DOW CHEMICAL INTERNATIONAL P.LTD, MUMBAI V. ADDL CIT RG 10(2), MUMBAI

ITA 2403/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100774 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . , , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM ./ I .T.A. NO. 2403/MUM/2013 ( / ASSESSMENT YEAR: 2008 - 09 ) DOW CHEMICAL INTERNATIONAL PRIVATE LIMITED 1 ST FLOOR, BLOCK B, GODREJ IT PARK, 02 GODREJ BUSINESS DISTRICT, PIROJESHANAGAR, VIKHROLI (W), MUMBAI - 400 079 / VS. ADDL. CIT, RANGE 10 (2), AAYAKAR BHAVAN, MUMBAI ./ ./ PAN/GIR NO. AAACD 4467 B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. P. LOHIA / RESPONDENT BY : SHRI SANJAY PUNGLIA / DATE OF HEARING : 19.05.2015 / DATE OF PRONOUNCEMENT : 19 .0 8 .2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 21 , MUMBAI (CIT(A) FOR SHORT) DATED 11.12.2012 , PARTLY ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 VIDE ORDER DATED 26.12.2011 . 2 ITA NO. 2403/MUM/2013 (A.Y. 2008 - 09) DOW CHEMICAL INTERNATIONAL PRIVATE LIMITED VS. ADDL. CIT 2. THE ONLY IS SUE ARISING IN THE INSTANT APPEAL, AGITATED PER ITS SOLE GROUND NO. 1, IS THE DISALLOWANCE OF THE DEDUCTION CLAIMED U/S.37(1) OF THE ACT QUA LEASE PAYMENTS OF COMPUTER DURING THE YEAR TO IBM IN THE SUM OF ` .15,64,817/ - AS CAPITAL EXPENDITURE. 3. AT THE V ERY OUTSET, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL , THAT THE SAME ISSUE HAD ARISEN IN THE ASSESSEES CASE FOR THE A.Y. 2006 - 07, WHEREAT THE T RIBUNAL WAS PL EAS ED TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSES SING OFFICER ( A.O. ) FOR FRESH DETERMINATION, T AKING US THROUGH THE RELEVANT PART OF THE SAID ORDER (IN ITA NO. 7460/MUM/2010 DATED 10.03.2015/PB PGS. 3 & 4/COPY ON RECORD). THE LD. DEPARTMENTAL REPRESENTATIVE (DR) COULD NOT BRING ANY DISTINGUISHING FEATURE IN THE ASSESSMENT FOR THE INSTANT YEAR, I.E., VIS - A - VI S THAT FOR THE A.Y. 2006 - 07, TO OUR NOTICE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. WE FI ND THAT THE A.O., RELYING ON THE DECISION IN THE CASE OF ASEA BROWN BOVERI LTD. VS . INDUSTRIAL FINANCE CORPORATION OF INDIA [2006] 154 TAXMANN 512 (SC) , WHEREAT THE A PEX C OURT HAS HELD THAT IN CASE OF A FINANCIAL LEASE IT IS THE LESSEE, AS THE ASSESSEE IN THE INSTANT CASE , WHO IS THE OWNER OF THE ASSET FOR ALL PRACTICAL PURPOSES , ENTITL ED TO DEPRECIATION, AND NOT THE LESS O R, IBM IN THE INSTANT CASE. THAT IS, HE HAS PROCEEDED ON THE BASIS THAT THE LEASE UNDER REFE RENCE IS A FINANCIAL LEASE, IN AGREEMENT WITH THE TREATMENT ACCORDED BY THE ASSESSEE TO THE RELEVANT LEASE TRANSACTION IN ITS B OOKS OF ACCOUNT. SO, HOWEVER, TREATMENT IN THE BOOKS , THOUGH RELEVANT , IS NOT CONCLUSIVE. THE TRIBUNAL FOR A.Y. 2006 - 07 HAS GIVEN A CLEAR FINDING THAT THE NATURE OF THE LEASE NEEDS TO BE EXAMINED IN - AS - MUCH AS THERE IS NO SPECIFIC FINDING QUA THE SAME, AND WHICH POSITION OBTAINS FOR THE CURRENT YEAR AS WELL. ACCORDINGLY , AS WELL AS FOR THE SAKE OF CONSISTENCY , WE ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO DETERMINE THE ISSUE AFRESH, AS IN THE CASE FOR A.Y. 2006 - 3 ITA NO. 2403/MUM/2013 (A.Y. 2008 - 09) DOW CHEMICAL INTERNATIONAL PRIVATE LIMITED VS. ADDL. CIT 07, IN ACCORDANCE WITH LAW , ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO PRESENT ITS CASE BEFORE HIM . WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 19 , 201 5 SD/ - SD/ - (D. MANMOHAN) (SANJAY ARORA) / V ICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 . 0 8 .201 5 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI