M/s. Jayshree Aromatics Pvt. Ltd., Ankleshwar V. The ACIT, Bharuch Circle, Bharuch

ITA 3020/AHD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6899 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 17-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Depreciation; Additional depreciation
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.3020/AHD/2013 ( / ASSESSMENT YEAR : 2010-11) M/S.JAYSHREE AROMATICS PVT.LTD. PLOT NO.4705/1/13, GIDC ANKLESHWAR 393 002 / VS. THE ASST.CIT BHARUCH CIRCLE BHARUCH ./ ./ PAN/GIR NO. : AABCJ 8258 R ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI MILIN MEHTA, AR $% #'& / RESPONDENT BY : SHRI M.K. SINGH, SR.D.R. ()'* / DATE OF HEARING 17/12/2014 +,-.'* / DATE OF PRONOUNCEMENT 30/12/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA (CIT(A) IN SHORT) DATED 20/09/2013 PERTAINING TO ASSESSMENT Y EAR (AY) 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 2 - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN NOT AL LOWING DEDUCTION U/S.10B. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN NOT AL LOWING ADDITIONAL DEPRECIATION TO THE EXTENT OF RS.1,36,77,110/- DESP ITE THE FACT THAT THE APPELLANT WAS ELIGIBLE TO CLAIM SUCH DEPRECIATI ON AND REQUEST FOR THE SAME WAS MADE DURING THE COURSE OF ASSESSME NT BEFORE THE AO 3. YOUR APPELLANT CRAVES THE RIGHT TO ADD TO OR ALTER , AMEND, SUBSTITUTE, DELETE OR MODIFY ALL OR ANY OF THE ABOV E GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 04/02/2013, THEREBY THE ASSESSING OFFICER (AO IN SHORT) HAD DISALLOWED THE CLAIM FOR DEDUCTION U/S.10B OF THE A CT AMOUNTING TO RS.3,25,32,776/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE FIL ED AN ADDITIONAL GROUND IN RESPECT OF DISALLOWANCE OF THE ADDITIONAL DEPREC IATION TO THE EXTENT OF RS.1,36,77,110/-. THE LD.CIT(A), AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE FIRST GROUND IS AGAINST THE DISALLOWANCE OF DEDUCTION MADE U/S.10B OF THE ACT. THE LD.COUNSEL FOR THE ASSESSE E SHRI MILIN MEHTA ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 3 - ARGUED THAT THE LD.AO AND THE LD.CIT(A) WERE NOT JU STIFIED IN DISALLOWING THE CLAIM OF DEDUCTION U/S.10B OF THE ACT. 3.1. ON THE CONTRARY, THE LD.SR.DR SHRI M.K. SINGH POINTED OUT THAT THE AUTHORITIES BELOW HAVE GIVEN A FINDING ON FACT THAT AS PER FORM NO.56G, JAYSHREE AROMATICS PVT.LTD. COMMENCED PRODUCTION ON 10/09/1999, I.E. AY 2000-01. HENCE, 10 YEARS EXPIRES IN AY 2009-10. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE UNDER LA W. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE AO IN PARA-4.1 OF HIS ORDER HAS GIVEN A FI NDING ON FACT AS UNDER:- 4.1 IN THE RETURN FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT OF RS.3,25,32, 776/-. BUT AS PER SECTION 10B OF THE ACT- SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUC TION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A 100% EOU FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PE RIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE SHALL ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. HENCE, DEDUCTION HAS TO BE GIVEN FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEAR BEGINNING FROM THE ASSESSMENT RELEV ANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE. AS PER FORM 56G, JAYSHREE AROMATICS PVT. LTD. COMMENCED PR ODUCTION ON ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 4 - 10.09.1999 I.E. AY 2000-01. HENCE, 10 YEARS EXPIRE S IN AY 2009-10. A SHOW CAUSE (REGARDING THIS ISSUE) WAS ISSUED ON 15. 01.2013. IN RESPONSE TO THIS, THE ASSESSEE VIDE ITS REPLY DATED 17.01.2013 HAS SUBMITTED AS UNDER:- DEDUCTION U/S 10B: THE INITIAL PRODUCTION DATE FOR THE ASSESSEE COMPANY IS 10.09.1999 AND HENCE, THE 10 FINANCIAL Y EARS FOR CLAIMING DEDUCTION U/S 10B EXPIRED ON 09.09.2009, W HICH FALL IN THE FINANCIAL YEAR 2009-10 RELEVANT TO AY 2010-11. HENCE, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10B. CLEARLY, THE ASSESSEE HAS INTERPRETED THE SECTION O F THE ACT WRONGLY. DEDUCTION IS AVAILABLE FOR 10 YEAR BEGINNING WITH ASSESSMENT YEAR IN WHICH PRODUCTION BEGINS I.E. AY 2000-01 (IN THIS CA SE PRODUCTION STARTED ON 10.09.1999) AND AY 2009-10 IS THE 10 TH YEAR OF PRODUCTION. HENCE, AY 2009-10 IS THE LAST YEAR FOR WHICH CLAIM FOR DEDUCTION U/S 10B OF THE ACT CAN BE MADE. THE AUTHORIZED REPRESEN TATIVE OF THE ASSESSEES INTERPRETATION OF CALCULATING 10 YEARS F ROM DAY (INSTEAD OF ASSESSMENT YEAR) OF BEGINNING OF PRODUCTION, IS LEA DING TO WRONG CALCULATION OF APPLICABILITY OF DEDUCTION US/ 10B O F THE ACT TILL AY 2010- 11. HENCE, THE DEDUCTION OF RS.3,25,32,776/- CLAIMED U/ S 10B OF THE ACT HAS BEEN DISALLOWED ON ACCOUNT OF NON FULFILLMENT OF TH E CONDITION GIVEN UNDER THE SECTION 10B OF THE ACT. PENALTY U/S 271(1 )(C) OF THE ACT IS ALSO INITIATED FOR FURNISHING INACCURATE PARTICULAR OF I NCOME. 4.1. ON APPEAL, THE LD.CIT(A) CONFIRMED THE FINDING OF THE AO. WE DO NOT FIND MERIT IN THE CONTENTION OF THE LD.CIT(A). A BARE PERUSAL OF THE PROVISIONS MAKES IT ABUNDANTLY CLEAR THAT THE DEDUC TION U/S.10B OF THE ACT IS ALLOWABLY ONLY FOR TEN CONSECUTIVE YEARS AFT ER THE COMMENCEMENT OF THE PRODUCTS. THE UNDISPUTED FACTS IN THE PRESE NT CASE IS THAT THE ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 5 - ASSESSEE COMMENCED ITS PRODUCTION ON 10/09/1999 FAL LING IN THE YEAR 2000-01, THEREFORE WE DO NOT SEE ANY REASON TO INTE RFERE WITH THE FINDING OF THE LD.CIT(A). THUS, THIS GROUND OF ASSESSEES APPEAL IS REJECTED. 5. NOW, WE TAKE UP GROUND NO.2 OF THE APPEAL WHICH IS AGAINST DISALLOWANCE OF THE ADDITIONAL DEPRECIATION TO THE EXTENT OF RS.1,36,77,110/-. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF ADDITIONAL DEPRECIATION WAS MADE BEFORE TH E AO AS WELL AS THE ADDITIONAL GROUND WAS RAISED BEFORE THE LD.CIT(A). HOWEVER, THE LD.CIT(A) EXPRESSED HIS INABILITY TO ENTERTAIN THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF THE JUDGEMENT OF HONBLE G UJARAT HIGH COURT RENDERED IN THE CASE OF CIT-1 VS. ARVIND MILLS LTD. IN TAX APPEAL 1407 OF 2011. HE SUBMITTED THAT THE LD.CIT(A) HAS NOT C ONSIDERED THE JUDGEMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT REPORTED AT 284 ITR 323(SC) AN D THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF CIT-1 VS. ARVIND MILLS LTD.(SUPRA) IN THE RIGHT PERSPECTIVE. 5.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE ASSESSEE HAS RAISED A CLAIM RELATED TO ADD ITIONAL DEPRECIATION. HOWEVER, THE CLAIM WAS REJECTED BY THE LD.CIT(A) ON THE BASIS THAT HE IS NOT EMPOWERED TO ENTERTAIN THE CLAIM. AFTER CONSID ERING THE FACTS AND ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 6 - CIRCUMSTANCES OF THE CASE, WE HEREBY ADMIT THE GROU ND RAISED BY THE ASSESSEE AND THE SAME IS REQUIRED TO BE ADJUDICATED . THEREFORE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO HIS FILE FOR DECISION AFRESH. THE LD.CIT(A) IS DIRECTE D TO VERIFY THE CLAIM OF ADDITIONAL DEPRECIATION MADE BY THE ASSESSEE. IN C ASE, IF HE FINDS THAT THE ADDITIONAL DEPRECIATION IS ALLOWABLE TO THE ASSESSE E, THEN THE SAME BE ALLOWED IN ACCORDANCE WITH LAW. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON TUESDAY, THE 30 TH DAY OF DECEMBER , 2014 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/12/2014 2*..,(.../ T.C. NAIR, SR. PS ITA NO.3020/AHD /2013 M/S.JAYSHREE AROMATICS PVT.LTD. VS. ASST.CIT ASST.YEAR 2010-11 - 7 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VI, BARODA 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 26.12.14(DICTATION-PAD 9- P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..26.12.14 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30.12.2014 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.12.2014 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER