Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 9900 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 1 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-11-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
20-10-2016
Assessment Year
2006-2007
Appeal Filed On
11-10-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 2297/AHD/2012 (ASSESSMENT YEAR: 2006-07) DCIT, CIRCLE 8, AHMEDABAD APPELLANT VS. SPECIFIC CERAMIC LTD., PLOT NO.50, AT POST KAROLI, DIST. GANDHINAGAR-382721 RESPONDENT / BY REVENUE : SHRI K. D. RATNOO, SR. D.R. /BY ASSESSEE : SHRI S. N. SOPARKAR & URVASHI SHODHAN, A.R. /DATE OF HEARING : 20.10.2016 /DATE OF PRONOUNCEMENT : 24.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 A RISES AGAINST THE CIT(A)- XIV, AHMEDABADS ORDER DATED 25.07.2012, IN APPEAL NO. CIT(A)- XXI/367/11-12, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE REVENUES SOLE SUBSTANTIVE GROUND PLEADS THA T THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.3,32,27,538/- ON ITA NO. 2297/AHD/2012 (DCIT VS. SPECIFIC CERAMICS LTD.) A.Y. 2006-07 - 2 - ACCOUNT OF DEPRECIATION WRITTEN BACK WHILE COMPUTIN G SECTION 115JB BOOK PROFITS. WE NOTICE AT THE OUTSET THAT THE LOWER AP PELLATE AUTHORITY HAS DISCUSSED THIS ISSUE ALONG WITH ASSESSING OFFICERS CONCLUSION AS UNDER: 3.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONS GIVEN BY THE APPELLANT. THE A. O. HAS MADE THE ADDITION BY A PPLYING THE RATIO OF THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF APOLLO TYRES [122 TAXMAN 562] AND HOLDING THAT THE ADJUSTMENT WHICH ARE SPEC IFIED IN THE SECTION CAN ONLY BE MADE TO THE BOOK PROFIT. THE APPELLANT HAS POINTED OUT THAT THE BOOK PROFIT HAS BEEN TAKEN IN ACCORDANCE WITH THE ACCOUNTS PREPARED AS PER SCHEDULE XIV OF THE COMPANIES ACT, 1956 AND THE SAME HAS BEEN APPROVED IN THE ANNUAL GENERAL MEETINGS OF THE SHAREHOLDERS. FURTHER, IT HAS ALSO BEEN MENTIONED BY THE APPELLANT THAT THE ADJUSTMENT THAT HAS BEEN MADE ON ACCOUNT O F CHANGE OF METHOD OF DEPRECIATION ARE BELOW THE LINE ADJUSTMENT I.E. THE SAME HAS BEEN MADE AFTER WORKING OUT THE PROFIT AND LOSS ACCOUNT IN ACCORDAN CE WITH THE COMPANIES ACT AND, THEREAFTER, THE DEPRECIATION HAS BEEN ADJUSTED WHILE TAKING THE AMOUNT TO THE GENERAL RESERVE. I AM INCLINED TO ACCEPT THE EXPLANATION GIVEN BY TH E APPELLANT. IT IS NOTED FROM THE AUDITED ACCOUNTS SUBMITTED BY THE APPELLAN T COMPANY THAT THE PROFIT BEFORE TAX HAS BEEN WORKED OUT AS RS.2,24,41,786/- IN THE ACCOUNTS AND, THEREAFTER, THE LIABILITY FOR DEFERRED TAX HAS BEEN REDUCED WHI CH GIVES THE NET PROFIT FOR THE YEAR AT RS.41,03,786/-. THEREAFTER, THE EXCESS PROV ISION OF EARLIER YEARS AND PRIOR PERIOD ITEMS HAVE BEEN MENTIONED AND NET PROFIT OF RS.3,76,97,634/- HAS BEEN CARRIED OVER TO THE BALANCE SHEET. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE A.O. HAS STARTED FROM BOOK PROFIT OF RS.2,26,41,790/- WH ICH IS BEFORE THE REDUCTION OR ADJUSTMENT ON ACCOUNT OF CHANGE OF METHOD OF CLAIMI NG DEPRECIATION OF EARLIER YEARS WHICH ARE GIVEN IN AUDITED ACCOUNTS IN SCHEDU LE 15. THE BOOK PROFIT TAKEN FROM SECTION 115JB IS BEFORE ANY ADJUSTMENT AND, TH EREFORE, THE ADDITION MADE BY THE A. O. IS ON A WRONG FOOTING. THERE IS NO ADJUST MENT THAT HAS BEEN MADE BY THE APPELLANT AS MENTIONED IN EXPLANATION TO SECTION 11 5JB WHICH PRESCRIBES THE ADJUSTMENT TO THE BOOK PROFIT AS COMPUTED IN ACCORD ANCE WITH THE COMPANIES ACT AND THE AMOUNT OF DEPRECIATION HAS NOT BEEN REDUCED . THERE IS NO QUESTION OF ADDING IT BACK. THE ADDITION MADE BY THE A. O. IS, THEREFORE, DIRECTED TO BE DELETED. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 3. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. THERE DOES NOT APPEAR ANY DISPUTE THAT THE ASSESSEE CHANGED ITS ME THOD OF PROVIDING DEPRECIATION TO STRAIGHT LINE METHOD IN THE IMPUGNE D ASSESSMENT YEAR RESULTING IN INCREASE OF ITS BOOK PROFITS TO THE TU NE OF THE ABOVE STATED SUM. IT WOULD REDUCE IT FROM SECTION 115JB COMPUTATION. TH E ASSESSING OFFICER ADDED THE SAME AS PER HIS ABOVE EXTRACTED OPINION. WE NOTICE IN THESE FACTS ITA NO. 2297/AHD/2012 (DCIT VS. SPECIFIC CERAMICS LTD.) A.Y. 2006-07 - 3 - THAT HONBLE MADRAS HIGH COURT IN (2015) 63 TAXMANN .COM 329 DHARMAPURI PAPER MILLS (P.) LTD. VS. JCIT HOLDS THAT EXPRESS PROVISION OF DEPRECIATION PROVIDED FOR IN EARLIER YEARS AND CREDITED TO P&L A CCOUNT DUE TO CHANGE IN METHOD OF DEPRECIATION WOULD QUALIFY FOR SECTION 11 5JA EXPLANATION (I) ADJUSTMENT ENVISAGING SPECIFIC ITEMS TO BE INCREASE D OVER AND ABOVE AN ASSESSEES NET PROFITS. LD. DEPARTMENTAL REPRESENT ATIVE FAILS TO DISPUTE APPLICATION OF THIS JUDICIAL PRECEDENT IN FACTS OF INSTANT CASE. HE IS FURTHER FAIR ENOUGH IN NOT DISPUTING THE FACT THAT THE ABOVE MAT COMPUTATION PROVISION INCLUDES THE SPECIFIC HEADS ONLY. WE THUS CONCLUDE THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION ON ACCOUNT OF DEPRECIATION WRITTEN BACK WHILE COMPUTING SECTION 115JB BOOK PROFITS. 4. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 24/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0
