ITO, Ward - 12(4), Kolkata, Kolkata V. M/S. V.T. Industries (P) Ltd., Kolkata

ITA 252/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2465 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 30-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2010
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KR KOLHE
• Assessee Lawyers: R SALARPURIA
• Keywords: Depreciation; Additional evidence; Set aside

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA ( (( ( ) )) ) . .. . . . . . , , , , !' !' !' !', ,, , #$ #$ #$ #$ . . . . . . . . %& %& %& %&, , , , ' !' ' !' ' !' ' !' [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI K. K. GUPTA, AM] $( $( $( $( / ITA NO. 252 /KOL/2010 )* +, )* +, )* +, )* +,/ // / ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, WD-12(4), KOLKATA. -VS- M/S. V. T. INDUSTRIES (P) LTD., (PA NO. AABCV 1164 A) (./ / APPELLANT ) (0.// RESPONDENT ) FOR THE APPELLANT : / SRI PIYUSH KR. KOLHE FOR THE RESPONDENT : / SHRI R. SALARPURIA !1 / ORDER PER D. K. TYAGI, JM ( . . . . . . . . , , , , !' ) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 18.11.2009 FOR THE ASSESSMEN T YEAR 2004-05 IN DELETING THE ADDITION OF RS.4,22,442/- ON ACCOUNT OF FOREIGN EXC HANGE FLUCTUATION LOSS AND ALSO ALLOWING FULL DEPRECIATION ON THE FURNITURE AND FIX TURE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE DEBITED RS.4,22,442/- TOWARDS LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. T HE AO DISALLOWED SUCH LOSS ON THE GROUND THAT THE ASSESSEE DELIBERATELY MADE LATE PAY MENT TO INCUR LOSS THOUGH IT HAD SUFFICIENT BANK BALANCES AND BORROWED FUNDS. THE A O ALSO DISALLOWED THE DEPRECIATION ON A WAREHOUSE ON THE GROUND THAT THE ASSESSEE FAIL ED TO EXPLAIN THE USE AND PURPOSE OF SUCH A WAREHOUSE MENTIONED AS A GUEST HOUSE TYPED R ESIDENTIAL ACCOMMODATION. ON APPEAL, THE LD. CIT(A) DELETED BOTH THE ADDITIONS. AGGRIEVED BY THE SAID ORDER, NOW THE REVENUE IS IN APPEAL BEFORE US. 3. IN RESPECT OF GROUND NO. 1 I.E. DELETION OF DIS ALLOWANCE ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION LOSS, AT THE TIME OF HEARING B EFORE US, THE LD. DR RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE AO HAS RIGHT LY DISALLOWED SUCH LOSS ON THE GROUND THAT THE ASSESSEE DELIBERATELY MADE LATE PAY MENT TO INCUR LOSS THOUGH IT HAD SUFFICIENT BANK BALANCES AND BORROWED FUNDS. HE, TH EREFORE, PRAYED BEFORE THE BENCH TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE T HAT OF THE AO. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFORE THE LOWER AUTHORITI ES RELIED ON THE ORDER OF THE LD. CIT(A) AND URGED BEFORE THE BENCH TO CONFIRM HIS AC TION 2 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) HAD DELETED THE ADDITION B Y OBSERVING AS UNDER : I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE AO HAS NOT DISPUTED THE FACT THAT THE APPELLANT INCURRED THE EXPENDITUR E ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION LOSS. THE LOSS WAS INCURRED IN THE COU RSE OF THE BUSINESS. IN MY VIEW THE OBSERVATIONS MADE BY THE AO WITH REGARD TO AVAILABI LITY OF SUFFICIENT FUNDS AND DELIBERATE ACT OF DELAYED PAYMENTS ARE NOT RATIONA LE. I AGREE WITH THE APPELLANTS ARGUMENT THAT NO BUSINESSMAN WOULD LIKE TO INCUR A VOIDABLE EXPENDITURE. THE EVENTS OCCUR IN THE REGULAR COURSE OF BUSINESS. FOREIGN E XCHANGE LOSS/GAIN IS A USUAL OCCURRENCE. A BUSINESSMAN CANNOT FORESEE A GAIN/LO SS WELL IN ADVANCE TO INCUR EXPENDITURE/PAYMENTS. IT DEPENDS UPON A NUMBER OF FACTORS LIKE AVAILABILITY OF FUNDS, PRIORITY OF TRANSACTIONS ETC. THEREFORE, I AM OF T HE OPINION THAT THE APPELLANT HAS NOT DELIBERATELY ACTED TO MAKE DELAYED PAYMENTS TO INCU R LOSS. I HAVE ALSO PERUSED THE CASE LAWS CITED BY THE APPELLANT WHICH ARE IN SUPPORT OF ITS ARGUMENTS. THEREFORE, I DIRECT THE AO TO DELETE THE ADDITION MADE ON THIS COUNT. AT THE TIME OF HEARING BEFORE US, THE LD. DR DID NO T CONTROVERT THE ABOVE FINDING OF THE LD. CIT(A) BY PRODUCING ANY COGENT MATERIAL/EVIDENC E. IN THIS VIEW OF THE MATTER AND IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD BY THE REVENUE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF APPEAL OF THE REVENUE IS DI SMISSED. 6. GROUND NO. 2 RELATES TO DELETION OF DISALLOWANCE OF RS.3,80,490/- ON ACCOUNT OF DEPRECIATION. AT THE TIME OF HEARING BEFORE US, TH E LD. DR RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT SINCE THE ASSESSEE FAILED TO EXP LAIN THE USE AND PURPOSE OF THE WAREHOUSE BUILT FOR THE ASSESSEES BUSINESS AND ALS O FAILED TO EXPLAIN AS TO HOW THE SAID WAREHOUSE WAS FULLY AND EXCLUSIVELY BE TERMED AS US ED THROUGHOUT THE YEAR FOR THE PURPOSE OF ASSESSEES BUSINESS, THE AO HAS RIGHTLY DISALLOWED THE DEPRECIATION OF RS.3,80,490/-. HE, THEREFORE, CONCLUDED THAT THE O RDER OF THE AO MAY BE RESTORED. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFORE THE LOWER AUTHORITI ES RELIED ON THE ORDER OF THE LD. CIT(A) AND PRAYED BEFORE THE BENCH TO CONFIRM THE S AME. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) DELETED THE SAI D ADDITION BY RELYING ON THE ORDER OF HIS PREDECESSOR FOR THE AY 2003-04 WHERE THE SIMILA R DISALLOWANCE MADE WAS DELETED. THE RELEVANT EXTRACT OF THE SAID ORDER WAS ALSO REP RODUCED BY HIM IN HIS IMPUGNED ORDER. WE FURTHER FIND THAT THE SAID ORDER OF THE L D. CIT(A) FOR AY 2003-04 HAS BEEN CONFIRMED BY THE ITAT IN ASSESSEES OWN CASE VIDE I TA NO. 540/K/2008 FOR AY 2003- 04 DATED 24.10.2008, WHEREIN THE ITAT HAS HELD AS U NDER : 10. AT THE OUTSET, WE ARE OF THE CONSIDERED VIEW T HAT THE GROUND TAKEN BY THE DEPARTMENT THAT THE ID. CIT(A) HAD ADMITTED ADDITIO NAL EVIDENCES IN VIOLATION OF RULE, 3 46A FOR CONSIDERING THE GUEST HOUSE AS AN EXCLUSIVE WAREHOUSE, HAS NO MERIT. DURING THE COURSE OF HEARING, THE LD. DR. SUBMITTED THAT T HE LD. CIT(A) CONSIDERED THAT THE SAID. GUEST HOUSE IS A TRANSIT ACCOMMODATION AND AS SUCH ADDITIONAL EVIDENCES HAVE BEEN ADMITTED, ARC NOT SUPPORTED BY ANY FACT OR EVI DENCE. FURTHER WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE O RDER OF THE LD. CIT(A) TO DELETE THE DISALLOWANCE OF RS.3,12,043/- MADE BY THE A.O. ON A CCOUNT OF THE DEPRECIATION CLAIMED BY THE ASSESSE TOWARDS THE COST OF FURNITURE AND FI XTURES OF RS.25,21,804/-. THE DEPARTMENT HAS NOT DISPUTED THE FACT THAT THE ASSES SEE HAS SPENT THE SAID AMOUNT. TOWARDS FURNITURE AND FIXTURES IN THE SAID GUEST HO USE/ TRANSIT ACCOMMODATION. THE DEPARTMENT HAS NOT BROUGHT ANY EVIDENCE ON RECORD T O CONTROVERT THE FACTS THAT THE SAID. ACCOMMODATION WAS USED BY THE ASSESSEES DIRE CTORS/OFFICIALS/FOREIGN SERVICE PERSONNEL AS AND WHEN THEY WERE TO VISIT TO NORTHER N COALFIELDS. THE DEPARTMENT HAS ALSO NOT DISPUTED THE FACT THAT THERE WAS NO OTHER PROPER ACCOMMODATION NEAR BY THE WAREHOUSE OF THE ASSESSEE. WE OBSERVE THAT THE A.0. DISALLOWED THE DEPRECIATION MERELY BECAUSE HE WAS OF THE VIEW THAT THE AMOUNT SPENT WA S USED FOR CONSTRUCTING A LUXURIOUS GUEST HOUSE BY THE ASSESSEE. WE ARE OF THE CONSIDER ED VIEW THAT THIS COULD NOT BE A GROUND TO DISPUTE THE CLAIM OF THE ASSESSEE. THEREF ORE, WE UPHOLD THE ORDER OF THE LD. CIT(A) IN REJECTING THE GROUND NO. 1 READ WITH GROU ND NO. 4 OF THE APPEAL TAKEN BY THE DEPARTMENT. IN THIS VIEW OF THE MATTER, AND ALSO IN ABSENCE OF ANY CONTROVERTING MATERIAL BROUGHT ON RECORD BY THE REVENUE AT THE TIME OF HEARING BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.7.10 SD/- SD/- . . . . . . . . %& %& %& %&, , , , ' !' . . . . . . . . , , , , !' (K. K. GUPTA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (' ' ' ') )) ) DATED :16TH JULY, 2010 23 )45 )6 JD.(SR.P.S.) !1 7 0))8 98+:- COPY OF THE ORDER FORWARDED TO: 1. ./ /APPELLANT - ITO, WARD-12(4), KOLKATA 2 0./ / M/S. V. T. INDUSTRIES (P) LTD., 62A, HAZRA ROAD, KOLKATA-12. 3. )1/ THE CIT, KOLKATA 4. )1 ()/ THE CIT(A), KOLKATA 5. A) 0) / DR, KOLKATA BENCHES, KOLKATA 8 0)/ TRUE COPY , !1B/ BY ORDER , C $5 / DEPUTY REGISTRAR .