GTC INDUSTRIES LTD ( PRESENTLY KNOWN AS GOLDEN TOBACO LTD), MUMBAI V. ACIT CIR 8(1), MUMBAI

ITA 3106/MUM/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3473 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINHA
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 32; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI R.K. GUPTA, JM AND SHRI N.K. BILLAI YA, AM ./I.T.A. NO. 3106/MUM/2009 ( / ASSESSMENT YEAR : 2004-05 M/S. GTC INDUSTRIES LTD. (PRESENTLY KNOWN AS GOLDEN TOBACO LTD.), TOBACCO HOUSE, S.V. ROAD, VILE PARLE (W), MUMBAI - 400 056 THE ACIT, CIR 8(1), AAYAKAR BHAVAN, MUMBAI ./ ./PAN/GIR NO. : AAACG 1421A ( ! /APPELLANT ) .. ( '#! / RESPONDENT ) ! $ / APPELLANT BY : ` SHRI VINODKUMAR BINDAL, SHRI S.C. GUPTA & SHRI GAURAV BANSAL '#! % $ /RESPONDENT BY : SHRI PAVAN VED & SHRI D.K. SINHA % &' / DATE OF HEARING :11.06.2013 () % &' / DATE OF PRONOUNCEMENT :19.06.2013 *+ / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE CIT DT. 26.3.2009 PASSED U/S. 263 OF THE ACT PERTAINING TO ASSESSMENT YEAR 2004-05. 2. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSE E THAT THE CIT FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT DT. 17.3.2006 WAS NEITHER ERRONEOUS OR PREJUDICIAL TO T HE INTEREST OF THE REVENUE AND THEREFORE, THE CIT ERRED IN INVOKING TH E JURISDICTION U/S. 263 ITA NO.3106/M/09 2 OF THE ACT. THE IMPUGNED ASSESSMENT ORDER SUBJECT TO PROCEEDINGS U/S. 263 WAS PASSED U/S. 143(3) DT. 27.12.2006. -THE CIT INVOKING HIS JURISDICTION U/S. 263 WAS OF THE OPINION THAT THE A SSESSING OFFICER HAS NOT APPLIED HIS MIND THAT NO DEPRECIATION WAS ALLOWABLE ON AN INTANGIBLE ASSETS ACQUIRED PRIOR TO 1.4.1998 THEREBY COMMITTI NG AN ERROR WHICH HAS CAUSED PREJUDICE TO THE REVENUE AS EXCESSIVE DEPRE CIATION HAS BEEN ALLOWED. A PERUSAL OF THE SCHEDULE OF FIXED ASSETS AS ON 31 ST MARCH, 2004 EXHIBITED AT PAGE-3 OF THE PAPER BOOK SHOW THAT THE ASSESSEE HAS SHOWN WDV OF PROPERTY TIME SHARING UNIT INTANGIBLE ASSET S AT RS.5,79,49,626/- ON WHICH IT HAS CLAIMED DEPRECIATI ON AT RS. 1,04,30,933/- A WRITE OFF AT RS. 11,58,993/-. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE AO HAD ISSUED A QUESTIONNAIRE DT. 11.12.2006. QUESTIO N NO. 11 AND 17 ARE RELEVANT FOR THE ISSUE UNDER CONSIDERATION WHICH IS AS UNDER: Q.11. IT IS OBSERVED FROM THE RETURN OF INCOME THAT DEPRECIATION CLAIMED ON LAND & BUILDING INCLUDES VA LUE OF LAND. STATE WHY DEPRECIATION CLAIMED ON LAND SHOUL D NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. Q. 17. STATE WHY DEPRECIATION CLAIMED ON LEASE ASSE TS SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOM E. 4. THE ASSESSEES REPLY TO THESE SPECIFIC QUERIES W ERE AS UNDER: ANS.11. AS PER ANNEXURE C OF THE TAX AUDIT REPORT FOR THE FINANCIAL YEAR 2003-04, DEPRECIATION HAS NOT BEEN CLAIMED ON LAND. ANS. 17: THE COMPANY AS ONE OF ITS BUSINESS ACTIVIT IES HAD GIVEN CERTAIN ASSETS ON LEASE AND HAS BEEN EARNING LEASE INCOME FROM THE PARTIES TO WHOM THE MACHINES HAVE BEEN LEA SED. THE OWNERSHIP OF THESE MACHINES REMAINS WITH THE COMPAN Y, AND THERE IS NO SCOPE FOR TRANSFERRING THESE MACHINES TO THE PARTIES. THE LEASING OF PLANT & MACHINERY HAS BEEN ONE OF THE CO MPANYS REGULAR BUSINESS ACTIVITIES. ITA NO.3106/M/09 3 IN VIEW OF THIS, THE COMPANY IS ENTITLED FOR DEPRE CIATION ON THE LEASED ASSETS AS IT FULFILLS THE CONDITION OF S ECTION 32 OF THE I.T. ACT, 1961. RELIANCE IS ALSO PLACED ON THE DECISION OF THE APEX COURT IN THE CASE OF SHAAN FINANCE (P) LTD. VS CIT 231 ITR 308 (SC). 5. A PERUSAL OF THESE TWO QUESTIONS AND THE REPLIES FILED BY THE ASSESSEE CLEARLY SHOW THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO HAS NOT QUESTIONED THE CLAIM OF DEPRECIATION ON PROPERTY TIME SHARING UNIT. THEREFORE, IN OUR CONS IDERATE VIEW, THE CIT HAS RIGHTLY INVOKED THE JURISDICTION U/S. 263 OF TH E ACT AS THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BY NOT QUESTIONING THE CLAIM OF DEPRECIATION ON PROPERTY T IME SHARING UNIT. WHILE UPHOLDING THE ORDER OF THE CIT PASSED U/S. 26 3 OF THE ACT, WE MODIFY THE DIRECTION ISSUED BY THE CIT. WE, THEREF ORE, DIRECT THE AO TO VERIFY WHETHER THE PROPERTY TIME SHARING UNIT ACTUA LLY FALLS UNDER THE CATEGORY OF INTANGIBLE ASSETS AFTER GIVING A REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. TO THIS EXTENT, DIRECT IONS OF THE CIT ARE MODIFIED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON . *+ % ) , -*. ) % / SD/- SD/- (R.K. GUPTA ) (N.K . BILLAIYA ) * /JUDICIAL MEMBER * / ACCOUNTANT MEMBER MUMBAI; -* DATED 19/06/2013 . . ./ RJ , SR. PS ITA NO.3106/M/09 4 *+ *+ *+ *+ % %% % '&0 '&0 '&0 '&0 10& 10& 10& 10& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. 2 ( ) / THE CIT(A)- 4. 2 / CIT 5. 03/ '& , , / DR, ITAT, MUMBAI 6. /4 5 / GUARD FILE. *+ *+ *+ *+ / BY ORDER, #0& '& //TRUE COPY// 6 66 6 / 7 7 7 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI