Premium Farm Fresh Produce Limited, New Delhi V. ITO, New Delhi

ITA 2653/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0219 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : F NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.2653/DEL./2010 (ASSESSMENT YEAR : 2007-08) PREMIUM FARM FRESH PRODUCE LTD., VS. ITO, WARD 1 4(3), LG FLOOR, WORLD TRADE CENTRE, NEW DELHI. BARAKHAMBA LANE, NEW DELHI-110001. (PAN/GIR NO.AADCP8849A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.V.S.R. KRISHNA, C.A. REVENUE BY : SHRI H.K. LAL, SR.DR ORDER PER A.D. JAIN, JM THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08, C ONTENDING THAT THE CIT(A) HAS ERRED IN REJECTING THE CLAIM OF THE ASSESSEE COM PANY REGARDING DEPRECIATION ON FIXED ASSETS. 2. THE ASSESSEE, A PRIVATE LIMITED COMPANY IS ENGAGED IN TH E BUSINESS OF EXPORTING FRUIT AND VEGETABLES TO DIFFERENT COUNTRIES. IT CLAIMS DEPRECIATION OF `154440. THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THIS C LAIM WITH SUPPORTING DOCUMENTARY EVIDENCE. THE ASSESSEE PRODUCED BEFORE THE AO, BILLS OF FIXED ASSETS ACQUIREING DURING THE YEAR, AS FOLLOWS: S.NO. NAME IN THE BILL FURNISHED BY THE ASSESSEE NAME OF THE PARTY FROM WHOM PURCHASED AMOUNT (RS.) 1. M/S BHARAT HOTEL LTD. BEST SYSTEMS (P) LTD. 75,1 00/- 2. M/S BHARAT HOTEL LTD. BEST SYSTEMS (P) LTD. 78,1 04/- 3. M/S BHARAT HOTEL LTD. BEST SYSTEMS (P) LTD. 61,6 72/- 4. M/S BHARAT HOTEL LTD. NORTHERN LEADING EDGE DIGITAL (P) LTD. 20,800/- I.T.A. NO.2653/DEL./2010 (A.Y. : 2007-08) 2 5. M/S BHARAT HOTEL LTD. BEST SYSTEMS (P) LTD. 18,5 21/- 6. M/S INTERCONTINENTAL CEDAR IMPEX (P) LTD. 36,978 /- 7. M/S INTERCONTINENTAL DURIAN INDUSTRIES LTD. 3,94 0/- 8. M/S BHARAT HOTEL LTD. RECLINERS INDIA (P) LTD. 5 ,325/- 3. THE AO OBSERVED THAT THE BILLS OF THE FIXED ASSETS PROD UCED DURING THE YEAR WERE NOT IN THE NAME OF THE ASSESSEE, BUT IN THE NAMES OF SOM E OTHER PARTIES, I.E., M/S BHARAT HOTELS LTD. AND M/S INTERCONTINENTAL, SIST ER CONCERNS OF THE ASSESSEE AND THE ASSETS WERE NOT OWNED BY THE ASSESSEE, DUE TO WHICH DEPRECIATION OF `93,188 WAS NOT ALLOWABLE. 4. THE CIT(A) CONFIRMED THE AOS ACTION. THE CORRECT DI SALLOWANCE, HOWEVER, CAME TO `79,665 AND NOT `93,188. THIS WAS CORRECT AN D THE DISALLOWANCE OF DEPRECIATION WAS RESTRICTED TO `79,665. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 6. THE LD.COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT WHILE WRONGLY CONFIRMING THE DISALLOWANCE OF DEPRECIATION, THE CIT(A) HAS NOT APPRECIATED THAT THE ASSETS WERE NOT OWNED BY THE ASSESSEE COMPANY, SINCE THE PAYMENT HAD BEEN MADE BY THE ASSESSEE COMPANY; THAT THE CIT(A) ALSO FAILED TO APPRECIATE THAT THE ASSETS WERE BEING USED BY THE ASSESSEE COMPANY FOR ITS OWN BUSINESS PURPOSES; AND THAT THE CIT(A) IN NOT TAKING INTO CONSIDERATION THE AFFIDAVIT FILED BY BOTH THE COMPANIES, I.E., M/S BHART HOTELS LTD. AND THE ASSESSEE C OMPANY; THAT THE SISTER CONCERN OF THE ASSESSEE COMPANY HAS NOT CLAIMED THE DEPREC IATION OF THE ASSETS AND THE ASSETS WERE NOT BOOKED IN THEIR NAMES; AND THAT, THEREFORE, THE ASSESSEES APPEAL BE ALLOWED WHILE CANCELING THE ORDERS OF THE AUTHO RITIES BELOW. RELIANCE HAS BEEN PLACED BELOW ON THE CASE LAWS: 1. MYSORE MINERALS LTD. VS. CIT (1999) 239 ITR 775 (SC); 2. CIT VS. BASTI SUGAR MILLS CO. LTD. (2002), 257 ITR 8 8 (DEL.); I.T.A. NO.2653/DEL./2010 (A.Y. : 2007-08) 3 3. CIT & ANOTHER VS. VARANASI AUTO SALES PVT. LTD. (2010) 326 ITR 182 (ALLAHABAD) 7. THE LD.DR, ON THE OTHER HAND, HAS REFUTED THE ARGUMENT REGARDING AFFIDAVITS HAVING BEEN CONSIDERED BY THE CIT(A). IT HAS BEEN POINT ED OUT THAT IN THE IMPUGNED ORDER, THERE IS NO MENTION OF ANY SUCH AFFIDAVIT. 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. PAGES 1-2 OF THE ASSESSEES PAPER BOOK CONTAIN A COPY OF THE AF FIDAVIT STATED TO HAVE BEEN FILED BEFORE THE CIT(A) ON BEHALF OF THE ASSESSEE COMPA NY, STATING THAT THE ASSESSEE COMPANY PURCHASED FIXED ASSETS AS REFLECTED IN THE S AID AFFIDAVIT, THROUGH PURCHASE DEPARTMENT OF ITS SISTER CONCERN, M/S BHARAT HO TELS LTD.; THAT IT WAS DUE TO INADVERTENCE THAT THE NAME OF M/S BHARAT HOTELS LTD., APP EARED ON THE BILLS; THAT IN FACT THE PAYMENT HAD BEEN MADE TO THE SUPPLIERS DIRECTLY BY THE ASSESSEE COMPANY THROUGH ACCOUNT PAYEE CHEQUES; AND THAT THE FULL OWNERSH IP RIGHT, CONTROL AND POSSESSION OF THE FIXED ASSETS WAS WITH THE ASSESSEE COMPAN Y. APB 3-4 IS A COPY OF AFFIDAVIT ON BEHALF OF M/S BHARAT HOTELS LTD. THE POSITION AS EXPLAINED IN THE ASSESSEES AFFIDAVIT (SUPRA) HAS BEEN REITERATED IN THE AF FIDAVIT OF M/S BHARAT HOTELS LTD. IT HAS ALSO BEEN STATED THEREIN THAT NO DEPRECIATION HAS BEEN CLAIMED BY M/S BHARAT HOTELS LTD. ON THE FIXED ASSETS. 9. BOTH THE ABOVE AFFIDAVITS HAVE BEEN CERTIFIED TO HAVE B EEN FILED BEFORE THE CIT(A). 10. THE IMPUGNED ORDER DOES NOT CONTAIN EITHER ANY MENTION OF THE ABOVE AFFIDAVITS, OR ANY FINDING WITH REGARD THERETO. THE OR DER OF THE CIT(A), IT IS SEEN, IS THUS NON-SPEAKING WITH REGARD TO RELEVANT DOCUMENTARY EVI DENCE FILED BEFORE THE CIT(A), THEREBY CAUSING PREJUDICE TO THE ASSESSEE. 11. IN THIS VIEW OF THE MATTER, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FILE OF THE CIT(A) TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW BY PASSING A I.T.A. NO.2653/DEL./2010 (A.Y. : 2007-08) 4 SPEAKING ORDER ON CONSIDERING THE AFORESAID AFFIDAVIT FI LED BY THE ASSESSEE IN THE FIRST APPELLATE PROCEEDINGS. 12. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11.03.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D.JAIN) VICE PRESIDENT JUDICIAL MEMBER DELHI, DATED : 11.3.2011 SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT, 4.CIT(A)-XVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT