ITO, Chandigarh V. M/s Punjab Pre-stressed Concrete Works Ltd., Chandigarh

ITA 345/CHANDI/2010

• Counselvise Citation: 34521514 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAISHREE SHRMA
• Assessee Lawyers: A K JINDAL
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHE B CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.345/CHD/2010 ASSESSMENT YEAR :2006-07 PAN: INCOME TAX OFFICER VS. M/S. PUNJAB PRE-STRESSED CO NCRETE WORKS WARD 3(3), CHANDIGARH. LTD., CHANDIGARH. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. JAISHREE SHRMA, DR ASSESSEE BY: SH. A.K. JINDAL DATE OF HEARING: 23.11.2011 DATE OF PRONOUNCEMENT:24.11.2001 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A), CHANDIGARH, DATED 01/12/2009, PA SSED UNDER SECTION 250(6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO IN SHORT THE ACT), FOR THE ASSESSMENT YEAR 2006-07, WHERE THE REVENUE RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), IS RIGHT IN LAW ON ALLOWING THE EXPEN DITURE CLAIMED BY THE ASSESSEE COMPANY PARTICULARLY WHEN THE BUS INESS OF THE ASSESSEE HAD BEEN CLOSED LONG TIME BACK. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), IS RIGHT IN LAW ON ALLOWING THE SET O FF OF INCOME FROM OTHER SOURCES AGAINST UNABSORBED DEPRECIATIO N FOR THE A.Y. 1998-99 WHEN ACTUALLY THE ASSESSEE HAD NO DEPREC IATION IN THE ABSENCE OF ITS BUSINESS. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) B E CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND S OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OF. 2 2. IN GROUND NO.1 THE REVENUE CHALLENGED THE ALLOW ANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE-COMPANY PARTICULARLY WHEN T HE BUSINESS OF THE ASSESSEE HAD BEEN CLOSED LONG TIME BACK. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, FACTS OF T HE CASE AND THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. COUNSE L FOR THE ASSESSEE CONTENDED THAT THE EXPENSES ARE NECESSARY FOR MAIN TAINING THE STATUS AS A COMPANY WHICH ARE IN THE NATURE OF FEES PAID TO ROC , POSTAGE EXPENSES, STATIONERY AND AUDIT FEES. AS REGARDS FEES PAID TO VARIOUS ADVOCATES, PHOTO COPIES OF THE BILLS WERE FILED IN THE ASSESSMENT P ROCEEDINGS. IT WAS CONTENDED THAT THE AMOUNT INCLUDES RS.17,010/- PAID TO VARIOUS ADVOCATES FOR TRAVELING AND THE REMAINING AMOUNT OF RS.35,500 /- PAID TO ADVOCATES TOWARDS FEES FOR ATTENDING VARIOUS CASES BEFORE COU RTS TO DEFEND THE COMPANY. THE LD. COUNSEL FOR THE ASSESSEE, PLACED R ELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. BATRA FILMS PVT. LTD. 179 ITR134 (P&H). THE LD. CIT(A), V IDE PARAS 7 & 8 ALLOWED THE EXPENDITURE FOLLOWING THE AFORESAID DE CISION OF THE JURISDICTIONAL HIGH COURT. THE VERY NATURE OF EXPEN DITURE CLAIMED BY THE ASSESSEE-COMPANY IS IN THE NATURE OF BARE MAINTENAN CE OF THE COMPANY. THE EXPENDITURE THOUGH INCURRED AFTER THE CLOSURE OF TH E BUSINESS BUT IS ESSENTIAL FOR THE SURVIVAL OF THE COMPANY AS AN ENTITY. THU S, IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, IN THE CA SE OF CIT VS. BATRA FILMS PVT. LTD. (SUPRA), WE UPHOLD ACTION OF THE LD. CIT( A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 4. IN GROUND NO.2, THE REVENUE CONTENDED THAT THE L D. CIT(A), IS NOT RIGHT IN LAW IN ALLOWING SET OFF OF INCOME FROM OTH ER SOURCES AGAINST 3 UNABSORBED DEPRECIATION FOR THE ASSESSMENT YEAR 19 98-99 WHEN ACTUALLY THE ASSESSEE HAD NO DEPRECIATION IN THE ABSENCE OF ITS BUSINESS. 5. THE LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE ISSUE DOES NOT ARISE FROM THE ASSESSMENT ORDER PASSED BY THE A.O. AND HE ALSO CONTENDED THAT UNABSORBED DEPRECIATION CARRIED FORWARD IS TRE ATED AS CURRENT YEAR DEPRECIATION AND IS ALSO ELIGIBLE FOR SET OFF AGAIN ST INCOME FROM OTHER SOURCES. 6. THE LD. DR, ON THE OTHER HAND, CONTENDED THAT THE ISSUE PATENTLY ARISE FROM THE ASSESSMENT ORDER AND IS COVERED AGAI NST THE ASSESSEE BY THE DECISION OF THE ITAT, MUMBAI E SPECIAL BENCH, IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS. TIMES GUARANTY LIMIT ED (2010) 41 DTR (MUMBAI)(SB)(TRIB) 193. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT, MUMBAI E SPECIAL BENCH, IN THE CASE OF DEPUTY COMMISSIONER O F INCOME TAX VS. TIMES GUARANTY LIMITED (2010) 41 DTR (MUMBAI)(SB)(T RIB) 193, WHEREIN IT HAS BEEN HELD AS UNDER: IT IS NOWHERE LAID DOWN THAT THE UNABSORBED DEPR ECIATION OF THE EARLIER PERIOD IS TO BE GIVEN THE CHARACTER OF CU RRENT DEPRECIATION IN THE PERIOD AFTER IST APRIL,2002 THEREFORE, ASSESSEE CANNOT CLAIM SET OFF OF UNABSORBED DEPRECIATION RELATIN G TO ASSESSMENT YEARS 1997-98 TO 1999-2000 AGAINST INC OME UNDER ANY HEAD OTHER THAN PROFITS AND GAINS OF BUSINES S OR PROFESSION IN ASSTT, YEARS. 2003-04 AND 2004-05 . 7.1. ` IT IS SETTLED LEGAL PROPOSITION THAT UNABSOR BED DEPRECIATION OR CURRENT DEPRECIATION CANNOT BE SET OFF AGAINST INCOME FROM OTHER SOURCES EXCEPT INCOME EARNED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SECTION 28 OF THE ACT. THE A.O. HAS ASSESSED THE INTEREST INCOME AT RS.6,96,252/- UNDER THE HEAD INCOME FROM OTHER SOU RCES AND HELD THAT NO ADJUSTMENT IS MADE AGAINST UNABSORBED DEPRECIATION IN PARA 5.1. OF THE 4 ASSESSMENT ORDER. HAVING REGARD TO THE FACT SITUAT ION OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT, MU MBAI E SPECIAL BENCH, IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS . TIMES GUARANTY LIMITED (SUPRA), THE ISSUE IN QUESTION IS DECIDED I N FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 8. GROUND NO.3 & 4 ARE GENERAL IN NATURE AND NEED N O SEPARATE ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 24TH NOVEMBER, 2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: TH NOVEMBER, 2011 /SKR/ COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT:M/S. PUNJAB PRE-STRESSED CONCRETE WOR KS LTD. CHANDIGARH. 2. THE RESPONDENT ITO WARD 3(3), CHANDIGARH. 3. THE CIT(A) 4. THE CIT 5. THE DR, INCOME-TAX DEPARTMENT, CHANDIGARH.