ITO, Coimbatore V. V.Sabithamani, Coimbatore

ITA 2492/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86244 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: V JAGADISAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.2492/MDS/2014 AND C.O.NO.129/MDS/2014. ( ! / ASSESSMENT YEAR : 2010-2011) THE INCOME TAX OFFICER, WARD II(4), COIMBATORE 641 018 . ( /APPELLANT) VS. SMT. V. SABITHAMANI, 358, C/O. PIONEER CORPORATION, METTUPALAYAM ROAD, COIMBATORE 641 043 . [PAN :AJXPS 7311Q] ( /RESPONDENT/CROSS OBJECTOR) ' # $ / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. %&' # $ / RESPONDENT BY : SHRI. V. JAGADISAN, C.A., ' ( # )* /DATE OF HEARING : 21 .01.2015. +,! # )* /DATE OF PRONOUNCEMENT : 21.01.2015. / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 2 2.7.2014 PASSED BY LD CIT(APPEALS)-I, COIMBATORE AND THEY RELATE TO TH E ASSESSMENT YEAR I.T.A.NO.2492 /MDS/2014 AND C.O.NO.129/MDS/2014. . :- 2 -: 2010-11. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(APPEALS) IN HOLDING THAT THE PROVISIONS OF EXPLANATION 3 TO SEC. 43(1) IS NOT APPLICABLE TO THE SECOND HAND WIND MILL PURCHASED B Y THE ASSESSEE. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT (APPEALS) IN DETERMINING THE VALUE OF SECOND HAND MACHINERY AT ` 1.50 CRORES IN THE PLACE OF COST OF PURCHASE OF ` 2.36 CRORES. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE THAT THE ASSESSEE HAS PURCHASED A SECOND HAND WIND MILL ON 23.3.2009 FROM M/S SOUNDARARAJA MILLS LIMITED FOR A VALUE OF RS.2.36 C RORES. THE ASSESSEE CLAIMED DEPRECIATION OF ` 1.12 CRORES ON THE ABOVE SAID VALUE. THE ASSESSING OFFICER NOTICED THAT THE SELLER HAD ALREA DY CLAIMED ALMOST FULL DEPRECIATION ON THE ABOVE SAID WIND MILL. HENCE TH E ASSESSING OFFICER, BY INVOKING THE PROVISIONS OF EXPLANATION 3 TO SEC. 43(1) DETERMINED THE COST OF WIND MILL AT ` 43,28,388/-. THE ASSESSING OFFICER COMPUTED THE DEPRECIATION ADMISSIBLE ON THE ABOVE S AID AMOUNT AT ` 17,31,355 FOR THE IMMEDIATELY PRECEDING YEAR, I.E., FOR AY 2009-10 AND THUS ARRIVED AT THE OPENING WDV FOR THE YEAR UN DER CONSIDERATION AT ` 25,97,033/-. ACCORDINGLY HE COMPUTED THE DEPRECIAT ION ADMISSIBLE FOR THE YEAR UNDER CONSIDERATION AT ` 20,77,626/- AND ACCORDINGLY DISALLOWED AS SUM OF ` 91,34,670/- AS EXCESS CLAIM OF DEPRECIATION. I.T.A.NO.2492 /MDS/2014 AND C.O.NO.129/MDS/2014. . :- 3 -: 3. IN THE APPELLATE PROCEEDINGS, THE LD CIT( APPEALS) HELD THAT THE PROVISIONS OF EXPLANATION 3 TO SEC. 43(1) CANNOT BE APPLIED, SINCE IT CANNOT BE SAID THAT THE MOTIVE OF THE ASSESSEE WAS TO REDUCE THE TAX LIABILITY BY CLAIMING DEPRECIATION ON ENHANCED COST . HOWEVER, THE LD CIT(APPEALS) DETERMINED THE COST OF WIND MILL AT ` 1.50 CRORES AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ADOPT THE COST OF WIND MILL AT ` 1.50 CRORES. 4. SINCE THE DISPUTE BEFORE US REVOLVES AROU ND THE APPLICABILITY OR OTHERWISE OF EXPLANATION 3 TO SEC. 43(1) OF THE ACT , WE EXTRACT THE SAID PROVISIONS, FOR THE SAKE OF CONVENIENCE:- EXPLANATION 3:- WHERE, BEFORE THE DATE OF ACQUISI TION BY THE ASSESSEE, THE ASSETS WERE AT ANY TIME USED BY ANY O THER PERSON FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION AND THE ASSESSING OFFICER IS SATISFIED THAT THE MAIN PURPOSE OF THE T RANSFER OF SUCH ASSETS, DIRECTLY OR INDIRECTLY TO THE ASSESSEE, WAS THE REDUCTION OF A LIABILITY TO INCOME TAX (BY CLAIMING DEPRECIAT ION WITH REFERENCE TO THE ENHANCED COST), THE ACTUAL COST TO THE ASSESSEE SHALL BE SUCH AN AMOUNT AS THE ASSESSING OFFICER MA Y, WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER, DETERM INE HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. A CAREFUL PERUSAL OF THE ABOVE SAID PROVISIONS WOUL D SHOW THAT THE SAME RELATES TO THE DETERMINATION OF ACTUAL COST TO THE ASSESSEE, MEANING THEREBY, THE REQUIREMENT OF DETERMINATION O F ACTUAL COST SHALL ARISE ONLY IN THE YEAR OF PURCHASE OR IN THE YEAR I N WHICH THE DEPRECIATION WAS CLAIMED FOR THE FIRST TIME. I.T.A.NO.2492 /MDS/2014 AND C.O.NO.129/MDS/2014. . :- 4 -: 5. IN THE INSTANT CASE, WE HAVE NOTICED THAT THE ASSESSEE HAD PURCHASED THE WIND MILL ON 23.03.2009 AND SHE HAS A LSO CLAIMED DEPRECIATION THEREON DURING THE ASSESSMENT YEAR 200 9-10. ACCORDINGLY, IT WAS POINTED OUT TO BOTH THE PARTIES THAT THE QUESTION OF DETERMINATION OF ACTUAL COST SHALL ARISE ONLY IN AY 2009-10 AND NOT DURING THE YEAR UNDER CONSIDERATION. ON VERIFICATI ON OF DETAILS, BOTH THE PARTIES SUBMITTED THAT THE ASSESSMENT RELATING TO AY 2009-10 HAD BEEN RE-OPENED BY THE ASSESSING OFFICER AND THE DEP RECIATION CLAIM OF THE ASSESSEE HAS BEEN RESTRICTED. IT WAS FURTHER S UBMITTED THAT THE ASSESSEE HAS PREFERRED APPEAL AGAINST THE SAME AND IT IS PENDING BEFORE LD CIT(APPEALS). UNDER THESE SET OF FACTS, THE LD D.R FAIRLY AGREED THAT THE QUESTION OF DETERMINATION OF ACTUA L COST DURING THE YEAR UNDER CONSIDERATION DOES NOT ARISE AND IN THIS YEAR, THE DEPRECIATION HAS TO BE ALLOWED ON THE WDV OF THE WI ND MILL AS DETERMINED IN AY 2009-10. 6. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE ISSUE CONTESTED BEFORE US IS CONSEQUENTIAL, I.E., IT WOUL D DEPEND UPON THE OUTCOME OF THE IDENTICAL DISALLOWANCE MADE IN AY 20 09-10. FOR THE ABOVE SAID REASON, THE DECISION RENDERED BY LD CIT (APPEALS) IS LIABLE TO BE SET ASIDE. I.T.A.NO.2492 /MDS/2014 AND C.O.NO.129/MDS/2014. . :- 5 -: 7. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CI T(APPEALS) AND RESTORE ALL THE ISSUES TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO RE-WORK THE AMOUNT OF DEPRECIATION ON THE WDV DETERMINED IN AY 2009-10 AFTER THE RECEIPT OF APPEL LATE ORDER OF LD CIT(APPEALS). IF THE ASSESSEE IS AGGRIEVED BY THE SAME, HE MAY PURSUE THE SAME IN ACCORDANCE WITH THE LAW. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED ON THE 21ST DAY OF JANUARY, 2015, AT CHENNAI. SD/- SD/- ( ) (VIKAS AWASTHY) /JUDICIAL MEMBER ( . . ) (B.R. BASKARAN) ' / ACCOUNTANT MEMBER - /DATED:21.01.2015. K.V . # %)/ 0!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 2) ( )/CIT(A) 4. ' 2) /CIT 5. 34 %) 5 /DR 6. 46 7( /GF. I.T.A.NO.2492 /MDS/2014 AND C.O.NO.129/MDS/2014. . :- 6 -: