M/S Pawan Cotton Industries, Sendhwa V. THE ITO, Khargone

ITA 321/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5971 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: GIRISH AGRAWAL
• Keywords: Depreciation; Additional depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 321/IND/2016 A.Y. : 2008-09 M/S. PAWAN COTTON INDUSTRIES, ITO, KHARGONE JAWAHARGANJ, VS SENDHWA APPELLANT RESPONDENT PAN NO. AAJFP0999G A PPELLANT BY : SHRI GIRISH AGRAWAL, C. A. RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 31.12.20150 FOR THE ASS ESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS:- DATE OF HEARING : 24 .0 5 . 20 16 DATE OF PRONOUNCEMENT : 22 .0 6 . 201 6 M/S. PAWAN COTTON INDUSTREIS, SENDHWA VS. ITO, KHAR GONE I.T.A.NO. 321/IND/2016 A.Y. 2008 -09 2 2 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 10,31,959/- AS MADE BY THE AO ON ACCOUNT OF EXCESS DEPRECATION. 2. THE ADDITION OF RS. 10,31,959/- ON ACCOUNT OF EXCESS DEPRECIATION AS MADE BY THE AO AND SUSTAINED BY LD. CIT(A)-II, INDORE MAY PLEASE BE DELETED. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS TAKEN THE ALTERNATIVE PLEA STATING THAT THE IMMEDIA TELY PRECEDING YEAR AY 2007-08 WAS THE YEAR OF LOSS WHICH WAS ASSESSED U/S 143(3) BY THE SAME AO. PLANT AND MACHI NERY AND WEIGHBRIDGE ELIGIBLE FOR ADDITIONAL DEPRECIATIO N U/S 32(1)(IIA) WERE PUT TO USE IN THIS ASSESSMENT YEAR FOR A PERIOD LESS THAN 180 DAYS. SECTION 32(1)(IIA) PERMITS A DE DUCTION TOWARDS ADDITIONAL DEPRECIATION FOR A SUM EQUAL TO T WENTY PERCENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLA NT. SINCE THE ELIGIBLE ASSETS WERE PUT TO USE FOR A PERIOD LES S THAN 180 DAYS DURING THE AY 2007-08, THE ASSESSEE WAS ENTITLE D TO CLAIM FIFTY PERCENT OF THE ADDITIONAL DEPRECIATION, VIZ. TEN PERCENT OUT OF THE TOTAL AVAILABLE TWENTY PERCENT. T HUS, OUT OF M/S. PAWAN COTTON INDUSTREIS, SENDHWA VS. ITO, KHAR GONE I.T.A.NO. 321/IND/2016 A.Y. 2008 -09 3 3 THE TOTAL ADDITIONAL DEPRECIATION @ 20% OF THE COST OF ASSETS, 10% WAS CLAIMABLE IN AY 2007-08 AND BALANCE 10% IN THE IMPUGNED AY 2008-09 ON THE WRITTEN DOWN VALUE (WDV). AS AY 2007-08 WAS THE YEAR OF LOSS, ADDITIONAL DEPRECI ATION AS STATED ABOVE WAS NOT CLAIMED BY THE ASSESSEE IN TER MS OF SECTION 32(2). ASSESSEE CLAIMED ENTIRE 20% IN THE I MPUGNED AY 2008-09 INSTEAD OF SPLITTING IT IN TWO ASSESSMENT YEARS AS STATED ABOVE BY APPLYING THE PROVISIONS OF SECTION 32(2). IN AY 2007-08, LD. AO HAD ALLOWED A CARRY FORWARD OF UNABS ORBED DEPRECIATION OF RS. 1,62,735/- WHILE COMPLETING THE ASSESSMENT U/S 143(3). IF THE ASSESSEE HAD CLAIMED PERMISSIBLE DEDUCTION OF 10% OUT OF THE ADDITIONAL DEPRECIATION, THE CARRY FORWARD OF THIS UNABSORBED DEPRECIATION WOULD HAVE INCREASED TO THAT EXTENT. TH IS INCREASED UNABSORBED DEPRECIATION WOULD BE AVAILABLE FOR SET OFF IN THE NEXT YEAR, I.E. YEAR UNDER APPEAL AY 200 8-09, THEREBY RESULTING INTO NIL IMPACT ON THE ASSESSED TOTAL INCOME. IF THE ALLOWANCE OF ADDITIONAL DEPRECIATION IS SPLIT INTO TWO YEARS, THERE WILL BE NO DIFFERENCE TO THE ASSESSE D INCOME FOR AY 2008-09 AS THE CARRY FORWARD OF UNABSORBED M/S. PAWAN COTTON INDUSTREIS, SENDHWA VS. ITO, KHAR GONE I.T.A.NO. 321/IND/2016 A.Y. 2008 -09 4 4 DEPRECIATION FROM AY 2007-08 WOULD INCREASE WHICH BEC OMES AVAILABLE FOR SET OFF IN THE IMPUGNED AY 2008-09. D ETAILED WORKING OF THIS IS TABULATED AS UNDER S. NO. PARTICULARS PB PAGE (#) AMOUNT (RS.) A. AY 2007-08 : ASSESSED LOSS CARRIED FORWARD FOR SET OFF IN THE NEXT YEAR, WITHOUT CLAIM OF ADDITIONAL DEPRECIATION 27 1,62,735 B. AY 2007-08 : CLAIM OF ADDITIONAL DEPRECIATION, OUT OF TOTAL ENTITLEMENT OF 20% SINCE THE ASSETS PUT TO USE FOR LESS THAN 180 DAYS 34 5,57,815 C. TOTAL LOSS TO BE CARRIED FORWARD FOR SET OFF IN THE NEXT YEAR [1,62,735 + 5,57,815] 7,20,550 D. AY 2008-09 : ASSESSED TOTAL INCOME U/S 143(3) 08 80,020 E. ADD BACK ADDITIONAL DEPRECIATION CLAIMED @ 20% 19 10,31,959 F. ADD BACK BROUGHT FORWARD LOSS FROM AY 2007-08 AS PER ASSESSMENT ORDER 08 1,62,735 G. TOTAL INCOME AFTER ADD BACK 12,74,714 H. LESS CLAIM OF ADDITIONAL DEPRECIATION, REMAINING PART OF ENTITLEMENT OF 20% (4,74,144) I. LESS BROUGHT FORWARD LOSS FROM AY 2007-08 AS PER (C) ABOVE (7,20,550) J. ASSESSED TOTAL INCOME 80,020 M/S. PAWAN COTTON INDUSTREIS, SENDHWA VS. ITO, KHAR GONE I.T.A.NO. 321/IND/2016 A.Y. 2008 -09 5 5 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PRAYED THAT THE ADDITION OF RS. 10,31,959/- ON ACCOUNT OF EXCES S DEPRECIATION AS MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) MAY PLEASE BE DELETED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE MATTER REQUIRES INVESTIGATION AT THE END OF AO. THEREFORE, I RESTORE THE MATTER TO THE FILE OF AO WITH THE DIRECT ION THAT HE SHALL VERIFY THE FACTS AND FIGURES AS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE T ABULATED FORM AS GIVEN ABOVE AND THEN DECIDE THE MATTER AF RESH AS PER LAW. THE AO SHALL ALSO AFFORD AN OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE WHILE DECIDING THE APPEAL. M/S. PAWAN COTTON INDUSTREIS, SENDHWA VS. ITO, KHAR GONE I.T.A.NO. 321/IND/2016 A.Y. 2008 -09 6 6 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 22 ND JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 22 ND JUNE, 2016. CPU* 21