Tejdeep Engineering Enterprises Pvt. Ltd. (Presently known as Devesh Engineering Enterprises Pvt. Ltd.), Hyderabad, Hyderabad V. ITO, Ward-2(2), Hyderabad, Hyderabad

ITA 336/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2161 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 10-05-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Principle of natural justice; Question of law; Set aside
• Section: 271(1)(c); 143(3); 143(1); 44AB; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 3 36 /H/20 1 7 ASSESSMENT YEAR: 2 0 09 - 1 0 TEJDEEP ENGINEERING ENTERPRISES PVT. LTD. (PRESENTLY KNOWN AS DEVESH ENGINEERING ENTERPRISES PVT. LTD.) HYDERABAD. PAN A A BCT 6576A VS. INCOME - TAX OFFICER , WARD 2(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. M URALI MOHAN RAO REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 10 /0 5 /2021 DATE OF PRONOUNCEMENT: 29 /0 6 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT(A) 2 , HYDERABAD S ORDER DATED 30 / 11 /201 6 FOR AY 20 09 - 1 0 INVOLVING PROCEEDINGS U/S 1 4 3( 3 ) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT ON THE FOLLOWING GROUNDS OF APPEAL: I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 2 - : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 2, HYDERABAD, HEREIN AFTER REFERRED TO AS 'LD.CIT(A)' IS ERRONEOUS BOTH ON FACTS AND LAW TO THE EXTENT THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT. 2. THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 10,75,718/ - TOWARDS DISALLOWANCE OF DEPRECIATION MADE BY THE INCOME TAX OFFICER, WARD - 2(2), HYDERABAD, HEREINAFTER REFERRED TO AS 'THE ASSESSING OFFICER/ A.O' VIDE ORDER U/ S 143(3) DATED, 30.12.2011. 3. THE CIT (A) OUGHT TO HAVE APP RECIATED THE FACT THAT THE A.O., MADE ADDITION TOWARDS DISALLOWANCE OF DEPRECIATION, WITHOUT AFFORDING REASONABLE OPPORTUNITY TO EXPLAIN AND HEAR THE APPELLANT, WHICH ACT OF THE A.O., IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE A.O., DISALLOWED APPELLANT'S CLAIM OF DEPRECIATION, MERELY ON THE BASIS OF DISALLOWANCE OF DEPRECIATION BY THE A.O., FOR EARLIER YEARS, WITHOUT APPRECIATING THE FACTS THAT THE CIT (A) ALLOWED APPELLANT'S CLAIM OF DEPRECI ATION FOR THE A.Y. 2006 - 07 AND 2008 - 09 AND THE HON. ITAT SET ASIDE THE ISSUE OF DEPRECIATION TO THE CIT (A) FOR THE ASSESSMENT YEAR 2007 - 08. 5. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE A.O., HAS TO ALLOW THE CLAIM OF DEPRECIATION WHEN THE ASSESSEE COMPANY IS MAINTAINING REGULAR BOOKS OF ACCOUNTS, WHICH HAVE BEEN AUDITED UNDER COMPANIES ACT, 1956 AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AB OF THE INCOME, TAX ACT, 1961 AND AN AUDIT REPORT IN FORM 3CD WAS ISSUED BY THE QUALIFIED CHAR TERED ACCOUNTANT, WHEREIN THE CLAIM OF DEPRECIATION WAS CERTIFIED BY HIM. I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 3 - : 6. THE CIT (A) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON. ITAT, HYDERABAD, IN THE CASE OF M/S BARTRONICS INDIA LTD VS. ACIT 2188/HYD/2011, WHEREIN THE HON. ITAT HELD THAT ON CE THE STATUTORY AUDIT HAS BEEN CONDUCTED AND NO DISCREPANCY FOUND ,IN THE BOOKS AND ACCOUNTS, THE A.O., CANNOT UNILATERALLY REJECT THAT REPORT AND DENY DEPRECIATION. 7. THE CIT (A) OUGHT TO HAVE CONSIDERED THE VOUCHERS PRODUCED/FURNISHED BY THE APPELLAN T BEFORE HIM IN SUPPORT OF ITS CLAIM OF DEPRECIATION AND OUGHT TO HAVE ALLOWED THE SAME. 8. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE A. O ., FAILED IN MAKING ENQUIRIES WITH REGARD TO PURCHASE OF ASSETS INSTALLING THEM AND PUTTING THEM TO USE BEFORE ARRIVING AT THE CONCLUSION THAT THE APPELLANT HAS NOT PURCHASED THE ASSETS. 9. THE CIT (A) ERRED IN NOT ADJUDICATING GROUND.NO.3 OF THE APPEAL FILED BEFORE HIM, STATING THAT THE A.A O ERRED IN ADDING AN AMOUNT OF RS. 1,77,000 IN COMPUTATION OF TOT AL INCOME . 10. THE CIT (A) ERRED IN NOT ADJUDICATING GROUND NO. 4 OF THE APPEAL FILED BEFORE HIM, STATING THAT THE APPELLANT HAS NOT CONCEALED ANY INCOME OR NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND HENCE PENALTY PROCEEDINGS UL S 271(1)(C) OF THE ACT MAY NOT BE INITIATED . 11. THE APPELLANT MAY ADD, ALTER OR MODIFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 4 - : 1.1 THE ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 12. WE WOULD LIKE TO SUBMIT THAT AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL POWER CO. LTD VS. CIT (1998) 229 ITR 383 (SC) THE IT AT HAS JURISDICT ION TO EXAMINE THE QUESTION OF LAW WHICH THOUGH NOT AROSE BEFORE THE CIT (A) BUT AROSE BEFORE THE ITAT FOR THE FIRST TIME. 13. THE LD. CIT(A) - 2 OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO ERRED IN DISALLOWING THE DEPRECIATION OF RS.10,75,718 / - ON COMP UTERS WHEREAS THE APPELLANT CLAIMED DEPRECIATION OF RS.10,67,282 ONLY ON THOSE COMPUTERS IN RETURN OF INCOME. 14. THE APPELLANT MAY ADD, ALTER OR MODIFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING O F THE APPEAL. 2 . BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, A TRADERS IN STEEL, FILED ITS RETURN OF INCOME FOR THE AY 2009 - 10 ON 31/03/2010 DECLARING TOTAL INCOME OF RS. 12,47,450/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 30/10/ 2010. SUBSEQUENTLY, THE CASE WAS CONVERTED INTO SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, THE AR OF THE ASSESSEE FURNISHED THE INFORMATION CALLED FOR. 2.1 DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE CLAIMED VAT INTEREST OF RS. 1,26,747/ - AND ACCORDING TO HIM, THE SAME WAS NOT AN ELIGIBLE EXPENDITURE, HENCE, DISALLOWED. I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 5 - : 2.2 FURTHER, HE OBSERVED THAT DURING THE FYS 2005 - 06, 2006 - 07 AND 2007 - 08, ASSESSEE MADE ADDITIONS TO COMPUTERS OF RS. 14,21,100/ - , RS. 16,00,025/ - AND RS. 20,65,658/ - RESPECTIVELY. SINCE THE ASSESSEE COULD NOT FURNISH THE PURCHASE INVOICES, THE CLAIM OF DEPRECIATION WAS DISALLOWED FOR THE AYS 2006 - 07, 2007 - 08 AND 2008 - 09. THE AO DISALLOWED IN THIS IMPUGNED AY ALSO T HE CLAIM OF DEPRECIATION OF RS. 54,540/ - , RS. 1,53,602/ - AND RS. 8,67,576/ - RELEVANT TO THE ADDITIONS TO COMPUTERS FOR AYS 2006 - 07, 2007 - 08 AND 2008 - 09. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) DE LETED THE ADDITION OF RS. 126,747/ - MADE BY THE AO ON ACCOUNT OF INTEREST ON VAT AND CONFIRMED THE DISALLOWANCE OF RS. 10,75,718/ - ON ACCOUNT OF DEPRECIATION ON THE GROUND THAT THE AR OF THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE IN SUPPORT OF HAVING MADE ADDITIONS TO THE COMPUTERS. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO HAD MADE DISALLOWANCE RELYING ON A CONCLUSION DRAWN BY EARLIER OFFICER, WHICH IS IN DISPUTE WITHOUT PERSONALLY EXAMINING OR VERIFYING THE FACTS TO THE I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 6 - : DISALLOWANCE OF DEPRECIATION OF RS. 10,75,718/ - IS NOT JUSTIFIABLE IN LAW AND IS AGAINST THE PROVISIONS OF THE ACT. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF RS. 10,75,718/ - MADE BY THE AO ON ACCOUNT OF DEPRECIATION TOWARDS ADDITIONS TO COMPUTERS ON THE GROUND THAT THE AR OF THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE IN SUPPORT OF HAVING MADE ADDITIONS TO THE COMPUTERS. EVEN THE AO ALSO MADE ADDITION ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH THE PURCHASE INVOICES AGAINST ADDITIONS TO COMPUTERS. THE CONTENTION OF THE ASSESSEE IS THAT ONCE THE STATUTORY AUDIT HAS BEEN CONDUCTED AND NO DISCREPANCY IS FOUND IN THE BOOKS OF ACCOUNT, THE AO CANNOT UNILATER ALLY REJECT THAT REPORT AND DENY DEPRECIATION. FURTHER, HE CONTENDED THAT THE AO FAILED TO MAKE ENQUIRIES WITH REGARD TO PURCHASE OF ASSETS INSTALLING THEM AND PUTTING THEM TO USE BEFORE ARRIVING AT THE CONCLUSION THAT THE ASSESSEE HAS NOT PURCHASED THE AS SETS. THE ASSESSEE ALSO CONTENDED THAT THE AO HAS DISALLOWED THE DEPRECIATION OF RS. 10,75,718/ - AGAINST THE ASSESSEES CLAIM OF DEPRECIATION OF RS. 10,67,282/ - . WE FIND THAT S IMILAR ISSUE WAS DISALLOWED BY THE AO IN AYS 2006 - 07, I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 7 - : 2007 - 08 AND 2008 - 09. THE ASSESSEE HAS PRODUCED APPEAL EFFECT FOR AY 2007 - 08 IN WHICH THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED. IN RESPECT OF AY 2008 - 09, THE CIT(A) HAS REMITTED THE MATTER TO THE FILE OF AO FOR VERIFICATION OF PURCHASE INVOICE OF THE COMPUTER. AGAINST THE ORDER OF CIT(A), T HE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 1815/HYD/2012, VIDE ORDER DATED 27/08/2015 AT PARA NO. 14 OBSERVED AS UNDER: 14 . WITH RESPECT TO GROUND NO. 12 RAISED WITH RESPECT TO DEPRECIA TION ON COMPUTERS, WE DO NOT FIND ANY INFIRMITY WITH THE ORDER OF THE CIT (A) , AS THE CIT (A) HAS MERELY DIRECTED THE ASSESSING OFFICER TO VERIFY THE PURCHASE BILLS WITH RESPECT TO THE NEW COMPUTERS ACQUIRED DURING THE YEAR AND, THEREFORE, IT IS FOR THE A SSESSEE TO ADDUCE EVIDENCE SATISFACTORILY IN ORDER TO BE ELIGIBLE FOR DEPRECIATION. WE CONFIRM THE ORDER OF THE C IT(AL ON THIS ISSUE. 7.1 WE NOTICE FROM THE DEPRECIATION SCHEDULE DURING THE IMPUGNED AY, THE ADDITION UNDER THE COMPUTER & SOFTWARE IS ONLY OF RS. 7,750/ - . THE ADDITION OF RS. 10,75,718/ - RELATES TO AYS 2006 - 07, 2007 - 08 AND 2008 - 09 OF RS. 54,540/ - , RS. 1,53,602 AND RS. 8,67,576/ - RESPECTIVELY. THERE IS NO DISPUTE WITH REGARD TO AY 2007 - 08 AS THE AO HAS PASSED CONSEQUENTIAL ORDER ON 06/03/2012 AND ACCEPTED THE CLAIM OF T HE ASSESSEE, THE DETAILS OF WHICH ARE PLACED AT PAGE NOS. 73 & 74 OF PAPER BOOK. IN VIEW OF THE ABOVE OBSERVATIONS, THE AO IS DIRECTED TO RECOMPUTE THE DEPRECIATION AS PER THE ORDER OF THE TRIBUNAL QUOTED I TA NO. 336 /HYD /201 7 TEJDEEP ENGG. ENTERPRISES PVT. LTD. HYD. : - 8 - : ( SUPRA ) FOR AY 2008 - 09. ACCORDINGLY, THE APPEAL OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 29 TH JUNE , 20 2 1 . K V C OPY TO : 1 M/S TEJDEEP ENGINEERING ENTERPRISES PVT. LTD. (PRESENTLY KNOWN AS DEVESH ENGG. ENTERPRISES PVT. LTD., C/O P. MURALI & CO., CAS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2 IT O , WARD 2(2), HYDERABAD. 3 C I T(A) 2 , HYDERABAD. 4 PR. CIT - 2 , HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.