D.C.I.T.-4(1), Agra V. Smt. Charu Agrawal, Agra

ITA 236/AGR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50460 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: RAKESH JAIN
• Keywords: Depreciation
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.236/AGR/2010 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME TAX 4(1), VS. SMT. CHARU AGARWAL, AGRA. PROP. M/S RAMWATI SHEETGRAH, G-1, KAMLA NAAR, AGRA. (PAN: AEOPA 4142 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI RAKESH JAIN, ADVOCATE DATE OF HEARING : 23.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 ORDER PER BENCH : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A)-II, AGRA DATED 18.03.2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.7,50,000/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF CAPITAL SUBSIDY RECEIVED BY THE ASSESSEE HOLDING TH AT THE PROVISIONS OF SECTION 43(1) OF THE I.T. ACT DOES NOT APPLY TO THI S CASE IGNORING THE FOLLOWING VITAL ASPECT OF THE CASE : (A) THE ASSESSEE HAD RECEIVED THE CAPITAL SUBSIDY; THEREFORE, THE SAME SHOULD HAVE BEEN DEDUCTED FROM THE COST OF THE FIXED ASSETS OF THE PROJECT. ITA NO.236/AGR/2010 A.Y. 2007-08 2 (B) THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT ON MERCANTILE SYSTEM OF ACCOUNTING WHERE IN THE RIGHT TO RECEIVE IS ACCRUED ON THE DAY, WHEN THE CAPITAL SUBSIDY IS SANCTIONED. (C) AS PER EXPLANATION 10 TO THE SECTION 43(1) OF T HE I.T. ACT THIS CAPITAL SUBSIDY IS ALSO REQUIRED TO BE REDUCED FROM THE COST OF THE FIXED ASSETS. 2. THE ORDER OF THE LEARNED CIT(A) DESERVES TO BE C ANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THAT THE APPELLANT CRAVE LEAVE TO ADD OR ALTER A NY OR MORE GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AT THE TIME OF HEARING OF APPEAL. 3. THE BRIEF FACTS IN GROUND NO.1 OF THE REVENUE AR E THAT THE ASSESSEE HAS RECEIVED CAPITAL SUBSIDY OF RS.50,00,000/- DURING T HE YEAR. THE A.O. OBSERVED THAT THE CAPITAL SUBSIDY HAS BEEN KEPT IN THE BANK AND T HE ASSESSEE HAS TAKEN LOAN AGAINST THIS AND THE ASSESSEE IS ENJOYING THE CREDI T. IT IS LOGICAL TO REDUCE IT FROM THE VALUE OF TOTAL ASSETS ON 01.04.2006 AND AS A RE SULT THE DEPRECIATION CHARGED WILL BE ACCORDINGLY REDUCED FROM RS.24,62,061/- TO RS.17 ,12,061. THE NET EFFECT OF THIS WOULD RESULT IN ADDITION TO NET PROFIT OF RS.7,50,0 00/-. THE A.O. ACCORDINGLY MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. THE LD . CIT(A) FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. P.J . CHEMICALS (1994) 210 ITR 830 OBSERVED THAT THE PROVISIONS OF SECTION 43(1) W ILL NOT APPLY IN THIS CASE AND DELETED THE ADDITION MADE BY THE A.O. ITA NO.236/AGR/2010 A.Y. 2007-08 3 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE RA TIO OF JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF P.J. CHEMICALS (SUPRA) IS APPLICABLE IN THE FACTS OF THE PRESENT CASE AND THEREFORE, PROVISIONS OF 43(1) WIL L NOT BE APPLICABLE AND THE A.O. IS NOT JUSTIFIED TO REDUCE THE CAPITAL SUBSIDY AND HENCE THE DEPRECIATION AND NO ADDITION WAS CALLED FOR. WE FIND NO ERROR IN THE O RDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. THUS GROUND NO.1 OF THE REVENUE IS DISMISSED. 5. AS REGARDS GROUND NOS.2 & 3 OF THE REVENUE, SINC E THE SAME ARE GENERAL IN NATURE, THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 6. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.2 36/AGR/2010 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 25 TH NOVEMBER, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY