The ACIT, Circle-2, Bhavnagar V. Bhavnagar Nagrik Sahakari Bank Ltd., Bhavnagar

ITA 2330/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80550 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Retrospective amendment; Revised return
• Section: 32; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ITA NO . 2330 /AHD/20 1 0 A. Y. 200 7 - 0 8 ACIT, CIRCLE - 2, BHAVNAGAR. VS SHRI BHAVNAGAR NAGRIK SAHKARI BANK LTD., 14 SAHKAR BHUVAN, GANGA JALIA TALAO, BHAVNAGAR. PAN : AAAAB0606Q (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR. D.R. , ASSESSEE(S) BY : SHRI M.K. PATEL , A.R. / DATE OF HEARING : 27 / 11 /201 4 / DATE OF PRONOUNCEMENT: 28 / 11 /201 4 / O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN A PPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF L EARNED CIT (A ) - XX , AHMEDABAD , DAT ED 1 7 / 04 /201 0 . THE MAIN ISSUE IS IN RESPECT OF DISALLOWANCE OF DEPRECIATION CLAIMED U/S.32 OF IT ACT. FOR THIS SINGLE ISSUE, REVENUE DEPARTMENT HAS RAISED FOLLOWING GROUNDS: 1. THE LD. CIT(A) - XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW DEPRECIATION AT RS. 1 5,85,753 / - U/S.32 OF THE IT ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 1.2 I N DOING SO, THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT A PPRECIATING THAT THE ASSESSEE WAS NOT ENTITLED TO FILE REVISED RETURN IN VIEW OF PROVISIONS OF SECTION 139 ( 5 ) OF THE ACT, SINCE THE ORIGINAL RETURN OF INCOME WAS NOT FILED WITHIN THE DUE DATE U/S.139(1) OF THE I.T. ACT. 1.3 IN DOING SO, THE LD. CIT(A)XX, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE BANK HAD NEVER CLAIMED THE ADMISSIBLE DEPRECIATION IN THE RETURNS OF INCOME OF EARLIER YEARS AND THEREFORE, THE CORRECT WDV OF EACH ASSETS AS ON 1/4/2006 COULD NOT BE WORKED OUT C ORRECTLY AND THE ASSESSEE CHANGED ITS CLAIM OF ADMISSIBLE DEPRECIATION WHENEVER THE DETAILS OF ADMISSIBLE DEPRECIATION WAS CALLED FOR . I TA NO. 2330 /AHD/201 0 ACIT, CIRCLE - 2, BHAVNAGAR VS. SHRI BHAVNAGAR NAGRIK SAHKARI BANK LTD . FOR A.Y. 200 7 - 0 8 - 2 1.4 IN DOING SO, THE LD. CIT (A)XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THAT IN THE AUDITORS REPO RT ALSO A NOTE HAD BEEN GIYEN BY THE AUDITORS THAT THE AMOUNT OF ADMISSIBLE DEPRECIATION COULD NOT B E WORKED OUT AS RELEVANT DETAILS WERE N OT AVAILABLE AND /OR SUCH RELEVANT DETAILS WERE UNDER COMPILATION. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S.143(3) DATED 29.12.2009 WERE THAT THE ASSESSEE IS ENGAGED IN BANKING ACTIVITY. AN ORIGINAL RETURN WAS FILED WHEREIN THE CLAIM OF DEDUCTION U/S.32 WAS MADE ON AD HOC BASIS OF RS.4,31,262/ - . THEREAFTER , THE ASSESSEE HAD FURNIS HED A REVISED RETURN AND CLAIMED DEPRECIATION OF RS.16,45,962/ - . THE AO WAS OF THE VIEW THAT THROUGH REVISED RETURN THE CLAIM OF DEPRECIATION SHOULD NOT HAVE BEEN MADE AND THAT THE DEPRECIATION WAS CLAIMED ON AD HOC BASIS; THEREFORE, THE SAID AMOUNT OF RS. 4,21,762/ - WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS EXAMINED CERTAIN LEGAL ASPECTS AND AFTER NARRATING A DECISION OF THE HON BLE SUPREME COUR T HE HAS HELD AS UNDER: 5.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSION MADE BEFORE ME. FROM THE DETAILS FILED BEFORE THE AO AND ALSO DURING THE COURSE OF APPELLATE PROCEEDINGS, IT IS NOTICED THAT THE APPELLANT HAS CLAIM ED DEPRECATION OF RS.4,21,262/ - IN THE ORIGINAL RETURN ON AD HOC BASIS. THE APPELLANT IN THE REVISED RETURN FILED BEFORE THE AO HAS CLAIMED DEPRECIATION AT RS.15,85,753/ - AND ALSO FURNISHED THE WORKING OF ADMISSIBLE DEPRECIATION. THE APPELLANT HAD NOT CLAI MED DEPRECIATION IN THE PREVIOUS ASSESSMENT YEARS AS IT WAS NOT MANDATORY. HOWEVER, WITH THE INSERTION OF EXPLANATION (5) TO SECTION 31(1) BY THE FINANCE ACT, 2001, IT WAS MANDATORY TO COMPUTE DEPRECATION ON ASSETS W.E.F. 1/4/2002. ACCORDINGLY, IN ORDER TO CLAIM CORRECT COMPUTATION OF DEPRECATION, THE APPELLANT PREPARED STATEMENTS OF ADMISSIBLE DEPRECATION FROM THE AY 2002 - 03 AS PER THE RATES SPECIFIED IN THE ACT. EVEN IN THE ACT, IT HAS NOT BEEN SPECIFIED WHETHER EXPLANATION 5 TO SECTION 32(1) IS HAVING RE TROSPECTIVE EFFECT. THE MADRAS HIGH COURT REFERRED TO BY THE APPELLANT IN THE CASE OF CIT VS SREE SENHAVALLI TEXTILES PVT LTD REPORTED AT 259 ITR 87 HAS HELD AS UNDER: I TA NO. 2330 /AHD/201 0 ACIT, CIRCLE - 2, BHAVNAGAR VS. SHRI BHAVNAGAR NAGRIK SAHKARI BANK LTD . FOR A.Y. 200 7 - 0 8 - 3 '....EXPLANATION 5 WAS INSERTED IN SECTION 32(1) OF THE INCOME - TAX ACT, 1961, BY THE FIN ANCE ACT 2001, WITH EFFECT FROM APRIL 1, 2002 DECLARING THAT 'FOR THE REMOVAL OF DOUBTS' THE PROVISIONS OF SUB - SECTION (1) WILL APPLY WHETHER OR NOT THE ASSESSEE CLAIMS DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME, THAT EXPLANATION CA NNOT BE REGARDED AS TAKING AWAY THE EFFECT OF THE JUDGMENT OF THE SUPREME COURT FOR THE YEARS PRIOR TO THE DATE OF INTRODUCTION OF THE EXPLANATION. THE LAW DECLARED BY THE SUPREME COURT CANNOT BE REGARDED AS HAVING MERELY RAISED DOUBTS. THE INTERPRETATION OF THE RELEVANT PROVISIONS OF THE ACT BY THE APEX COURT SETTLES THE LAW, AND UNLESS THE SUBSEQUENT AMENDMENT TO THE STATUTE IS EXPRESSLY GIVEN RETROSPECTIVE EFFECT THE LAW LAID DOWN BY THE APEX COURT WILL REMAIN THE BINDING LAW FOR THE PERIOD PRIOR TO THE AMENDMENT. THE NEWLY ADDED EXPLANATION TAKES EFFECT ONLY ON AND FROM APRIL 1, 2002 AND WILL NOT BE APPLICABLE FOR PRIOR YEARS.' FROM THE ABOVE JUDGMENT OF THE SUPREME COURT, IT IS CLEAR THAT EXPLANATION 5 TO SECTION 32(1) IS APPLICABLE FROM 01/04/2002 AND THE APPELLANT HAS RIGHTLY CALCULATED THE WDV OF THE EARLIER YEARS. THIS FACT IS EVIDENT FROM THE DETAILS SUBMITTED BY THE APPELLANT. THE APPELLANT'S CLAIM IS THAT IT HAD NEVER CLAIMED DEPRECIATION IN THE PAST SINCE THE ENTIRE INCOME FROM BANKING BUSINESS W AS DEDUCTIBLE UNDER SECTION 80P(2) OF THE ACT AND ALSO THERE WAS NO TAX IMPLICATION AND THEREFORE DEPRECIATION WAS NOT CLAIMED TILL AY 2006 - 07. IN THE AUDIT REPORT, A NOTE HAS BEEN MADE BY THE AUDITORS THAT THE AMOUNT OF ADMISSIBLE DEPRECIATION COULD NOT B E WORKED OUT AS RELEVANT DETAILS WERE NOT AVAILABLE AND / OR THAT SUCH RELEVANT DETAILS WERE UNDER COMPILATION. HOWEVER, THE SUPPLEMENTARY DEPRECIATION DETAILS FURNISHED BY THE APPELLANT HAS BEEN GONE THROUGH AND IT APPEARS IN ORDER. THEREFORE, FOLLOWING T HE DECISION OF THE HON'BIE MADRAS HIGH COURT IN THE CASE OF CIT VS SHREE SENHAVALII TEXTILES PVT LTD REPORTED AT 259 ITR 77 WHEREIN IT HAS BEEN HELD THAT SECTION (5) TO SECTION 32 IS PROSPECTIVE AND APPLIES FROM 1/4/2002, THE AO IS HEREBY DIRECTED TO ALLOW DEPRECIATION AT RS.15,85,753/ - AS CLAIMED IN THE SUPPLEMENTARY TAX AUDIT REPORT WHICH HAS BEEN DULY PREPARED BY A TAX AUDITOR. THIS GROUND IS THEREFORE HEREBY ALLOWED. 4. HEARD BOTH THE SIDES. PERUSED THE MATERIAL PLACED BEFORE US. WE FIND NO FALLACY IN THE JUDGMENT OF LEARNED CIT(A) SPECIALLY WHEN HE HAS FOLLOWED A DECISION OF THE HON BLE MADRAS HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. SHREE SENHAVALLI TEXTILES PVT. LTD., 259 ITR 77, WHEREIN IT WAS HELD THAT SUB SECTION (5) TO SECTION 32 IS PROSPECT IVE AND TO BE APPLIED FROM 01.04.2002. BECAUSE OF THIS REASON, THE STAND OF THE ASSESSEE IS THAT IN THE PAST HE HAS NOT CLAIMED THE DEPRECIATION ; APPEARS TO BE CORRECT. MOREOVER, WE HAVE NOT COME ACROSS ANY CONTRARY MATERIAL I TA NO. 2330 /AHD/201 0 ACIT, CIRCLE - 2, BHAVNAGAR VS. SHRI BHAVNAGAR NAGRIK SAHKARI BANK LTD . FOR A.Y. 200 7 - 0 8 - 4 FROM THE SIDE OF THE REVENUE. W E RESULTANTLY AFFIRM THE FINDING OF LEARNED CIT(A) AND DISMISS ALL THESE GROUND S OF THE REVENUE. 5. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. SD/ - SD/ - ( N.S. SAINI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28 / 11 / 20 1 4 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD