The Dy. CIT, Circle-3(1)(2), Ahmedabad V. M/s. Rasna Pvt. Ltd., Ahmedabad

ITA 2475/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8279 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 30-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHAVERI
• Keywords: Depreciation
• Section: 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2475/AHD/2016 (ASSESSMENT YEAR: 2004-05) DCIT, CIRCLE-3(1)(2), AHMEDABAD V/S M/S. RASNA PVT. LTD. RASNA HOUSE, OPP. SEARS TOWER, GULBAI TEKRA, ELLISBRIDGE, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACCR1616C APPELLANT BY : DR. JAYANT JHAVERI, SR. D. R. RESPONDENT BY : SHRI PARAS F. JAIN ( )/ ORDER DATE OF HEARING : 08 -05-201 8 DATE OF PRONOUNCEMENT : 11 -05-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 14.07.2016 PERTAINING TO A.Y. 2004- 05 AND FOLLOWING GROUND HAS BEEN TAKEN:. ITA NO. 2475 /AHD/2016 . A.Y. 2004-0 5 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.86,13,2817- ON ACCOUNT OF DISALLOWANCE OF DEPREC IATION ON NON-COMPETE TERRITORY RIGHTS. 2. IN THIS CASE, THE ASSESSEE HAD CHALLENGED THE REJEC TION OF RECTIFICATION APPLICATION U/S. 154 FOR ALLOWING DEPRECIATION ON N ON COMPETE TERRITORY RIGHTS CONSEQUENT TO APPELLATE ORDERS INCLUDING ORDER OF G UJARAT HIGH COURT. THE A.O. DEALT WITH THIS ISSUE IN THE ORDER U/S.154 PAS SED ON 16/9/2015 AND OBSERVATION OF THE A.O. WERE AS UNDER:- 'VIDE APPLICATION DATED 22/08/2015 BEARING ASK NO.27 8240815008029, ASSESEE HAD REQUESTED THAT IN APPEAL EFFECT FOR CIT(A)'S OR DER DATED 10/10/2006 THE ISSUE OF DEPRECIATION OF RS.86,13,281/- HAD NOT BEEN GIVE N EFFECT TO. FURTHER, NO APPEAL WAS FILED ON THIS ISSUE OF DEPRECIATION BEFORE HON' BLE IT AT. THEREFORE, IT ACCORDING TO ASSESSEE ASSUMES FINALITY AND DEPRECIA TION SHOULD BE ALLOWED IN EFFECT TO CIT(A)'S ORDER. 2. THE CLAIM OF THE ASSESEE HAS BEEN DULY VERIFIED. IT HAS BEEN FOUND THAT THE ISSUE OF DEPRECIATION WAS LEFT GIVEN EFFECT TO UNTI L SCA NO.375 OF 2005 IS DECIDED BY HON'BLE GUJARAT HIGH COURT IN ASSESSEE'S OWN CAS E FOR A. Y. 2002-03. IN THIS ASSESSMENT YEAR I.E. A.Y. 2002-03, THE CASE WAS REO PENED U/S 147 OF THE IT ACT. THE REASON RECORDED FOR REOPENING CONTAINED THE ISS UE OF 'ALLOWABILITY OF DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS'. ON BE ING PROVIDED WITH THE REASON, ASSESSEE FILED AN SCA BEFORE GUJARAT HIGH C OURT AND, THUS, FOR ALL SUBSEQUENT YEARS IN WHICH ADDITION WAS MADE ON THIS GROUND, CIT(A) DIRECTED THIS OFFICE TO DECIDE THE ISSUE IN LIGHT OF THE FINAL DE CISION OF THE HON'BLE HIGH COURT FOR A.Y. 2002-03. THUS, THE EFFECT TO CIT(A) ORDER WAS KEPT IN ABEYANCE UNTIL THE DECISION OF GUJARAT HIGH COURT'S ORDER. ITA NO. 2475 /AHD/2016 . A.Y. 2004-0 5 3 3. ON ARRIVAL OF THE ORDER OF GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION A/O.375 OF 2005 DATED 09/07/2012, IT WAS OBSERVED T HAT THE HON'BLE COURT HAS QUASHED THE PROCEEDINGS U/S 147 OF THE IT ACT BY HO LDING REOPENING OF THE CASE INVALID AND NOTICE U/S 148 NULL AND VOID. HOWEVER, THE HON'BLE HIGH COURT IN ITS ORDER HAD MADE NO OBSERVATION ON THE MERITS OF DISA LLOWANCE OF DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS. THUS, THE DECISION OF THE HON'BLE HIGH COURT DOES NOT CALL INTO QUESTION THE VALIDITY OF THIS DISALLO WANCE. AS SUCH, THE DEPARTMENT IS BOUND BY THIS DECISION ONLY TO THE EXTENT OF AVOIDI NG REOPENING OF CASE U/S 147 AND MAKING AN ADDITION ON THIS GROUND. BUT, FOR ALL THE SUBSEQUENT YEARS THE ADDITION AS MADE VIDE THE ORIGINAL ASSESSMENT ORDER U/S 143(3), WHICH IS NOT IN CONTRAVENTION OF THE COURT'S DECISION. 4. IN VIEW OF THE ABOVE, THE CLAIM OF ALLOWANCE OF DEPRECIATION IS NOT EXPRESSLY ALLOWED BY THE DECISION OF THE GUJARAT HI GH COURT AND HEREBY DENIED. THUS, ASSESSEE'S APPLICATION FOR RECTIFICATION STAN DS RESOLVED AND HEREBY DISPOSED OFF.' 3. AND AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRS T STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMP UGNED ORDER. IN THIS CASE, ITAT HAS DEALT WITH THE ISSUE OF GRANTING OF DEPREC IATION ON NON COMPETE TERRITORY RIGHTS AND THE CHRONOLOGICAL DEVELOPMENT IN THE ORDERS PASSED BY THE A.OS, CIT(A) AS WELL AS TRIBUNAL. THE ITAT AT PARA- 11 HAS CLEARLY REFLECTED UPON THE INACTION OF THE REVENUE AUTHORITIES TO DEA L WITH THE ISSUE OF DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS AND TH US HAS REACHED TO THE CONCLUSION OF UPHOLDING THE ORDER OF THE LD. CIT(A) DATED 18.12.2012 FOR ASSESSMENT YEAR 2006-07 AND DEPARTMENT HAS NOT PREF ERRED ANY APPEAL AGAINST ITA NO. 2475 /AHD/2016 . A.Y. 2004-0 5 4 THE ORDER OF THE LD. CIT(A) FOR ASSESSMENT YEAR 200 3-04 AND ASSESSMENT YEAR 2004-05 AND IT HAS BEEN MENTIONED BY THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS I.E. 2003-04 & 2004-05 THAT THE HONBLE GUJAR AT HIGH COURT HAD ADMITTED THE ASSESSEE APPEAL. FURTHER, IT WAS HELD BY THE LD. CIT(A) FOR THESE YEARS THAT THE MATTER IS SUBJUDICE WITH GUJARAT HIG H COURT. AS THE OUTCOME OF APPEAL WERE AWAITED, THE DEPARTMENT DID NOT FILE AN Y APPEAL BEFORE ITAT AGAINST THE ORDER OF THE CIT(A) FOR THESE TWO YEARS . THE CO-ORDINATE BENCH OF ITAT FOR ASSESSMENT YEAR 2005-06 RELIED UPON THE DE CISION OF DEPARTMENT NOT FILING THE APPEALS FOR ASSESSMENT YEARS 2003-04 & 2 004-05 AND DISMISS THE APPEAL OF REVENUE FOR ASSESSMENT YEAR 2005-06. AND LD. CIT(A) RIGHTLY DECIDED THE MATTER IN FAVOUR OF ASSESSEE IN VIEW OF THE ITAT ORDER FOR ASSESSMENT YEAR 2006-07 AND IN THE SAID ORDER, THE CO-ORDINATE BENCH HAS HELD THAT THE A.O. HAS NEVER GIVEN ANY INDEPENDENT REASONS FOR THE SAID DISALLOWANCE AND SAID MATTER HAD NEVER BEEN DECIDED OR EXAMINED ON MERITS. 5. IN SUPPORT OF ITS CONTENTION, THE LD. A.R. CITED AN ORDER OF CO-ORDINATE BENCH IN ITA NO. 574 & 575/AHD/2013 IN ASSESSEES OWN CAS E TITLED AS ASSISTANT COMMISSIONER OF INCOME TAX VS. RASNA PRIVATE LIMITE D FOR ASSESSMENT YEAR 2005-06 & 2006-07 AND DECIDED THE APPEAL WITH FOLLO WING OBSERVATION: 10. HAVING NOTED THAT IN ALL THE PRECEDING ASSESSME NT YEARS, LEARNED CIT(A) HAD DELETED THE DISALLOWANCE OF DEPRECIATION ON NON-COM PETE TERRITORY RIGHTS SUBJECT TO THE RIDER THAT 'HOWEVER, CONSEQUENTIAL EFFECT WO ULD BE GIVEN ON THE ISSUE, IF REQUIRED, AS PER THE DECISION OF HON'BLE GUJARAT HI GH COURT', HAVING NOTED THAT NO CONSEQUENTIAL EFFECT IS REQUIRED TO BE GIVEN TO THE RELIEF SO GRANTED TO THE ASSESSEE AS THERE ARE NO ADVERSE COMMENTS ON THE ME RITS OF THE CLAIM, AND FOR THE SAKE OF CONSISTENCY, WE CONFIRM THE STAND TAKEN BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. IT IS ALSO IMPORTANT TO BE AR IN MIND THE FACT THAT THE NET IMPACT OF THIS DECISION HAVING BEEN ACCEPTED IS THA T NO REASSESSMENT OR RE- ITA NO. 2475 /AHD/2016 . A.Y. 2004-0 5 5 COMPUTATION CAN BE DONE AT THIS STAGE, SINCE SUCH A N ACTION WILL BE TIME BARRED NOW AND THE PROVISIONS OF SECTION 153(3]., WHICH RE STRICT THIS LIMITATION ON TIME BARRING TO GIVE EFFECT TO FINDING OR DIRECTIONS OF HON'BLE HIGH COURT'S ORDER, WILL NOT COME TO THE RESCUE TO THE ASSESSEE IN THIS CASE SINCE THERE IS NO SUCH 'FINDING OR DIRECTION' ON MERITS, WHICH CAN BE GIVEN EFFECT, IN TERMS OF HON'BLE SUPREME COURT'S JUDGMENT IN THE CASE OF RAJINDER NATH VS CI T [120 ITR 14]. THE RELAXATION UNDER SECTION 153(3), AS HELD BY HON'BLE SUPREME CO URT IN THIS CASE, COMES TO THE RESCUE OF THE REVENUE ONLY IN RESPECT OF SUCH FINDI NGS OR DIRECTIONS AS ARE NECESSARY FOR DISPOSAL OF THE MATTER. THE MATTER HA VING BEEN DECIDED ON THE GROUND OF JURISDICTION ALONE, THERE WAS NO NEED TO DEAL WITH THE MERITS OF THE CASE, AND, AS SUCH, FOLLOWING HON'BLE SUPREME COURT 'S JUDGMENT IN THE CASE OF DELETION OF SIMILAR DISALLOWANCE, IN THE COURSE OF REGULAR SCRUTINY ASSESSMENT PROCEEDINGS, HAS BEEN ACCEPTED BY THE ASSESSING OFF ICER FOR THREE IMMEDIATELY PRECEDING ASSESSMENT YEARS. THAT WILL BE UNSETTLING THE ACCEPTED AND SETTLED POSITION FOR OTHER ASSESSMENT YEARS, AND CONTRARY T O THE DECISION OF THE COORDINATE BENCH IN THE IMMEDIATELY PRECEDING ASSES SMENT YEAR. HOWEVER, AS WE HAVE REACHED THIS DECISION ON SOMEWHAT PECULIAR FAC TS OF THIS CASE, IN WHICH AN INACTION OF THE REVENUE AUTHORITIES HAS PREJUDICED THEIR INTERESTS MORE THAN ANYTHING ELSE, PRESENT DECISION CANNOT BE AN AUTHOR ITY ON THE BROAD LEGAL ISSUES INVOLVED AND MUST REMAIN CONFINED TO THE FACTS OF T HIS CASE. IN VIEW OF THESE DISCUSSIONS, SUBJECT TO THE OBSERVATIONS MADE ABOVE , AND BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSION ARR IVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 11. IN THE RESULT, THE APPEAL FOR THE ASSESSMENT YE AR 2006-07 (I.E. 575/AHD/2013) IS ALSO DISMISSED. TO SUM UP, BOTH THE APPEALS ARE DISMISSED IT WAS SO PRONOUNCED IN THE OPEN COURT IMMEDIATELY UPON CONCL USION OF HEARING. ITA NO. 2475 /AHD/2016 . A.Y. 2004-0 5 6 6. AS CO-ORDINATE BENCH HAS GIVEN DECISION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE SAID CO-ORDINATE BENCH ORDER AND IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED DETAILED AND REASONED ORDER. THEREFORE, WE ARE NOT INCLINE TO EN TERTAIN THE APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 11- 05- 2018 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDI CIAL MEMBER AHMEDABAD: DATED 11/05/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD