Sai Flipped Coils Ltd., Gandhinagar V. The Addl. CIT, (OSD), Circle-8, Ahmedabad

ITA 3097/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9109 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: T P HEMANI
• Keywords: Depreciation; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 3097/AHD/2013 (ASSESSMENT YEAR:2009-10) SAI FLIPPED COILS LTD., 75/B, SANTEJ VADSAR ROAD, SANTEJ, GANDHINAGAR APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX (OSD), CIRCLE-8, AHMEDABAD RESPONDENT PAN: AAHCS0475P /BY ASSESSEE : SHRI T. P. HEMANI, A.R. /BY REVENUE : SHRI DEEPAK SUTARIA, SR. D.R. /DATE OF HEARING : 09.02.2017 /DATE OF PRONOUNCEMENT : 13.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST THE CIT(A)-XXI, AHMEDABADS ORDER DATED 13.11.2013 PASS ED IN APPEAL NO. CIT(A)-XXI/190/11-12, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT. ITA NO. 3097/AHD/2013 (SAI FLIPPED COILS LTD. VS.AC IT) A.Y. 2009-10 - 2 - 2. THE ASSESSEES TWIN SUBSTANTIVE GROUNDS RAISED I N THE INSTANT APPEAL CHALLENGE THE CIT(A)S ORDER CONFIRMING ASSESSING O FFICERS ACTION DISALLOWING ITS DEPRECIATION CLAIM MADE IN COURSE O F ASSESSMENT PROCEEDINGS SEEKING TO INCLUDE THE ALLEGED SHORT TERM CAPITAL G AINS ARISING FROM SALE OF MOTOR VEHICLES WITH THE OTHER BLOCK OF ASSETS OF PL ANT AND MACHINERY THEREBY ASSESSING ITS SHORT TERM CAPITAL GAINS U/S.50 OF TH E ACT TO THE TUNE OF RS.26,95,708/- IN VIEW OF HONBLE APEX COURTS DECI SION IN GOETZ INDIA LTD. VS. CIT 284 ITR 323 (SC). 3. RELEVANT FACTS INVOLVED IN THE INSTANT CASE ARE IN A NARROW COMPASS. THIS ASSESSEE IS A COMPANY MANUFACTURING AND TRADIN G IN METALS/FABRIC PRODUCTS. IT FILED LETTER DATED 04.07.2011 BEFORE THE ASSESSING AUTHORITY REQUESTING TO CHANGE ITS DEPRECIATION CLAIM AND SHO RT TERM CAPITAL GAINS OFFERED UNDER SECTION 50 OF THE ACT. IT PLEADED T HEREIN TO HAVE DECLARED SHORT TERM CAPITAL GAINS U/S.50 TO THE TUNE OF RS.2 6,95,705/- ALONG WITH DEPRECIATION CLAIM OF RS.7,78,769/-. THE ASSESSEE STATED THAT VERIFICATION OF ITS RETURN FILED REVEALED THAT VARIOUS ASSETS HAVIN G DEPRECIATION RATE OF 15% UNDER THE BLOCK PLANT AND MACHINERY HAD NOT BEEN ME RGED FOR THE PURPOSE OF CALCULATING DEPRECIATION ON ACCOUNT OF ITS INADVERT ENT MISTAKE. IT SOUGHT TO FILE A CORRECT CLAIM OF DEPRECIATION AFTER MERGING THE RELEVANT BLOCK OF ASSETS UNDER THE HEAD PLANT AND MACHINERY AS WELL AS THA T OF MOTOR VEHICLE HAVING IDENTICAL DEPRECIATION RATE OF 15%. THE ASSESSING OFFICER OBSERVED IN THE IMPUGNED ASSESSMENT ORDER DATED 20.12.2011 THAT REL EVANT PART A OF THE SCHEDULE OF DEPRECIATION FOR TANGIBLE ASSETS ALTHOU GH GRANTED SAME RATE OF DEPRECIATION ON PLANT AND MACHINERY ON MOTOR VEHICL E, THE SAME COULD NOT BE ALLOWED TO FORM ONE BLOCK OF ASSETS UNDER THE INCOM E TAX RULES. HE WAS ALSO OF THE OPINION THAT THE ASSESSEES CLAIM WAS F URTHER NOT ALLOWABLE IN ABSENCE OF THE REVISED RETURN AS PER HONBLE APEX C OURT ABOVE STATED DECISION. ITA NO. 3097/AHD/2013 (SAI FLIPPED COILS LTD. VS.AC IT) A.Y. 2009-10 - 3 - 4. WE NOW COME TO THE LOWER APPELLATE ORDER. THE C IT(A) UPHOLDS ASSESSING OFFICERS ACTION ON MERITS AS UNDER: 4.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. BLOCK OF ASSETS AS DEFINED IN SECT ION 2(11) MEANS A GROUP OF ASSETS FALLING WITHIN A CLASS OF ASSETS IN RESPECT OF WHICH SAME PERCENTAGE OF DEPRECIATION IS PRESCRIBED. THE BLOCK OF ASSETS H AVE BEEN LISTED IN THE NEW APPENDIX IN THE INCOME-TAX RULES, 1962, THE APPELLA NT'S CLAIM THAT ALL THE ASSETS, WHICH HAVE SAME RATE OF DEPRECIATION FALLS UNDER SAME BLOCK OF ASSETS, IS TOO SIMPLE INTERPRETATION OF SECTION 2(11). THE LEA RNED AR OF THE APPELLANT HAS IGNORED THE FIRST LEG OF DEFINITION OF BLOCK OF ASS ETS PROVIDED IN SECTION 2(11) WHICH SAYS THAT BLOCK OF ASSETS MEANS A GROUP OF AS SETS FALLING WITHIN A CLASS OF ASSETS. THE FIRST REQUIREMENT FOR THE ASSETS TO BE LISTED IN A BLOCK OF ASSETS IS THAT THEY SHOULD FALL IN THE SAME CLASS OF ASSETS. ONLY THOSE ASSETS WHO FALL UNDER SAME CLASS OF ASSETS AND HAVE SAME RATE OF DE PRECIATION WILL GO IN ONE BLOCK OF ASSET. IT IS FOR THIS REASON IN THE NEW AP PENDIX, WITHIN THE GROUP OF ASSETS, PLANT AND MACHINERY AND MOTOR CAR HAVE BEEN LISTED AS DIFFERENT CLASS OF ASSETS. IN FACT, IN THE GROUP OF ASSETS OF MACHINER Y AND PLANT, THERE ARE 9 CLASS OF ASSETS AND MACHINERY AND PLANT AND MOTOR CARS AR E LISTED AS DIFFERENT CLASS OF ASSETS. THEREFORE, THE AO HAS CORRECTLY REJECTED THE APPELLANT'S CLAIM OF MERGING TWO DIFFERENT CLASS OF ASSETS NAMELY, PLANT AND MACHINERY AND MOTOR CAR IN ONE BLOCK OF ASSETS. THIS GROUND IS ACCORDINGLY DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES. BOTH THE LEARNE D COUNSEL DO AGREE THAT HONBLE APEX COURTS DECISION IN GOETZ CASE (SUPRA) DOES NOT IMPINGE UPON APPELLATE AUTHORITIES JURISDICTION TO ENTERTAIN AD DITIONAL PLEAS IN ABSENCE OF A REVISED RETURN. THEIR ARGUMENTS ARE CONFINED TO ME RITS OF THE ISSUE AS TO WHETHER THE ASSESSEE COULD RIGHTLY SEEK TO MERGE TW O BLOCK OF ASSETS OF PLANT AND MACHINERY AND MOTOR VEHICLES UNDER THE PROVISIO NS OF THE ACT AND THE RELEVANT DEPRECIATION SCHEDULE. WE NOTICE IN THIS BACKDROP THAT A CO-ORDINATE BENCH DECISION IN ITA NO.7358/MUM/2012 M/S. FILMCRA FT PRODUCTIONS INDIA LTD. VS. ADDL.CIT DECIDED ON 15.07.2015 QUOTED HON BLE DELHI HIGH COURTS DECISION IN ANSAL PROPERTY & INFRASTRUCTURE LTD. 20 TAXMANN.COM 770 TO CONCLUDE THAT SECTION 2(11) OF THE ACT MEANS A GROU P OF ASSETS FALLING WITHIN THE RESPECTIVE CATEGORIES/CLAUSES (A) & ( B) AND TH E FORMER ONE PERTAINING TO TANGIBLE ASSETS INCLUDING BUILDING , MACHINERY, PLA NT ETC. LEARNED CO-ORDINATE ITA NO. 3097/AHD/2013 (SAI FLIPPED COILS LTD. VS.AC IT) A.Y. 2009-10 - 4 - BENCH THEN HOLDS THAT THE RELEVANT APPENDIX OF RATE OF DEPRECIATION PRESCRIBING THE SAME RATE OF DEPRECIATION OF 15% FO R PLANT AND MACHINERY AND MOTOR VEHICLES FORMS A SINGLE CATEGORY OF BLOCK OF ASSETS. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT CORRECTN ESS THEREOF IN THE COURSE OF HEARING BEFORE US. WE ACCORDINGLY OBSERVE THAT THE ASSESSEE WAS VERY WELL JUSTIFIED IN SEEKING TO MERGE ITS PLANT & MACHINERY WITH MOTOR VEHICLE SO AS TO FORM A SINGLE BLOCK OF ASSETS AS PER PROVISIONS OF THE ACT. WE THUS DIRECT THE ASSESSING OFFICER TO FRAME NECESSARY CONSEQUENT IAL COMPUTATION AS PER THE ASSESSEES REVISED DEPRECIATION SCHEDULE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS AS PER LAW. 6. THIS ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 13 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 13/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0