revised return; Reassessment proceedings

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2285/MDS/2016 * +* /ASSESSMENT YEAR: 2009-10 M/S.RENOLD CHAIN INDIA (P) LTD., S.F.NO.568/1A, 569/1&2, D.GUDALUR POST, VIA KARUR, VEDASANTHUR TALUK, DINDIGUL DISTRICT, TAMIL NADU. VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-V(3), CHENNAI. [PAN: AADCR 9839 E ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.SHIVA SRINIVAS, JCIT ./,- 0 1 /RESPONDENT BY : MR.S. SWAMINATHAN, CA # 0 2' /DATE OF HEARING : 10.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 22.02.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 31.03.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 3, CHENNAI, IN ITA NO.89/2014-15/CIT-3 FOR THE AY 2009-10. ITA NO.2285/MDS/2016 :- 2 -: 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE D EPRECIATION CLAIM U/S.32(1) OF INCOME TAX ACT (IN SHORT THE ACT). THE ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME ON 28.11.2011 AND THE ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 25.12.2011. SU BSEQUENTLY, THE ASSESSMENT WAS RE-OPENED U/S.147 AND THE RE-ASSESSM ENT ORDER WAS PASSED U/S.143(3) R/W SEC.147 OF THE ACT ON 30.06.2 014 ON TOTAL INCOME OF 23,47,441/-. DURING THE REASSESSMENT PROCEEDINGS A ND IN THE REVISED RETURN FILED IN RESPONSE TO THE NOTICE U/S147, THE ASSESSEE MADE THE CLAIM FOR DEPRECIATION OF 5,67,28,395/- AGAINST THE DEPRECIATION CLAIMED IN ORIGINAL RETURN 2,80,23,675/-. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS AO) HAS NOT ALLOWED THE ADDITIONAL CLAIM OF DEPRECIATION AND COMPLETED THE ASSESSMENT AND THERE WAS NO DISCU SSION ON THIS ISSUE IN THE ASSESSMENT ORDER. THE FIRST APPELLATE AUTHO RITY HAS ALSO REJECTED THE CLAIM OF THE ASSESSEE AND DISMISSED THE ASSESSE ES APPEAL. THE RELEVANT PART OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL)S (HEREINAFTER REFERRED TO AS LD.CIT(A)) ORDER IS E XTRACTED AS UNDER: ANOTHER GROUND OF APPEAL TAKEN BY THE APPELLANT PER TAIN TO ADDITIONAL DEPRECIATION STATED TO HAVE BEEN CLAIMED DURING THE REASSESSMENT PROCEEDIN GS WHICH HAS BEEN NOT ALLOWED BY THE AO. BEFORE ME, LD.AR HAS SUBMITTED FOLLOWING FACTS: 1. APPELLANT COMPANY HAD ACQUIRED INDUSTRIAL CHAIN BUS INESS OF LG BALAKRISHNAN AND BROTHERS LTD. ON 24.06.2008. 2. IT HAD FILED ORIGINAL RETURN OF INCOME U/S.139(1) F OR AY 2009-10 CLAIMING DEPRECIATION AMOUNTING TO 2,80,23,675/- AS ASSETS PURCHASED WERE PUT TO USE L ESS THAN 180 DAYS. 3. THE SAID DEPRECIATION WAS ALLOWED BY THE AO IN THE O RIGINAL ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT ON 29.12.2011. 4. TAX AUDIT REPORT IN FORM 3CD FOR AY 2009-10 THE TOT AL DEPRECIATION WAS SHOWN AT 5,67,28,395/- AFTER TREATING THE ASSETS PURCHASED F ROM LG BALAKRISHNAN AND BROTHERS LTD. WERE PUT TO USE MORE THAN 180 DAYS. ITA NO.2285/MDS/2016 :- 3 -: 5. IT IS STATED THAT APPELLANT HAD INADVERTENTLY UPLOA DED THE INCOME TAX RETURN WHICH WAS BASED ON DRAFT WORKINGS. 6. DURING THE REASSESSMENT PROCEEDINGS, IT IS STATED, APPELLANT HAS REALIZED THE ABOVE MISTAKES AND SOUGHT A RELIEF FROM THE AO WHO HAD DEN IED THE APPELLANTS CLAIM. BEFORE ME, APPELLANT HAS TAKEN FOUR GROUNDS OF APPE AL ON THE SAME ISSUE. I HAVE PERUSED GROUNDS OF APPEAL, ASSESSMENT ORDER AND DETAILS FIL ED DURING THE APPELLATE PROCEEDINGS. THE MAIN ARGUMENT OF THE LD.AR IS BASED ON AUDIT REPORT FILED IN FORM NO.3CD. LD.AR HAS FILED STATEMENT OF DEPRECIATION COMMUTATED AS PER THE PRO VISIONS OF THE IT ACT. I HAVE PERUSED AUDITORS REPORT ON WHICH APPELLANT HAS PLACED RELI ANCE. I HAVE NOTICED THAT AUDITOR HAS GIVEN A QUALIFIED NOTE WHICH IS AS UNDER: B) WITH RESPECT TO ADDITIONS DURING THE YEAR, DATE S PUT TO USE ARE AS CERTIFIED BY THE MANAGEMENT. THE QUALIFIED STATEMENT OF THE AUDITOR CLEARLY SHOW S THAT HE HAD FOLLOWED THE CERTIFICATE GIVEN BY THE MANAGEMENT WITH RESPECT TO ADDITIONS T O THE ASSETS, DATES OF PUT TO USE ETC. BUT NO INDEPENDENT VERIFICATION OR EXAMINATION OF A DDITIONS OF THE ASSETS AND DATES ON WHICH THE SAID ASSETS WERE PUT TO USE HAS BEEN DONE BY THE AUDITOR. THE FACTS INDICATE THAT ITS A ROUTINE AUDITORS REPORT FOR WHICH NOT MUCH OF VALUE IS ATTACHED. IN THE LIGHT, OF THE ABOVE FACTS I HAVE CONSIDERED SUBMISSIONS OF THE LD .AR AND FOUND THEM DEVOID OF MERITS. THE SAME MANAGEMENT WHICH HAS GIVEN A CERTIFICATE T O THE AUDITOR WITH REGARD TO ADDITIONS TO THE ASSETS DATES OF PUT TO USE ETC. HAS FILED RE TURN OF INCOME U/S.139(1) CLAIMING DEPRECIATION AMOUNTING TO 2,8023,675/- INSTEAD OF 5,67,28,:395/-. IN MY CONSIDERED OPINION, IT IS NOT AN INADVERTENT MISTAKE AS CLAIME D BY THE LD.AR BUT A WELL THOUGHT OUT DECISION OF THE MANAGEMENT TO CLAIM DEPRECIATION ON LY 2,8023,675/-, SINCE, FACTS PERTAINING TO THE ASSETS PUT TO USE WERE ONLY KNOWN TO THEM. THE CASE LAWS CITED BY THE LD.AR ARE NOT APPLICABLE TO THE FACTS OF THE APPELL ANTS CASE AS THE DEPRECIATION CLAIMED BY THE MANAGEMENT WAS ALLOWED BY THE AO IN THE ORIGINAL ASSESSMENT ORDER. IN THE SUBSEQUENT YEAR, APPELLANT HAS CLAIMED DEPRECIATION ON THIS ASSETS BEING PUT TO USE MORE THAN 180 DAYS AND CLAIMED FULL DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE OPEN IN BALANCE OF THE ASSETS UNDER DISCUSSION, WHICH WAS D ULY ALLOWED BY THE AO. IN VIEW OF THE ABOVE DISCUSSION, I FIND THAT APPELLANTS CLAIM OF ADDITIONAL DEPRECIATION SOUGHT TO BE CLAIMED DURING REASSESSMENT PROCEEDINGS IS DEVOID O F MERITS. THEREFORE, I HOLD THAT AO HAS RIGHTLY NOT ENTERTAINED SUCH AFTERTHOUGHT CLAIM. TH E GROUNDS OF APPEAL TAKEN ON THIS ISSUE ARE DISMISSED. 3.0 APPEARING FOR THE ASSESSEE, LEARNED AUTHORIZED REP RESENTATIVE (HEREINAFTER REFERRED TO AS LD.AR) ARGUED THAT WH ILE UPLOADING THE RETURN, THE ASSESSEE INADVERTENTLY CLAIMED THE DEPRECIATION OF .2,80,23,675/- AGAINST THE ELIGIBLE DEPRECIATION OF 5,67,28,395/- BY MISTAKE. THE ASSESSEE SUBMITTED THAT THE ASSETS WERE PUT TO FOR USE MORE THAN 180 DAYS AND THE ASSESSEE IS ELIGIBLE FOR 100% DEPRECIA TION AND CLAIMED 50% DEPRECIATION INADVERTENTLY. THEREFORE, HE REQUESTE D ONE MORE OPPORTUNITY TO PROVE THE CASE AND REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF AO. ITA NO.2285/MDS/2016 :- 4 -: ALTERNATIVELY, THE ASSESSEE REQUESTED FOR DEPRECIAT ION ON WRITTEN DOWN VALUE AS ON 01.04.2009 FOR THE AY 2010-11 ONWARDS. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE (HEREINAFTER RE FERRED TO AS LD.DR) VEHEMENTLY OBJECTED FOR THE REMITTING THE MATTER BA CK TO THE AO. THE LD.DR STATED THAT THE AO HAS ALLOWED THE DEPRECIATI ON AS CLAIMED BY THE ASSESSEE. THEREFORE, THERE IS NO CASE FOR REMITTIN G BACK TO THE AO. 4.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THE ASSESSEE SUBMITTED THE PAPER BOOK AND IN PAPER BOOK AS PER PAGE NO.24 OF AUDIT REPORT THE TOTAL ELIGIBLE DEPRE CIATION WAS REPORTED AT 5,67,28,395/-. THE DEPRECIATION ON ASSETS PUT TO US E FOR MORE THAN 180 DAYS WAS 5,38,15,038/- AND THE DEPRECIATION CLAIMED ON ASSET S USED FOR LESS THAN 180 DAYS WAS 29,30,357/-, THUS IT APPEARS THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION OF 5,67,28,395/-. THE LD.CIT(A) REJECTED THE CLAIM OF THE ASSESSEE ON THE REASON THAT THE AO HAS ALLOWED THE DEPRECIATION AS CLAIMED BY THE ASSESSEE IN THE ORIG INAL ASSESSMENT FOR THE AY 2009-10. IN THE SUBSEQUENT YEAR I.E. 2010-11, TH E ASSESSEE HAS CLAIMED THE FULL DEPRECIATION ON THE WRITTEN DOWN V ALUE OF THE OPENING BALANCE OF THE ASSETS, WHICH WAS ALSO ALLOWED BY TH E AO. AS PER THE PROVISIONS OF THE INCOME TAX ACT, THE ASSESSING OFF ICER SHOULD ALLOW THE CORRECT AMOUNT OF DEPRECIATION AS PROVIDED IN THE D EPRECIATION SCHEDULE AS PER THE EXPLANATION-V TO SEC.32 OF INCOME TAX ACT. THE PROVISIONS OF ITA NO.2285/MDS/2016 :- 5 -: SEC.32 APPLIES IRRESPECTIVE OF WHETHER THE ASSESSEE HAS CLAIMED DEPRECIATION OR NOT. FOR READY REFERENCE, WE REPRO DUCE EXPLANATION-5 OF SEC.32 HERE UNDER: [ EXPLANATION 5. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME] 5.0 BOTH THE AO & THE LD.CIT(A) ARE NOT CORRECT IN REJ ECTING THE CLAIM OF THE ASSESSEE. IT IS THE DUTY OF THE AO TO VERIFY T HE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE AND TO ALLOW THE CORRECT AMOUNT OF DEPRECIATION IN THE ASSESSMENT WHETHER THE ASSESSEE MAKES THE CLAIM OR NOT? THEREFORE, IN THE INTEREST OF THE JUSTICE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE REMIT BACK TO THE FILE OF THE AO AND THE AO IS DIRECTED TO VERIFY, WHETHER THE ASSETS ARE PU T TO USE MORE THAN 180 DAYS OR NOT AND ALLOW THE CORRECT AMOUNT OF DEPRECI ATION AS PER SEC.32 AND THE INCOME TAX RULES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET-ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO. IN CASE, THE ASSESSEE HAS CLAIMED THE DEPRECIA TION ON WRITTEN DOWN VALUE OF OPENING BALANCE FOR THE SUBSEQUENT YEARS, THE NECESSARY ADJUSTMENTS MAY BE CARRIED OUT. THE AO SHOULD GIVE AN OPPORTUNITY TO THE ASSESSEE. ITA NO.2285/MDS/2016 :- 6 -: 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 22 ND FEBRUARY, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF