M/s.The Malayala Manorama Co. Ltd, Kottayam V. The DCIT, Kottayam

ITA 329/COCH/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5602 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: IYPE JOHN
• Keywords: Depreciation; Additional depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NO.329/COCH/2016 ASSESSMENT YEAR : 2008 - 09 M/S. MALAYALA MANORMA CO.LTD., K.K. ROAD, KOTTAYAM. [PAN:AAACT 7597G] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM RANGE. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SHRI IYPE JOHN, CA REVENUE BY SHRI A. DHANARAJ, SR. DR DATE OF HEARING 27/ 07 / 201 7 DATE OF PRONOUNCEMENT 01 / 08 / 201 7 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THIS APPEAL AT THE INSTANCE OF THE ASSESSEE I S DIRECTED AGAINST THE CIT(A)S ORDER DATED 30/10/2015. THE RELEVANT ASSESSMENT YEAR IS 2008-09. 2. THE ASSESSEE HAS RAISED FIVE GROUNDS IN ITS ME MORANDUM OF APPEAL. THE GROUNDS 1 & 5 ARE GENERAL IN NATURE AND NO SPECIFIC ADJUDIC ATION IS CALLED FOR. HENCE, THESE GROUNDS ARE REJECTED. THE REMAINING SURVIVING GROU NDS READ AS FOLLOWS: ITA NO.329/COCH/2016 2 2. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRE D IN NOT ALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION OF RS.73,89,227/- IN RESPECT OF FM RADIO MACHINERY. 3. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERR ED IN NOT ALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION ON PHOTOGRAPHY EQU IPMENT OF RS.26,45,519/-. 4. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ER RED IN NOT ALLOWING THE CREDIT FOR TDS IN THE SUM OF RS.11,42,476/- (RS.90, 87,285/- - RS.79,44,809/-). GROUND NO. 2 3. THE BRIEF FACTS IN RELATION TO THE ABOVE GROUN D IS THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING OF NEWSPAPER AND MAGAZINES. IT ALSO RUNS A FM RADIO STATION IN THE NAME AND STYLE OF RADIO MANGO. THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF ADDITIONAL DEPR ECIATION OF RS.73,89,227/- ON FM RADIO EQUIPMENTS. THE RELEVANT FINDING OF THE ASSE SSING OFFICER IN DENYING THE BENEFIT OF ADDITIONAL DEPRECIATION OF RS.73,89,227/ - READS AS FOLLOWS: 2.2 THE ASSESSEES MAIN BUSINESS IS PRINTING AND PUBLISHING OF MAGAZINES AND NEWSPAPERS. THIS INDEED IS A MANUFACTURING ACT IVITY (EMPHASIS SUPPLIED). SO PLANT AND MACHINERY THAT IS USED IN THIS ACTIVIT Y IS ELIGIBLE FOR ADDITIONAL DEPRECIATION. HOWEVER IN FM RADIO DIVISION, NO MAN UFACTURING IS CARRIED OUT. THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION ON ASSETS USED IN THIS ACTIVITY. SINCE THESE EQUIPMENTS ARE NOT RELATED TO MANUFACTU RE, NO ADDITIONAL DEPRECIATION IS AVAILABLE ON THESE ASSETS. 3.1 AGGRIEVED BY THE ORDER OF THE ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A), FOLLOWING THE TRIBUNALS ORDER IN ITA NO.329/COCH/2016 3 ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 REPORTED IN 28 ITR (TRIB.)144 REJECTED THE CLAIM OF ADDITIONAL DEPRECIATION ON EQ UIPMENTS OF FM RADIO STATION. 3.2 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASS ESSEE HAS FILED THE PRESENT APPEAL RAISING THE ISSUE OF DENIAL OF ADDITIONAL DEPRECIAT ION AMOUNTING TO RS.73,89,227/-. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNALS ORDER IN ASSESSEES OWN CASE (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE MAINLY FOR THE REASON THAT LICENSE WAS NOT GRANTED FOR OPERATING F M RADIO STATION DURING THE RELEVANT ASSESSMENT YEAR AND THE EQUIPMENTS WERE NO T PUT TO USE AND THEREFORE, ASSESSEE WAS NOT ELIGIBLE FOR DEPRECIATION AND ADDI TIONAL DEPRECIATION. THE LD. COUNSEL SUBMITTED THAT THE ISSUE WHETHER FM RADIO S TATION IS INVOLVED IN ANY MANUFACTURING ACTIVITY OF ANY ARTICLE OR THING HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RADIO TODAY BROADCASTING LTD. REPORTED IN 382 ITR 42. 3.3 THE LD. DR SUPPORTED THE ORDERS OF THE ASSESS ING OFFICER AND THE CIT(A). 3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2007-08, THE TRIBUNAL IN ASSESS EES OWN CASE (SUPRA) HAD HELD THAT THE FM RADIO STATION OF THE ASSESSEE HAD NOT B ECOME OPERATIONAL DURING THE ASSESSMENT YEAR 2007-08 AND THEREFORE, MACHINERY IN STALLED WAS NOT ENTITLED TO DEPRECIATION AND ADDITIONAL DEPRECIATION. THE TRIB UNAL ALSO FOUND THAT ASSESSEE BY ITA NO.329/COCH/2016 4 OPERATING THE FM RADIO STATION WAS NOT ENGAGED IN A NY MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. IT WAS CONCLUDED BY TRIBUNAL SINCE ASSESSEE COMPANY WAS NOT ENGAGED IN ANY MANUFACTURE OR PRODUCTION OF ANY ART ICLE OR THING, IT WAS NOT ENTITLED TO ADDITIONAL DEPRECIATION U/S. 32(1)(IIA) OF THE A CT. 3.4.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RADIO TODAY BROADCASTING LTD. (SUPRA) HAD DECIDED THE ISSUE WHETHER THE FM R ADIO STATION IS ENGAGED IN ANY MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, IN FAVOUR OF THE ASSESSEE. THE HONBLE HIGH COURT HAD HELD THAT THE ASSESSEE IN TH AT CASE WAS ENTITLED TO THE BENEFIT OF ADDITIONAL DEPRECIATION SINCE IT HAS SATISFIED T HE CONDITIONS MANDATED U/S. 32(1)(IIA) OF THE ACT. 3.4.2 WE FIND THAT THE FACTS CONSIDERED BY THE H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RADIO TODAY BROADCASTING LTD. (SUPRA) AR E IDENTICAL TO THE FACTS OF THE INSTANT CASE. THE CIT(A) DID NOT HAVE THE BENEFIT OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RADIO TODAY BROADCASTING LTD. (SUPRA) BEFORE PASSING HIS IMPUGNED ORDER. SINCE THE HONBLE DELH I HIGH COURT IN THE CASE OF CIT VS. RADIO TODAY BROADCASTING LTD. (SUPRA) HAD CONSIDERE D AN IDENTICAL ISSUE WHICH WAS NOT AVAILABLE AT THE TIME CIT(A) PASSED HIS ORDER, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE CONSIDERED BY HIM AGAIN. THEREFORE, TH E ISSUE OF ADDITIONAL DEPRECIATION ON EQUIPMENTS OF FM RADIO STATION IS RESTORED TO TH E FILES OF THE CIT(A). THE CIT(A) SHALL CONSIDER THE VARIOUS JUDICIAL PRONOUNCEMENTS AND SHALL TAKE A DECISION IN ITA NO.329/COCH/2016 5 ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPO RTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. HENCE GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 4. THE ASSESSING OFFICER HAD DISALLOWED ADDITION AL DEPRECIATION AMOUNTING TO RS.26,45,519/- ON EQUIPMENTS OTHER THAN IN THE FM R ADIO DIVISION. THE RELEVANT FINDING OF THE ASSESSING OFFICER READS AS FOLLOWS: 2.3 THE ASSESSEE HAS ALSO CLAIMED ADDITIONAL DEPR ECIATION ON SOME OTHER ASSETS (I.E., NOT FM RADIO RELATED) WHICH ARE NEITH ER OFFICE EQUIPMENTS OR EQUIPMENTS WHICH DO NOT HAVE ANY RELATIONSHIP TO TH E ASSESSEES MANUFACTURING ACTIVITY. HENCE ADDITIONAL DEPRECIATI ON IS NOT ALLOWABLE ON THESE ASSETS EITHER. 4.1 AGGRIEVED BY THE ORDER OF THE ASSESSMENT WITH REGARD TO THE DENIAL OF ADDITIONAL DEPRECIATION ON EQUIPMENTS OTHER THAN IN THE FM RAD IO DIVISION, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORIT Y RAISING THE FOLLOWING GROUND: 3. THE DEPUTY COMMISSIONER HAS ERRED IN DISALLOWIN G THE CLAIM OF ADDITIONAL DEPRECIATION ON PHOTOGRAPHY EQUIPMENT OF RS.26,45,5 19/. 4.2 THE CIT(A) DID NOT ADJUDICATE THE ABOVE GROUND RAISED BY THE ASSESSEE. HENCE THE APPEAL ON THE ISSUE BEFORE THE TRIBUNAL. ITA NO.329/COCH/2016 6 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. SINCE THE CIT(A) HAS NOT ADJUDICATED THE GROUND REGARDING ADDITIONAL DEPRECIATION ON PHOTOGRAPHY EQUIPMENT AMOUNTING TO RS.26,45,519/-, WE DEEM IT APPROPRIATE THAT GROUND NO. 3 RAISED HEREIN SHOULD BE RESTORED TO TH E FILES OF THE CIT(A). ACCORDINGLY, THE ABOVE ISSUE IS RESTORED TO THE FILES OF THE CIT (A). THE CIT(A) SHALL DISPOSE OF THE MATTER AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. HENCE GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 4 5. THE ASSESSEE DID NOT PRESS THIS GROUND IN THE COURSE OF HEARING SINCE THE CIT(A) ON AN APPLICATION U/S. 154 FILED BY THE ASSE SSEE HAD ALREADY DIRECTED THE ASSESSING OFFICER TO LOOK INTO THE ISSUE. IN VIEW OF THE SUBMISSION MADE BY THE ASSESSEE, THE GROUND NO. 4 IS DISMISSED. IT IS ORD ERED ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 01-08-2017. SD/- SD/- (ABRAHAM P. GEORGE) ( GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 01 ST AUGUST, 2017 ITA NO.329/COCH/2016 7 GJ COPY TO: 1. M/S. MALAYALA MANORMA CO.LTD., K.K. ROAD, KOTTAY AM. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM RANGE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOTTAYA M. 4. THE PR. COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRA R) I.T.A.T. , COCHIN