DCIT, CIR-10(1), KOLKATA, Kolkata V. Albert David Ltd., Kolkata

ITA 260/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5305 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 10-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY CITSRDR
• Keywords: Depreciation; Business expenditure; Revised return; Set aside
• Section: 143(3); 133A; 32; 148

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 260 / KOL / 20 17 ASSESSMENT YEAR :2013-14 DCIT, CIRCLE-10(1), P-7,CHOWRINGHEE SQUARE, 3 RD FLOOR, KOLKATA-69 V/S . ALBERT DAVID LIST 15, CHITTARANJAN AVENUE, KOLKATA-700072 [ PAN NO.AACCA 3933 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI RABIN CHOUDHURY, ADDL. CIT-SR-DR /BY RESPONDENT SHRI RAJEEVA KUMAR, AR /DATE OF HEARING 30-04-2019 /DATE OF PRONOUNCEMENT 15-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2013-14 A RISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATAS O RDER DATED 06.12.2016 PASSED IN CASE NO.1338/CIT(A)-4/CIRCLE-10(1)/KOL/15 -16, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE RAISES FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL:- 1. WHETHER THE LD. CIT(A) WAS CORRECT IN ALLOWING 30% DEPRECIATION AS CLAIMED BY THE ASSESSEE DESPITE THE FACT THAT THE C LAIM OF THE ASSESSEE THAT IT WAS MANUFACTURING IV FLUID BOTTLES AND DISP OSABLE SYRINGE AND NEEDLES WITH THE HELP OF PLASTICS MOULDS IDENTICAL WITH THE MOULDS USED IN RUBBER & PLASTICS GOODS FACTORIES WAS NOT BLOCKE D BY ANY MATERIALS OR COGENT EXPLANATION? 2. WHETHER THE LEARNED. CIT(A) WAS CORRECT IN HOLDI NG THAT TECHNICALLY SIMILAR MOULDS USED IN RUBBER & PLASTICS GOODS FACT ORIES WERE ALSO ITA NO.260/KOL/2017 A.Y.2013-14 DCIT, CIR-10(1), KOL. VS. ALBERT DA VID LTD. PAGE 2 USED BY THE ASSESSEE COMPANY IN MANUFACTURING I.V. FLUID BOTTLES AND DISPOSABLE SYRINGE AN NEEDLES? 3. WAS THE LD. CIT(A) NOT INCORRECT IN RELYING UPON THE DECISION OF THE KARNATAKA HIGH COURT IN AMCO BATTERIES CASE IN WHIC H THE HON'BLE COURT REFERRED TO DIES AND MOULDS USED IN MANUFACTU RING PLASTICS COVERS FOR BATTERIES OR FOR MANUFACTURING WASHING MACHINE, VACUUM CLEANER, ETC.? 3. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE VERY ISSUE OF DEPRECIATION QUA THE VERY KIND OF ASSETS HAD ARISEN IN PRECEDING AS SESSMENT YEAR 2012-13. THE CIT(A) HAS ADMITTEDLY FOLLOWED HI S EARLIER LOWER APPELLATE FINDINGS IN THE INSTANT CASE. IT TRANSPIRES THAT TH E REVENUE HAD PREFERRED ITA NO.1305/KOL/201 BEFORE THIS TRIBUNAL TO THE CO-ORDI NATE BENCHS ORDER DATED 12.01.2018 HAS RESTORED BACK THE SAME TO ASSESSING OFFICER AS FOLLOWS:- 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PHARMACEUTICAL PROD UCTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS ORIGINALLY FILED B Y IT ON 29.09.2012 DECLARING A TOTAL INCOME OF RS. 11,54,94,310/-. THEREAFTER A REVISED RETURN WAS FILED BY THE ASSESSEE ON 26.03.2013 DECLARING A TOTAL INCOME OF RS. 11,86 ,54,770/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 23.02.2015, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO. AT RS. 12,71 ,94,860/- AFTER MAKING CERTAIN ADDITIONS. THEREAFTER A SURVEY UNDER SECTION 133A W AS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 16.07.2015. ON THE BASIS OF THE ADVERSE FINDINGS OF THE SURVEY, THE ASSESSEE COMPANY AGREED TO OFFER ADDITIONAL INCOME OF RS.1,43,62,640/- FOR THE YEAR UNDER CONSIDERATION BY WAY OF WITHDRAWING SOME EXPE NSES WHICH WERE NOT ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 37(1). THE AS SESSMENT, THEREFORE, WAS REOPENED BY THE AO. AND IN RESPONSE TO THE NOTICE I SSUED BY HIM UNDER SECTION 148 ON 24.08.2015, THE RETURN OF INCOME WAS FILED BY TH E ASSESSEE DECLARING ADDITIONAL INCOME OF RS. 1,43,62,640/-. DURING THE COURSE OF T HE RE-ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO. THAT THE ASSESSEE .HAS CLAIM ED DEPRECIATION OF RS. 1,70,68,691/- AT HIGHER RATE OF 300/0 ON MOULDS. SI NCE DEPRECIATION AT HIGHER RATE OF 30% WAS ALLOWABLE ON THE MOULDS WHICH ARE USED IN R UBBER AND PLASTIC GOODS FACTORIES, THE ASSESSEE COMPANY WAS CALLED UPON BY THE AO TO OFFER ITS EXPLANATION IN THE MATTER. IN REPLY, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE COMPANY THAT THE MOULDS WERE USED FOR MANUFACTURING PLASTIC GOODS ON LY I.E. I.V. FLUIDS IN PLASTIC BOTTLE AND DISPOSABLE SYRINGE AND NEEDLES. THIS EXPLANATIO N OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. IN THE ABSENCE OF ANY DOCUMENTA RY EVIDENCE PRODUCED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE THE SAME. HE A CCORDINGLY RESTRICTED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON MOULDS AT 15% W HICH RESULTED IN DISALLOWANCE OF RS. 85,34,346/-. 3. THE DISALLOWANCE OF RS.85,34,346/- MADE BY THE A O ON ACCOUNT OF ITS CLAIM FOR DEPRECIATION ON MOULDS WAS CHALLENGED BY THE ASSESS EE IN THE APPEAL FILED BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSION S MADE BY THE ASSESSEE, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE A.D. FO R THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO 3.2 OF HIS IMPUGNED ORDER: 'L HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT IN THE BACKDROP OF THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE VARIOUS CITATIONS AS ITA NO.260/KOL/2017 A.Y.2013-14 DCIT, CIR-10(1), KOL. VS. ALBERT DA VID LTD. PAGE 3 REFERRED TO BY THE AR IN THE MATTER. ON A CAREFUL P ERUSAL OF THE ASSESSMENT ORDER AT PARA 2.2. I FIND THAT THE AO HAS STRINGENT LY APPLIED THE RATE OF DEPRECIATION APPLICABLE TO THE BLOCK OF ASSETS PERT AINING TO PLANT & MACHINERY @ 15% IN RESPECT OF THE MOULDS USED BY THE APPELLAN T IN MANUFACTURING PLASTIC PRODUCTS AS CONTENDED WITHOUT ANY COUNTERVA ILING FINDING WHATSOEVER WITH COGENT MATERIAL AND DISCUSSION. I FURTHER FIND THAT THE AO HAS ALSO COMMENTED THAT 30% OF DEPRECIATION WAS ADMISSIBLE T O MOULDS WHICH WERE USED IN RUBBER AND PLASTIC GOODS FACTORIES AND THAT THERE WAS NO DISPUTE REGARDING THE USE OF MOULDS BY THE APPELLANT IN MAN UFACTURING PLASTIC PRODUCTS AS DISCUSSED SUPRA. IN VIEW OF THIS AND AS DELIVERED BY THE VARIOUS FORUMS, ONCE MOULDS ARE USED FOR MANUFACTURE OF RUB BER AND PLASTIC GOODS, THE APPELLANT WOULD BE ELIGIBLE FOR DEDUCTION AT HI GHER RATE OF DEPRECIATION U/S 32 OF THE ACT. A MERE CAVALIER DISALLOWANCE MADE BY THE A.O. IN THE MATTER WILL NOT HOLD GOOD UNLESS THE A.O. HAS BROUGHT ON R ECORD ANY OF THE ATTENDANT MATERIALS TO PROVE THAT THE APPELLANT WAS NOT ENTIT LED TO THE DEPRECIATION AS CLAIMED ON ACCOUNT OF MOULDS USED FOR THE MANUFACTU RE OF PLASTIC PRODUCTS AS ENVISAGED IN THE RELEVANT, STATUTES AND RULES. THE RELEVANT JUDICIAL CITATIONS WOULD VINDICATE THE STAND OF THE APPELLANT AS FOLLO WS: BPL REFRIGERATOR LTD. VS ACLT (2004) 8S TTJ 006 6, LTAT (BANGALORE BENCH) KINETIC HONDA MOTOR LTD. VS JCLT (2001) 72 TTJ 72 (PUNE LTAT) CLT VS AMCO BATTERIES LTD. (1993) 203 ITR 0614 (KARNATAKA HC) BPL SANYO UTILITIES & APPLIANCES VS ACIT (ITAT N OS. 88 & 89/BANG/1998) IN VIEW OF THE FOREGOING AND ALSO WITH SPECIAL REFE RENCE TO THE JUDICIAL PRECEDENCE ON THE APPOSITE MATTER AS DEPICTED ABOVE , I FIND THAT THE APPELLANT IS ULTIMATELY ELIGIBLE TO CLAIM DEPRECIAT ION ON MOULDS FOR THE MANUFACTURE OF PLASTIC PRODUCTS SUPRA AT THE SPECIF IED RATE OF 30%. CONSEQUENTLY, THE AO IS THEREFORE DIRECTED TO ALLOW THE CLAIM OF IMPUGNED DEPRECIATION ON MOULDS @ 30 AND NOT @ 15%. THIS GRO UND IS ALLOWED ' 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY CONTENDED BY THE LEARNED DR, THE ONUS TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR DEPRECIATION AT A HIGHER RATE ON MOULDS BY FILING THE RELEVANT DOCUMENTARY EVIDENCE WAS ON THE ASSESS EE AND THE SAME WAS NOT SATISFACTORILY DISCHARGED BY THE ASSESSEE DURING TH E COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO IN SPITE OF SUFFICIENT OP PORTUNITY AFFORDED IN THIS REGARD. AS FURTHER CONTENDED BY HIM, THIS VITAL ASPECT WAS COM PLETELY OVERLOOKED BY THE LD. CITCA) AND THE DISALLOWANCE MADE BY THE AO WAS DELE TED BY HIM BY OBSERVING THAT THERE WAS NO DISPUTE REGARDING USE OF MOULDS BY THE ASSESSEE COMPANY IN MANUFACTURING PLASTIC PRODUCTS. HE WAS ALSO WRONG I N PUTTING THE ONUS ON THE AO. BY OBSERVING THAT THE AO SHOULD HAVE BROUGHT SOME ATTE NDANT MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE COMPANY WAS NOT ENTITLED TO CLAIM HIGHER DEPRECIATION ON MOULDS. EVEN THE LEARNED COUNSEL FOR THE ASSESSEE H AS NOT BEEN ABLE TO DISPUTE THIS POSITION CLEARLY EVIDENT FROM THE IMPUGNED ORDER OF THE LD. CIT(A). HE HAS ONLY CONTENDED THAT THE ASSESSEE COMPANY HAS SUFFICIENT DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTIATE ITS CLAIM THAT THE MOULDS WERE USED FOR MANUFACTURING OF PLASTIC GOODS AND URGE THAT ONE MORE OPPORTUNITY MA Y BE GIVEN TO THE ASSESSEE TO SUBSTANTIATE ITS CASE BY PRODUCING THE SAID EVIDENC E FOR THE VERIFICATION OF THE ASSESSING OFFICER. SINCE THE LEARNED DR HAS NOT RAI SED ANY OBJECTION IN THIS REGARD, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) G IVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF TH E AO. WITH THE DIRECTION TO DECIDE THIS ISSUE AFRESH AFTER GIVING ONE MORE OPPORTUNITY TO T HE ASSESSEE TO PRODUCE THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLA IM FOR HIGHER DEPRECIATION ON MOULDS. ITA NO.260/KOL/2017 A.Y.2013-14 DCIT, CIR-10(1), KOL. VS. ALBERT DA VID LTD. PAGE 4 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSEE FAILS TO PIN-POINT ANY DISTINCTION IN THE FACTS INVOLVED IN THESE TWO ASSESSMENT YEAR(S). WE THEREFORE ADOPT JUDICIAL CONSISTENCY TO RESTORE THE INSTANT LIS BACK TO THE ASSESSING OFFICER FOR HIS SIMULTANEOUS CONSEQUENTIAL ADJUDICATION. 4. THIS REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT 15/05/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 15 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-CIT, CIR-10(1), P-7, CHOWRINGHEE SQ. 3 RD FL, KOLKAKTA-69 2. /RESPONDENT-ALBERT DAVID LTD., 15, CHITTARANJAN AVE NUE, KOLKATA-72 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 3,