Mavin Texturisers Pvt.Ltd., Surat V. The Dy.CIT, Circle-1, Surat

ITA 2296/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5921 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 16-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation
• Section: 271(1)(c); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 2296/AHD./2008 ASSESSMENT YEAR : 2005-2006 MAVIN TEXTURISERS PVT. LTD., SURAT -VS.- DEPUTY COMMISSIONER OF INCOME TAX, (PAN : AACCM 4411 G) CIRCLE-1, SURAT (APPELLANT) (RESPONDENT) & I.T.A. NO. 3205/AHD./2008 ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- M /S. MAVIN TEXTURISERS PVT. LTD., SURAT CIRCLE-1, SURAT (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH DEPARTMENT BY : SHRI H.P. MEENA, SR. D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : BOTH THESE APPEALS WERE HEARD ON THE SAME DATE, IN VOLVED COMMON ISSUE AND ARGUED BY COMMON LD. REPRESENTATIVE, THEREFORE, THESE ARE DEC IDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST NOW TAKE UP THE ASSESSEES APPEAL I.E. ITA NO. 2296/AHD/2008 . THIS APPEAL IS AGAINST THE ORDER DATED 29.04.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT FOR THE ASSESSMENT YEAR 2005- 06 ON THE FOLLOWING GROUND :- ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONF IRMING THE ACTION OF ASSESSING OFFICER IN ALLOWING DEPRECIATION AT RATE OF 25% INSTEAD OF 50% AS CLAIMED BY ASSESSEE ON MACHINERY PURCHASED U NDER TUF SCHEME. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE BUSINESS OF YARN TWISTING AND TEXTURISING AND ALSO CLOTH MANUFACTURI NG. IN THE ASSESSMENT YEAR UNDER APPEAL, THE 2 ITA NO. 2296 & 3205/AHD/2008 ASSESSEE CLAIMED DEPRECIATION AT THE RATE OF 50% ON MACHINERIES PURCHASED UNDER TUF SCHEME AND USED ONLY FOR TWISTING. ALL THESE MACHINERIES W ERE USED FOR THE PURPOSE OF TWISTING OF YARN AND ON THE SAME, THE ASSESSEE HAS CLAIMED DEPRECIAT ION @ 50% IN VIEW OF THE ENTRY AT SR. NO. 6 OF PART-A(III) OF APPENDIX-I OF I.T. RULES. THE ASS ESSING OFFICER ASKED THE ASSESSEE AS TO WHY NORMAL DEPRECIATION BE NOT ALLOWED IN VIEW OF THE F ACT THAT AS PER THE INCOME TAX RULES, HIGHER RATE OF DEPRECIATION IS ALLOWED ONLY AFTER PLANT AN D MACHINERY IS PURCHASED UNDER TUF SCHEME AND IS FOR THE PURPOSE OF WEAVING, PROCESSING AND G ARMENT SECTOR OF TEXTILE INDUSTRIES. THE ASSESSING OFFICER STATED THAT THE HIGHER RATE OF DE PRECIATION IS NOT AVAILABLE FOR MACHINERY USED FOR TWISTING, TEXTURISING AND MANUFACTURING OF YARN . THE ASSESSEE ARGUED THAT AS PER THE TEXTILE MINISTRY, ITS MACHINERIES WERE COVERED BY TUF SCHEM E AND THE ASSESSEE HAS OBTAINED LOAN UNDER TUF SCHEME AND, THEREFORE, HIGHER RATE OF DEPRECIAT ION IS ALLOWABLE. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION AND DISALLOWED THE EXCES S DEPRECIATION OVER AND ABOVE THE NORMAL RATE OF 25%. 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. 5. AT THE TIME OF HEARING, BOTH SIDES CONCEDED THAT THE CONTROVERSY INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECIS ION OF ITAT, C BENCH, AHMEDABAD IN ITA NO. 1044/AHD/2007 FOR THE ASSESSMENT YEAR 2004-05 I N ASSESSEES OWN CASE. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT YEAR 2004-05, ITAT, B BENCH, AHMEDABAD FOLLOWING THE DECISION DATED 10.11.2009 IN THE CASE OF NANGALIA SYNTHETICS PVT. LTD. IN ITA NO. 2213/AHD/2008 DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATIO N @ 50%. WE, THEREFORE, FOLLOWING THE DECISION OF ITAT C BENCH, AHMEDABAD IN ITA NO. 10 44/AHD/2007 FOR THE ASSESSMENT YEAR 2004-05 IN ASSESSEES OWN CASE (SUPRA) DIRECT THE A SSESSING OFFICER TO ALLOW DEPRECIATION @ 50% . RESULTANTLY, THE APPEAL OF THE ASSESSEE IS AL LOWED. 6. NOW WE TAKE UP THE REVENUES APPEAL I.E. ITA NO.3205/AHD/2008 . 7. THIS APPEAL IS AGAINST THE ORDER DATED 01.07.200 8 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT FOR THE ASSESSMENT YEAR 2004- 05 CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER OF RS.5,91,265/- UNDER SECTION 27 1(1)(C) OF THE INCOME TAX ACT, 1961. 3 ITA NO. 2296 & 3205/AHD/2008 8. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFICE R LEVIED THE PENALTY UNDER SECTION 271(1)(C) ON EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. AT THE TIME OF HEARING, BOTH SIDES CONCEDED THAT IN CASE, IN QUANTUM APPEAL IT IS HELD THAT THE ASSE SSEE IS ENTITLED TO DEPRECIATION AT THE RATE OF 50%, IN THAT EVENT NO PENALTY IS LEVIABLE. IN QUANT UM APPEAL, IN ITA NO. 2296/AHD/2008 (SUPRA), WE HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION @ 50%. CONSEQUENTLY NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. THEREF ORE, THE PENALTY OF RS.5,91,265/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) IS HEREBY CANCELLED. 9. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.06.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 / 06 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.