DCIT Corporate Circle 2(2), CHENNAI V. Hinduja Foundries Ltd., CHENNAI

ITA 2692/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5255 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Depreciation; Additional depreciation; Earning of tax free income; Question of law; Condonation of delay
• Section: 43B; 14A; 32

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN , ACCOU NTANT MEMBER I . T.A. NO S . 26 90, 2691, 2692 AND 2693 /MDS/201 7 ASSESSMENT YEAR S :20 0 8 - 0 9, 2011 - 12, 2012 - 13 & 2013 - 14 THE DEPUTY COMMISSIONER OF INCOME TAX, C ORPORATE CIRCLE 2 ( 2 ) , ROOM NO. 512, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G. ROAD, CHENNAI 600 0 34 . VS. M/S. HINDUJA FOUNDRIES LTD., [MERGED WITH M/S. ASHOK LEYLAND LTD.] KATHIVAKKAM HIGH ROAD, ENNORE, CHENNAI 600 057. [PAN:A A A CE1078K ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI N. MADHAVAN , ADDL. CIT / RESPONDENT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE / DATE OF HEARING : 03 . 0 4 .201 8 / DATE OF P RONOUNCEMENT : 02 . 0 5 .201 8 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH E S E FOUR APPEAL S FILED BY THE REVENUE PERTAINING TO SAME ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 6 , CHENNAI DATED 31 .0 5 .2017 RELEVANT TO THE ASSESSMENT YEAR S 20 0 8 - 0 9, 2011 - 12, 2012 - 13 AND 2013 - 14 . SINCE COMMON ISSUES ARE INVOLVED, THE ABOVE APPEALS WERE HEARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO S . 2690 - 2693 /M/ 17 2 2. THE AP PEALS OF THE REVENUE ARE FOUND TO HAVE BEEN FILED LATE BY 88 DAYS FOR THE ASSESSMENT YEAR 2008 - 09 AND 86 DAYS FOR OTHER ASSESSMENT YEARS. BY REFERRING TO THE PETITIONS FOR CONDONATION OF DELAY FOR ALL ASSESSMENT YEARS, THE LD. DR HAS EXPLAINED THAT WHILE T HE APPEAL PAPERS WERE PROCESSED FOR FILING APPEAL S , THE RECORDS GOT MIXED UP WITH OTHER SCRUTINY FILES. AFTER SEARCHING AND A S SOON AS THE RECORDS PERTAINING TO THIS CASE WAS TRACED, IMMEDIATELY, THE PAPERS FOR FILING APPEAL S BEFORE THE TRIBUNAL WERE PREPA RED AND THE SAME ARE SUBMITTED. FURTHER, THE DELAY IN FILING THE APPEALS BEFORE THE TRIBUNAL IS NEITHER WILFUL NOR WANTON. THE LD. DR, CITING THE ABOVE REASONS REQUESTED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL S FOR HEARING. THE LD. COUNSEL FOR THE ASSESSEE DID NOT OBJECT TO THE SUBMISSIONS OF THE LD. DR AND THEREFORE, WE CONDONE THE DELAY IN FILING THE APPEAL S AND ADMIT THE SAME FOR HEARING. 3. THE FIRST COMMON GROUND RAISED IN THE APPEALS OF THE REVENUE FOR ALL THE ASSESSMENT YEARS IS THAT THE LD . CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ADDITIONAL DEPRECIATION AS CLAIMED BY THE ASSESSEE. BRIEF FACTS OF THE CASE ARE THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED CARRY FORWARD OF BALANCE ADDITIONAL DEPRECIATION IN R ESPECT OF MACHINERY PURCHASED AND INSTALLED IN EARLIER YEARS, WHEREIN, THE IMPUGNED ASSETS WERE PUT TO USE FOR LESS THAN SIX MONTHS. THE ASSESSEE HAS CLAIMED 10% OF THE TOTAL COST OF SUCH MACHINERY IN THE YEAR OF INSTALLATION AND THE I.T.A. NO S . 2690 - 2693 /M/ 17 3 BALANCE 10% OF ADDITIO NAL DEPRECIATION IN THE FOLLOWING YEARS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ADDITIONAL DEPRECIATION IS TO BE ALLOWED ONLY IN CASE OF THE NEW PLANT AND MACHINERY ACQUIRED BY THE ASSESSEE DURI NG THE YEAR AND IS AVAILABLE ONLY IN THE YEAR IN WHICH, THE ASSET WAS FIRST PUT TO USE. SINCE THERE IS NO PROVISION IN THE ACT TO CARRY FORWARD AND EXTEND THE BENEFIT OF ADDITIONAL DEPRECIATION TO THE NEXT YEAR, THE ASSESSING OFFICER DISALLOWED THE CLAIM O F THE ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER APPEAL. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR OTHER ASSESSMENT YEARS VIDE ORDER DATED 19.02.2016, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE ADDITIONAL DEPRECIATION AS CLAIMED BY THE ASSESSEE. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED THAT THERE IS NO PROVISION EXISTS IN THE STATUTE TO CARRY FORWARD THE BALANCE ADDITIONAL DEPRECIATION TO THE SUBSEQUENT YEARS. MOREOVER, THE LD. CIT(A) IGNORED THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MM FORGING 349 ITR 673 AND PLEADED THA T THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDERS OF THE LD. CIT(A) AND RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR OTHER ASSESSMENT YEARS. I.T.A. NO S . 2690 - 2693 /M/ 17 4 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. AGAINST THE DISALLOWANCE OF ADDITIONAL DEPRECIATION ON THE GROUND THAT THERE WAS NOTHING MENTIONED IN THE SAID PROVISION FOR CARRY FORWARD OF 50% OF ELIGIBLE CLAIM OF 20% OF ADDITIONAL DEPRECIATION WHEN THE ASSETS ARE PUT TO USE FOR LESS THAN SIX MONTHS, THE LD. CIT(A) HAS OBSERVED THAT SIMILAR ISSUE ON AN IDENTICAL FACTS AND CIRCUMSTANCES, THE COORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEE S OWN CA SE FOR OTHER ASSESSMENT YEARS IN I.T.A. NOS. 1590 TO 1593/MDS/2015 VIDE ORDER DATED 19.02.2016 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE TRIBUNAL IN ASSESSEE OWN CASE. 6.1 FURTHER, IN THE CASE OF DCIT V. B RAKES INDIA LTD. IN I.T.A. NOS.249 & 1166/MDS/2010 & I.T.A. NO.1069/MDS/2010 DATED 06.01.2012, THE TRIBUNAL OBSERVED THAT E ACH ASSESSMENT YEAR IS SEPARATE AND INDEPENDENT ASSESSMENT YEAR AND THE PROVISIONS OF SECTION 32 OF THE ACT DO NOT PROVIDE FOR CARRY FORWARD OF THE RESIDUAL ADDITIONAL DEPRECIATION, IF ANY AND ACCORDINGLY, DISMISSED THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO ALLOWANCE OF ADDITIONAL DEPRECIATION. AGAINST THE ORDER OF THE TRIBUNAL, THE ASSESSEE [BRAKES INDIA LTD.] PREFERRED FURTHER APPEAL BEFORE THE HON BLE JURISDICTIONAL HIGH COURT. BY DISTINGUISHING THE JUGDEMENT OF HON BLE MADRAS HIGH COURT IN THE CASE OF M.M. FORGINGS LTD. V. ADDL. CIT (SUPRA) AND BY I.T.A. NO S . 2690 - 2693 /M/ 17 5 REFERRING TO THE DECISION OF THE TRIBUNAL IN THE CASE OF FRESH & HONEST CAF LTD V. DCIT IN I.T.A. NO. 1373/MDS/2016 DATED 10.08.2016, WHEREIN, THE TRIBUNAL FOLLOWED ITS OWN DECISION IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEAR, IN WHICH, THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. RITTAL INDIA (P) LTD . 66 TAXMANN.COM 4 HAS BEEN REFERRED, IN THE CASE OF BRAKES INDIA LTD. V. DCIT IN T.C. A. NO. 551 OF 2013 DATED 14.03.2017 , THE HON BLE MADRAS HIGH COURT , DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DULY AFFIRMING THE DECISION IN THE CASE OF CIT V. RITT AL INDIA (P) LTD. (SUPRA). FURTHER, IT WAS ALSO HELD THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT V. SHRI T.P. TEXTILES PVT. LTD. IN T.C.A. NO.157 OF 2017 VIDE ORDER DATED 06.03.2017. 6.2 IN VIEW OF T HE ABOVE JUDICIAL PRECEDENTS WITH REGARD TO GRANT OF ADDITIONAL DEPRECIATION IN THE SUBSEQUENT YEARS , WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THESE APPEALS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THUS, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED FOR ALL THE ASSESSMENT YEARS UNDER APPEAL. 7 . THE NEXT COMMON GROUND RAISED IN THE APPEALS OF THE REVENUE FOR THE AS SESSMENT YEARS 2011 - 12, 2012 - 13 AND 2013 - 14 IS THAT THE LD. CIT(A) ERRED I.T.A. NO S . 2690 - 2693 /M/ 17 6 IN HOLDING THAT NO DISALLOWANCE IS WARRANTED UNDER SECTION 14A OF THE ACT, WHEREIN NO DIVIDEND/EXEMPT INCOME HAS BEEN REPORTED BY THE ASSESSEE DURING THE YEARS UNDER APPEAL. BY INVOKI NG THE PROVISIONS OF SECTION 14A OF THE ACT W.R. RULE 8D, THE ASSESSING OFFICER DETERMINED THE EXPENDITURE COMPONENT FOR THE INVESTMENTS MADE BY THE ASSESSEE AND DISALLOWED THE SAME. ON APPEAL, THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT IN NONE OF T HE ASSESSMENT YEARS UNDER APPEAL, WHERE, THE DISALLOWANCE UNDER SECTION 14A OF THE ACT HAS BEEN EFFECTED, THE ASSESSEE HAS REPORTED ANY EXEMPTED INCOME EARNED. IT WAS ALSO CONTENDED THAT WHEN NO DIVIDEND WAS RECEIVED FROM THE INVESTMENTS, NO DISALLOWANCE C OULD BE MADE UNDER SECTION 14A OF THE ACT. BY CONSIDERING THE ABOVE SUBMISSIONS AS WELL AS BY FOLLOWING THE DECISION IN THE CASE OF REDINGTON INDIA LTD. V. ADDL. CIT IN T.C. (A) NO. 520 OF 2016 DATED 23.12.2016, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. 7 .1 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IN THE CASE OF REDINGTON INDIA LTD. V. ADDL. CIT (SUPRA), THE HON BLE JURISDICTIONAL HIGH COURT HAS HELD THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT CANNOT BE MAD E IN VACUUM I.E., IN THE ABSENCE OF EXEMPT INCOME. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER, WHEREIN, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY EXEMPT/DIVIDEND INCOME HAVING EARNED BY THE ASSESSEE AGAINST THE INVESTMENTS. UNDER THE ABOVE FACTS AN D CIRCUMSTANCES, WE ARE I.T.A. NO S . 2690 - 2693 /M/ 17 7 OF THE CONSIDERED OPINION THAT THE LD CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT AND DELETED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. THUS, THE GROUND RAISED BY THE REVENUE FOR ASSES SMENT YEARS UNDER APPEAL STANDS DISMISSED. 8 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2013 - 14 IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BELATED REMITTANCE OF EMPLOYEES CONTRIBUTION ON ESI & PF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE CONTRIBUTION TO ESI COLLECTED FROM THE EMPLOYEES HAD BEEN REMITTED BELATEDLY. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE DELAYED PAYMENTS REPRESENTING EMP LOYEES CONTRIBUTION TOWARDS ESI OF .1,38,535/ - AS INCOME OF THE ASSESSEE AND BROUGHT TO TAX UNDER SECTION 2(24)(X) R.W.S. 36(1)(VA)OF THE ACT. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT V. I NDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TCA NOS. 585 & 586 OF 2015 & M.P. NO. 1 OF 2015 DATED 24.07.2015, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 8 . 1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FROM THE ANNEXURE T O FORM 3CD, THE ASSESSING OFFICER NOTICED THAT THE CONTRIBUTION TO ESI COLLECTED FROM THE EMPLOYEES HAD BEEN REMITTED BELATEDLY. SINCE THE I.T.A. NO S . 2690 - 2693 /M/ 17 8 ASSESSEE HAS NOT REMITTED THE CONTRIBUTIONS TO ESI COLLECTED FROM THE EMPLOYEES BEFORE DUE DATE, THE ASSESSING OFFI CER HELD THAT THE ASSESSEE DOES NOT QUALIFY FOR CLAIMING DEDUCTION UNDER SECTION 36(1)(VA) OF THE ACT TO AVAIL THE BENEFIT UNDER SECTION 43B OF THE ACT. BEFORE THE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT THE IMPUGNED PAYMENTS HAVE BEEN REMITTED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND AS SUCH, THE SAME IS ALLOWABLE UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. IN THIS CASE, I T IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS NOT PAID THE EMPLOYEES CONTRIBUTION RECEIVED BY IT BEFORE T HE DUE DATE OF FILING OF THE RETURN. VARIOUS COURTS INCLUDING THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. (SUPRA) HELD THAT THERE CAN BE NO DEEMED ADDITION UNDER SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT, IF THE IMPUGNED AMOUNT HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. THE RELEVANT PORTION OF THE ORDER OF THE HON BLE HIGH COURT IS REPRODUCED AS UNDER: 5. WE FIND THAT THE TRIBUNAL HAS RIGHTLY RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD . REPORTED IN 319 ITR 306, WHEREBY, THE SUPREME COURT HELD THAT OMISSION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT TO FIRST PROVISO BY FINANCE ACT , 2003 ARE CURATIVE IN NATURE AND ARE EFFECTIVE RETROSPECTIVELY, I.E., WITH EFFECT FROM 1.4.1988 I.E., THE DATE OF INSERTION OF FIRST PROVISO. THE DELHI HIGH COURT IN THE CASE OF CIT V. AMIL LTD . REPORTED IN 321 ITR 508 HELD THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYEE'S CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIB ED UNDER THE RELEVANT ACT, BUT BEFORE THE DUE DATE OF FILING OF RETURN UNDER THE INCOME TAX ACT , NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY FINANCE ACT , 2003. 6. IN THE PRESENT CASE, THE ASSESSEE HAD REMITTED THE EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE FOR PAYMENT, BUT WITHIN THE DUE DATE FOR I.T.A. NO S . 2690 - 2693 /M/ 17 9 FILING THE RETURN OF INCOME. HENCE, FOLLOWING THE ABOVE - SAID DECISIONS, WE FIND NO REASON TO DIFFER WITH THE FINDINGS OF THE TRIBUNAL. ACCORDINGLY, WE FIND NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THESE APPEALS. ACCORDINGLY, BOTH THE TAX CASE (APPEALS) STAND DISMISSED. NO COSTS. CONSEQUENTLY, M.P.NO.1 OF 2015 IS ALSO DISMISSED. 8.2 THE TRIBUNAL HAS ALSO FOLLOWED THE ABOVE DECISION OF THE HON BLE MADRAS HIGH CO URT IN DECIDING SIMILAR ISSUE IN VARIOUS CASES. THE LD. DR COULD NOT CONTROVERT THE ABOVE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT. JUST BECAUSE THE DEPARTMENT HAS NOT ACCEPTED THE ABOVE DECISION AND PREFERRED REVENUE PETITION, WE CANNOT TAKE A DI FFERENT VIEW, OTHER THAN THE VIEW TAKEN BY THE HON BLE MADRAS HIGH COURT, WHICH IS BINDING ON THE TRIBUNAL. IN VIEW OF THE ABOVE, WE SUSTAIN THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, ALL THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 02 ND MAY, 2018 AT CHENNAI. SD/ - SD/ - ( S. JAYARAMAN ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 02 . 0 5 .201 8 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.