STATOMAT SPECIAL MACHINES (INDIA) P.LTD, NAVI MUMBAI V. ACIT RG 10(3), MUMBAI

ITA 3104/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4202 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 27-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI RK.GUPTA, JUDICIAL MEMBER & SHRI N K BILLAIYA, ACCOUNTANT MEMBER ITA NO.3104/MUM/2011: ASST. YEAR 2008-09 STATOMAT SPECIAL MACHINES (INDIA) PRIVATE LIMITED, PLOT NO.R/719, TTC INDUSTRIAL AREA, MIDC, RABALE, NAVI MUMBAI- 400 701 PAN :AAACS7260B VS. ACIT RANGE 10(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKRAM KHAN RESPONDENT BY : MS JOTHILAKSHMI NAYAK DATE OF HEARING : 27.06.2013 DATE OF PRONOUNCEMENT :05.07.2013 O R D E R PER N.K.BILLAIYA (AM) : WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE CIT(A) -22, MUMBAI, DATED 11.02.2011, PERTAININ G TO A.Y. 2008-09. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUNDS OF AP PEAL. 2. GROUND NO.1 RELATES TO CLAIM OF DEPRECIATION ON UPS SYSTEM. THE ASSESSEE HAS CLAIMED DEPRECIATION @60% AS APPLICABLE TO COMP UTER SYSTEM. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE FACT THAT UPS SY STEM IS A PART OF THE COMPUTER SYSTEM AND, ACCORDINGLY, ALLOWED DEPRECIATION @15% ONLY. WHEN THIS MATTER WAS AGITATED BEFORE THE CIT(A), THE CIT(A) WAS CONVINCE D WITH THE DECISION OF THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS BEFOR E US. THE COUNSEL FOR THE ASSESSEE RELIED UPON VARIOUS DECISIONS TO SUBSTANTI ATE THE CLAIM FOR DEPRECIATION. WE 2 ITA NO.3104/MUM/2011 AY:2008-09 FIND THAT THE HONBLE HIGH COURT OF DELHI IN THE CA SE OF CIT V. ORIENT CERAMICS AND INDUSTRIES LTD. IN ITA NO 65 & 66 OF 2011 HAS FOLLO WED THE EARLIER JUDGMENT OF THE SAME COURT IN THE CASE OF CIT V. BSES YAMUNA POWER L TD. IN ITA NO. 1267 DECIDED ON 31.08.2010 AND HAS ALLOWED DEPRECIATION @60% ON UPS. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT, WE DI RECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION @60% ON UPS. 3. GROUND NO.2 RELATES TO THE ADDITION OF RS.7,96,0 49/- BEING PARTICIPATION FEES FOR A TRADE EXHIBITION. WHILE SCRUTINIZING THE RET URN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED SELLING AND D ISTRIBUTION EXPENSES. ON VERIFYING THE DETAILS OF EXPENSES UNDER THIS HEAD, THE ASSESS ING OFFICER FOUND THAT THE ASSESSEE HAS PAID A SUM OF RS.8,15,712/- FOR ELECRAM A 2008. ON FURTHER VERIFYING THE DETAILS THE ASSESSING OFFICER FOUND THAT THE SU M OF RS.7,96,049/- IS SHOWN AS PARTICIPATION IN EXHIBITION. THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THIS PAR TICIPATION FEES, HE DISALLOWED THE ENTIRE AMOUNT OF RS.7,96,049/- AND ADDED IT TO THE RETURN OF THE ASSESSEE. THE ASSESSEE CARRIED THIS MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 4. BEFORE US, THE COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEE HAS PARTICIPATED IN ELECRAMA AND THE SAID AMOUNT HAS BEE N PAID AS EXHIBITION CHARGES. THE DR SUPPORTED THE FINDINGS OF THE ASSESSING OFFI CER. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE FAIL TO UNDERSTAND HOW THE EXHIBITION CHARGES COME WITHIN T HE DEFINITION OF RENT AS PROVIDED U/S. 194(I) OF THE ACT. AS THE SAID PAYMENT OF EXH IBITION CHARGES IS NOT EVEN REMOTELY CONNECTED WITH THE PAYMENT OF RENT, THERE IS NO QUESTION OF ANY LIABILITY FOR TDS. THEREFORE, WE DO NOT FIND ANY REASON FOR THE DISALLOWANCE OF RS.7,96,049/-. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE SAME . GROUND 2 IS ACCORDINGLY ALLOWED. 6. GROUND NO.3 RELATES TO THE TREATMENT OF INTEREST INCOME OF RS.60,505/- AS INCOME FROM OTHER SOURCES AS AGAINST THE BUSINESS I NCOME SHOWN BY THE ASSESSEE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED 3 ITA NO.3104/MUM/2011 AY:2008-09 THAT THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.6 0,505/- UNDER THE HEAD BUSINESS INCOME. THE ASSESSING OFFICER WAS OF TH E FIRM BELIEF THAT IT IS NOT DERIVED FROM THE BUSINESS AND, THEREFORE LIABLE TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) WAS CONVINCED WITH THE DECISION OF THE ASSESSING OFFICER. 7. BEFORE US THE COUNSEL FOR THE ASSESSEE SUBMITTED A DETAILED CHART OF INTEREST EARNED ON FIXED DEPOSITS. IT IS THE SAY OF THE COU NSEL THAT ALL THE FIXED DEPOSITS HAVE BEEN MADE AS PART OF BANK GUARANTEE AS REQUIRED FRO M TIME TO TIME BY ITS CUSTOMERS. THE COUNSEL FURTHER DREW OUR ATTENTION TO PAGE 16 OF THE PAPER-BOOK AND POINTED OUT THAT THE BANK HAS GIVEN CREDIT FACI LITIES ON A MARGIN OF 25% WHICH HAS BEEN GIVEN IN THE FORM OF FIXED DEPOSITS. THER EFORE, THE INTEREST INCOME SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME. THE LEA RNED DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE ORDERS OF THE LOWER AUTHORITIES. A PERUSAL OF THE INTEREST STATE MENT CLEARLY SHOWS THAT THE FIXED DEPOSITS HAVE BEEN MADE AS PART OF BANK GUARANTEE P ROVIDED TO THE VARIOUS CUSTOMERS. THE SANCTION LETTER FROM UNION BANK OF INDIA AS EXHIBITED AT PAGE 16 ALSO SHOW THAT FIXED DEPOSITS HAS BEEN PLACED BY TH E ASSESSEE WITH UNION BANK OF INDIA AS MARGIN MONEY. AS THE FIXED DEPOSIT HAS DI RECT NEXUS WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME UNDER THE HEAD BUSINESS INCOME. GROUND NO.3 IS A CCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY, 2013. SD/- SD/- (R.K.GUPTA) (N.K.BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 5 TH JULY, 2013 SA 4 ITA NO.3104/MUM/2011 AY:2008-09 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, MUMBAI 4. THE CIT (A)-22, MUMBAI 5. THE DR, E- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI