T.M. Abdul Gaffor, CHENNAI V. ACIT, CHENNAI

ITA 2312/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7866 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 08-08-2016
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2312/MDS./2016 / ASSESSMENT YEAR : 2003-04 T.M. ABDUL GAFFOR , 2,RAMAPILLAI STREET, PERIAMET,CHENNAI 600 003. VS. THE ACIT, NON-CORPORATE CIRCLE-4, CHENNAI-6. [PAN AACPG 1871 D ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.B.GOWTHAMAN, C.A /RESPONDENT BY : MR.SHIVAS SRINIVAS, JCIT DR / DATE OF HEARING : 08 - 11 - 201 6 / DATE OF PRONOUNCEMENT : 08 - 12 - 2016 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5,CHENNAI DATED 23.05.2016 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. AT THE TIME OF HEARING, THE LD. A.R OF THE ASSE SSEE DID NOT PRESS ISSUE NO.(I) MENTIONED IN GROUND NO.1. ACCORD INGLY, ISSUE NO.(I) ITA NO.2312/MDS./15 :- 2 -: RELATING TO DISALLOWANCE U/S.40A(3) OF THE ACT IS D ISMISSED AS NOT PRESSED. 2.1 THE ONLY ISSUE RAISED BY THE ASSESSEE IN HIS A PPEAL IS THAT LD.CIT(A) WENT WRONG IN UPHOLDING THE EXCESS CLAIM OF DEPRECIATION OF ` 2,73,500/-. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE CL AIMED DEPRECIATION AT 25% ON THE WDV OF PLANT AND MACHINERY OF ` 42,40150/- WORKED OUT ` 10,60,038/-. THE AO OBSERVED THAT ASSESSEE RECEIVE D SUBSIDIARY FROM SIDBI OF ` 10,94,000/-. AS SUCH, AO DEDUCTED THE SAID AMOUNT FROM TOTAL COST OF PLANT AND MACHINERY SO AS TO ARR IVE AT ACTUAL COST OF EQUIPMENT. IT WAS RESULTED IN DEDUCTION IN EXCESS CLAIM OF DEPRECIATION BY ` 2,73,500/-. AGAINST THIS, THE ASSESSEE CARRIED TH E APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) C ONFIRMED THE ORDER OF THE LD.CIT(A). AGGRIEVED BY THE ORDER OF LOWER AUTHORITIES, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R RELIED ON THE DECISION OF SUP REME COURT IN THE CASE OF CIT VS. P.J.CHEMICALS LTD., REPORTED IN [19 94] 210 ITR 0830(SC) AND SUBMITTED THAT THE SUBSIDIARY RECEIVED NOT FOR THE PURPOSE OF ACQUISITION OF PLANT AND MACHINERY, AS SUCH IT CANNOT BE REDUCED FROM THE COST OF PLANT AND MACHINERY SO AS TO REDUCE DEPRECIATION. 5. ON THE OTHER HAND, LD.D.R SUPPORTED THE ORDER O F LD.CIT(A). ITA NO.2312/MDS./15 :- 3 -: 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE THROUGH THE SANCTIONED LETTER OF SUBSIDIARY ISSUED UNDER NATIONAL LEATHER DEVELOPMENT PROGRAMME , NOIDA VIDE LETTER DATED 03.12.2001 AND ALSO PROVISIONS OF THE SECTION 43(1) OF THE ACT TO EXPLANATION-1, WHICH IS INTRODUCED WITH EFFE CT FROM 01.04.1999 WHICH READS AS UNDER:- S.43 IN SECTION 28 TO 41 AND IN THIS SECTION, UN LESS THE CONTEXT OTHERWISE REQUIRES-- (1) 'ACTUAL COST' MEANS THE ACTUAL COST OF THE ASSE TS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COST THERE OF, IF ANY, AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY: PROVIDED THAT WHERE THE ACTUAL COST OF AN ASSET, BE ING A MOTOR CAR WHICH IS ACQUIRED BY THE ASSESSEE AFTER THE 31ST DA Y OF MARCH, 1967, BUT BEFORE THE FIRST DAY OF MARCH, 1975, AND IS USED OTHERWISE THAN IN A BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS, EXCEEDS TWENTY-FIVE THOUSAND RUPEES, THE EXCESS OF THE ACTUAL COST OVER SUCH AMOUNT SHALL BE IGNORED, AND THE ACTUAL C OST THEREOF SHALL BE TAKEN TO BE TWENTY-FIVE THOUSAND RUPEES. EXPLANATION 1. WHERE AN ASSET IS USED IN THE BUSIN ESS AFTER IT CEASES TO BE USED FOR SCIENTIFIC RESEARCH RELATED T O THAT BUSINESS, AND A DEDUCTION HAS TO BE MADE UNDER CLAUSE (II) OF SUB-SECTION (1) OF SECTION 32 IN RESPECT OF THAT ASSET, THE ACTUAL COST OF THE ASSET TO THE ASSESSEE SHALL BE THE ACTUAL COST TO THE ASSESS EE AS REDUCED BY THE AMOUNT OF ANY DEDUCTION ALLOWED UNDER CLAUSE (I V) OF SUB- SECTION (1) OF SECTION 35, OR UNDER ANY CORRESPONDI NG PROVISION OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922). ITA NO.2312/MDS./15 :- 4 -: IN VIEW OF THE PROVISIONS OF THE ACT , WHERE THE PO RTION OF THE COST OF THE ASSETS ACQUIRED BY THE ASSESSEE HAS BEEN MADE DIRECTLY OR INDIRECTLY GOVERNMENT OR ANY AUTHORITY ESTABLISHED BY THE LAW OR BY ANY OTHER PERSON IN THE FORM OF SUBSIDIARY OR GRANT OR REIMBURSEMENT ESPECIALLY REDUCED FROM THE COST OF SUCH ASSET. BE ING SO, IN OUR OPINION, IN THIS CASE, THIS IS REIMBURSEMENT OF COS T OF ASSETS INCURRED BY THE ASSESSEE AND IT IS TO BE REDUCED FROM THE CO ST OF ASSETS SO AS TO ASCERTAIN THE ACTUAL COST OF ASSET, THEREBY DEPRECI ATION TO BE COMPUTED AS PER PRESCRIBED RATE. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHORITIES AND THE ORDER OF LD. CIT(A) IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON 08 TH DECEMBER, 2016, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 08 TH DECEMBER, 2016 K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF