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

ITA 2694/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4645 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAROJ KUMAR
• Keywords: Depreciation; Additional depreciation; Earning of tax free income
• Section: 14A; 32

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 2694/MDS/2017 / ASSESSMENT YEAR :2014-15 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), ROOM NO. 512, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G. ROAD, CHENNAI 600 034. VS. M/S. HINDUJA FOUNDRIES LTD., [MERGED WITH M/S. ASHOK LEYLAND LTD.] KATHIVAKKAM HIGH ROAD, ENNORE, CHENNAI 600 057. [PAN:AAACE1078K] ( APPELLANT ) ( RESPONDENT) / APPELLANT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT / RESPONDENT BY : SHRI SAROJ KUMAR, ADVOCATE / DATE OF HEARING : 28.08.2018 /DATE OF PRONOUNCEMENT : 22.10.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 6, CHENNAI DATED 31.05.2017 RELEVANT TO THE ASSESSMENT YEAR 2014-15. IN THIS APPEAL, THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS VIZ., (I) THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION FOR THE YEAR UNDER CONSIDERATION AND (II) THE LD. CIT(A) HAS ERRED IN 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 I.T.A. NO. 2694/CHNY/17 2 YEARS UNDER APPEAL. 2. THE APPEAL FILED BY THE REVENUE IS DELAYED BY 86 DAYS, FOR WHICH, THE REVENUE HAS FILED PETITION FOR CONDONATION OF THE DELAY, TO WHICH; THE LD. COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY SERIOUS OBJECTION. CONSEQUENTLY, THE DELAY OF 86 DAYS IN FILING OF THE APPEAL STANDS CONDONED AND THE APPEAL IS ADMITTED FOR ADJUDICATION. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SIMILAR ISSUE WAS SUBJECT MATTER IN APPEAL FOR THE ASSESSMENT YEARS 2011- 12, 2012-13 AND 2013-14 IN ASSESSEES OWN CASE AND VIDE ITS ORDER DATED 02.05.2018 IN I.T.A. NOS. 2690, 2691, 2692 & 2693/CHNY/2017, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE SAME MAY BE FOLLOWED. 4. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ASSESSMENT ORDER, WHEREIN, THE DECISION IN THE CASE OF MM FORGINGS LTD. V. ADDL. CIT 349 ITR 673 (MAD) HAS BEEN FOLLOWED. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CLAIMED CARRY FORWARD OF BALANCE ADDITIONAL DEPRECIATION IN RESPECT 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 I.T.A. NO. 2694/CHNY/17 3 TOTAL COST OF SUCH MACHINERY IN THE YEAR OF INSTALLATION AND THE BALANCE 10% OF ADDITIONAL 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 DURING 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 OF THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF MM FORGINGS LTD. V. ADDL. CIT (SUPRA). ON APPEAL, BY FOLLOWING VARIOUS DECISIONS, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION FOR THE YEAR UNDER APPEAL. 5.1 ON SIMILAR FACTS AND CIRCUMSTANCES IN AN IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS, VIDE ORDER DATED 02.05.2018 (SUPRA), THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 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 ASSESSEES OWN CASE 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. I.T.A. NO. 2694/CHNY/17 4 6.1 FURTHER, IN THE CASE OF DCIT V. BRAKES 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 EACH 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 HONBLE JURISDICTIONAL HIGH COURT. BY DISTINGUISHING THE JUGDEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF M.M. FORGINGS LTD. V. ADDL. CIT (SUPRA) AND BY 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 ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR, IN WHICH, THE DECISION OF THE HONBLE 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 HONBLE MADRAS HIGH COURT, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DULY AFFIRMING THE DECISION IN THE CASE OF CIT V. RITTAL INDIA (P) LTD. (SUPRA). FURTHER, IT WAS ALSO HELD THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE 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 THE 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. THE LD. DR COULD NOT CONTROVERT THE ABOVE DECISION OF THE TRIBUNAL. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED. I.T.A. NO. 2694/CHNY/17 5 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED 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. WE FIND THAT THIS GROUND OF APPEAL ALSO ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS VIDE ITS ORDER DATED 02.05.2018, WHEREIN, THE TRIBUNAL HAS FOLLOWED THE DECISION IN THE CASE OF REDINGTON INDIA LTD. V. ADDL. CIT IN T.C. (A) NO. 520 OF 2016 DATED 23.12.2016, WHICH WAS FOLLOWED BY THE LD. CIT(A) WHILE DELETING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT. 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. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 22 ND OCTOBER, 2018 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 22.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.