Piparia Syntex Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2832/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57260 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVNESH KULSHRESTHA
• Assessee Lawyers: RAMESH KUMAR MA LPANI
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 80HHC; 32; 147

Judgement Text

-1- IT A.NO.2832/AHD/2011 A SSESSMENT YEAR 2005-06 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI MUKUL KR. SHRAWAT - JM AND SHRI ANIL CHATURVEDI - AM ITA NO.2832/AHD/2011 (ASSESSMENT YEAR:-2005-06) PIPARIA SYNTEX PVT. LTD., 302/302A, 3 RD FLOOR, CENTRE POINT, OPP. NEW CIVIL HOSPITAL, RING ROAD, SURAT-395002 V/S THE INCOME-TAX OFFICER, WARD-1(4), SURAT PAN: AABCP 4386 L [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI RAMESH KUMAR MALPANI, AR REVENUE BY:- SHRI BHAVNESH KULSHRESTHA, SR. DR DATE OF HEARING:- 28-02-2012 DATE OF PRONOUNCEMENT:- 16-03-12 O R D E R PER ANIL CHATURVEDI (AM) :- THIS IS APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER DATED 30.9.2011 O F CIT(A)-I, SURAT RELATING TO ASSESSMENT YEAR 2005-06. THE FACTS IN BRIEF OF THE PRESENT CASE ARE AS UNDER : 2 THE ASSESSEE FILED RETURN OF INCOME ON 28.11.2006 WITH RETURNED TOTAL INCOME AT NIL. THE ASSESSMENT WAS CO MPLETED ON 9.12.2010 U/S 147 R.W.S 143(3) DETERMINING THE TOTA L INCOME AT 2 NIL AFTER SETTING OFF THE CARRY FORWARD DEPRECIATIO N OF EARLIER YEARS. 3 WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OF FICER DID NOT ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION U/S 32(1)(IIA) AMOUNTING TO RS.26,40,478/- THAT WAS CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT FILE CERTIFICA TE FROM A CHARTERED ACCOUNTANT IN FORM 3AA ALONGWITH THE RETU RN OF INCOME. ACCORDING TO THE ASSESSING OFFICER, SINCE T HE ASSESSEE FAILED TO FULFILL THE PRELIMINARY CONDITION FOR AVA ILING ADDITIONAL DEPRECIATION, WHICH ACCORDING TO HIM WAS MANDATORY, THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF ADDITIO NAL DEPRECIATION. 4 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT (A). BEFORE THE CIT (A) THE ASSESSEE DI SPUTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE ASS ESSEE FILED WRITTEN SUBMISSIONS BEFORE THE CIT (A) WHEREIN IT W AS CONTENDED BY THE ASSESSEE THAT DURING THE COURSE OF ASSESSMEN T PROCEEDINGS IT HAD FILED BEFORE THE ASSESSING OFFICER ALL THE R EQUIRED DETAILS OF ADDITIONS MADE TO PLANT AND MACHINERY AND ALSO T HE CHARTERED ACCOUNTANT'S CERTIFICATE IN FORM 3AA. THE ASSESSEE FURTHER CONTENDED IN ITS SUBMISSION THAT AS THE CHARTERED A CCOUNTANT'S CERTIFICATE WAS SUBMITTED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR ADDITION AL DEPRECIATION SHOULD HAVE BEEN ALLOWED. THE ASSESSE E FURTHER RELIED ON THE DECISION OF ITAT IN THE CASE OF MADHU INDUSTRIES LTD VS ITO (2010) 132 TTJ 233 (AHD). THE LD. CIT (A ) DID NOT ALLOW THE ASSESSEE THE BENEFIT OF ADDITIONAL DEPREC IATION AS 3 ACCORDING TO HIM THE CASE OF MADHU INDUSTRIES LTD. VS. ITO WAS DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEE AND MORE SO IN THE AFORESAID CASE, THE FILING OF CHARTERED ACCOUNTANT S REPORT WAS NOT AGITATED BEFORE THE ITAT. THE OBSERVATIONS MADE BY CIT (A) ARE AS UNDER:- IN THIS CONNECTION, THE COPY OF THE ITAT ORDER IN T HE CASE AS FURNISHED BY THE APPELLANT HAS BEEN GONE TH ROUGH CAREFULLY. CONTRARY TO THE CONTENTION OF APPELLANT, THE ABOVE ISSUE WAS NOT ADJUDICATED UPON BY THE HONBLE ITAT AS IT WAS NOT AN ISSUE BEFORE THEM. HONBLE ITAT HA S CONSIDERED AND ADJUDICATED ONLY THREE ISSUES ON THI S CASE, NAMELY, 1) THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF THE ITO WITH REGARD TO THE CLAIM OF DEPRECIATION @ 25% THEREBY CONFIRMING THE ADDITION OF RS.87,739/-. THE LD. CIT (A) (A) OUGHT TO HAVE ACCEPTED THE PLEA OF THE APPELLANT THAT VARIOU S ITEMS OF ADDITION RELATED TO THE PLANT AND MACHINER Y AND HENCE DEPRECIATION @ 25% WAS CORRECTLY CLAIMED. IT BE SO HELD NOW. 2) THE LD. CIT (A) ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,97,226 IN RESPECT OF INTEREST EXPENSES. ON THE FACTS OF THE CASE ADVANCES GIVEN T O THE SUPPLIERS OF PURCHASE WERE FOR THE PURPOSE OF BUSINESS AND HENCE THE DISALLOWANCE IS NOT CALLED F OR. ALSO SINCE NO INTEREST-BEARING FUNDS WERE UTILIZED FOR NON-BUSINESS PURPOSE, THE DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.1,97,226/- IS NOT JUSTIFIE D. THE SAME BE SO HELD NOW AND THE INTEREST EXPENSES B E ALLOWED IN FULL. 3) THE LD. CIT (A) ALSO FURTHER ERRED IN CONFIRMING TH E DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.5,31,197/- UNDER SEC. 32(1)(IIA) ON THE PLANT AN D MACHINERY BY HOLDING THAT COMBINED CAPACITY WAS TO BE SEEN IRRESPECTIVE OF THE ITEMS FOR WHICH THE 4 MACHINERY WERE PURCHASED. ON THE FACTS AND IN VIEW OF THE CORRECT LEGAL POSITION, ADDITIONAL DEPRECIAT ION OUGHT TO HAVE BEEN ALLOWED AND THE SAME BE DIRECTED TO BE THUS, FILING OF CA REPORT IN FORM NO.3AA ALONG WITH RETURN WAS NOT AGITATED BEFORE THE ITAT. HENCE, THEY HAVE NOT ADJUDICATED UPON THIS ISSUE OTHERWISE ALSO, FACTS OF APPELLANTS CASE ARE QUITE DIFFERENT FROM THE JUDGMENT RELIED UPON. THUS , IT IS CLEAR THAT THE JUDGMENT OF HONBLE ITAT AHMEDABAD RELIED UPON BY THE APPELLANT DOES NOT COME TO ITS RESCUE. UNDER THE CIRCUMSTANCES, THE ONLY CONCLUSION IS THAT APPELLANT FAILED IN ITS DUTY TO COMPLY WITH TH E PROVISO TO SECTION 32 (IIA) WHICH MANDATES FILING O F CAS REPORT ALONG WITH RETURN OF INCOME. IN VIEW OF ALL THE ABOVE, ACTION OF THE ASSESSING OFFICER IS UPHELD. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5 BEFORE US, THE LEARNED AR SUBMITTED AND REITERATE D THAT AS THE FORM 3AA WAS FILED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE NON FILING OF THE AUDIT REPORT ALO NG WITH THE RETURN OF INCOME BE CONSIDERED AS ONLY A TECHNICAL DEFAULT AND ACCORDINGLY THE DEDUCTION U/S 32(IIA) BE ALLOWED. H E FURTHER RELIED ON THE FOLLOWING DECISIONS. (I) ZENITH PROCESSING MILLS VS CIT (1996) 219 ITR 7 21 (GUJ) (II) ITO VS VXL INDIA LTD (2009) 312 ITR 187 (GUJ) (III) CIT VS SHARDA MOTOR INDUSTRIAL LTD (2009) 319 ITR 109 (DEL). 5 6 THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSI NG OFFICER. 7 WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION S MADE BY THE LEARNED REPRESENTATIVES AND HAVE ALSO GONE THRO UGH THE JUDGEMENTS WHICH WERE CITED BY THE LEARNED REPRESEN TATIVES. IN OUR VIEW, THE MATTER IS SQUARELY COVERED BY THE DEC ISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF ITO VS VX L INDIA LTD (SUPRA). IT IS WORTHWHILE TO REPRODUCE THE RELEVANT PARA: 14. WHAT HAS BEEN STATED IN RESPECT OF THE CLAIM U NDER S. 80J OF THE IT ACT IS EQUALLY APPLICABLE TO ONE UNDER S. 80HHC. SI MPLY BECAUSE S. 80HHC CONNOTES THAT THE REPORT OF ACCOUNTANT IN THE PRESCRIBED FORM SHOULD BE ATTACHED ALONG WITH THE RETURN OF INCOME, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION, IT DOES NOT MEAN THAT I F SUCH REPORT IS NOT ATTACHED ALONG WITH THE RETURN OF INCOME AND IT IS PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION UNDER S. 80HHC OF THE ACT . TO OBTAIN THE REPORT OF THE CHARTERED ACCOUNTANT IS A CONDITION P RECEDENT AND IT IS MANDATORY IN NATURE. HOWEVER, NON-FURNISHING OF SUC H REPORT AT THE TIME OF FILING THE RETURN OF INCOME BUT AT SUBSEQUE NT STAGE AND IN ANY CASE, BEFORE THE ASSESSMENT PROCEEDING IS COMPLETED , THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80HHC OF THE ACT CANNO T BE DISALLOWED . THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHARDA MOTOR INDUSTRIAL LTD. (SUPRA) HAS HELD THAT FURNISH ING OF FORM 3A I.E. AUDIT REPORT, IS ONLY DIRECTORY AND NOT MANDAT ORY. 6 8 RESPECTFULLY FOLLOWING THE DECISIONS OF HIGH COUR T IN THE CASE OF CIT VS. SHARDA MOTOR INDUSTRIAL LTD. (SUPRA ) AND ITO VS. VXL INDIA LTD., (SUPRA) WE ALLOW THE CLAIM OF THE A SSESSEE. 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT TODAY ON 16 - 03 -2012 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (ANIL CHATURVEDI) ACCOUNTANT MEMBER S.A. PATKI COPY OF THE ORDER FORWARDED TO: 1. PIPARIA SYNTEX PVT. LTD., 302/302A, 3 RD FLOOR, CENTRE POINT, OPP. NEW CIVIL HOSPITAL, RING ROAD, SURAT-39 5002 2. THE INCOME-TAX OFFICER, WARD-1(4), SURAT 3. CIT CONCERNED 4. CIT(A)-I, SURAT 5. DR, ITAT, AHMEDABAD BENCH-B, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD. 7 1.DATE OF DICTATION 28 - 2 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 2 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 2 - 3 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 16 - 3 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 16 - 3 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 6 - 3 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..