JABIL CIRCUIT INDIA P. LTD., MUMBAI V. PR. CIT -3, MUMBAI

ITA 349/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3774 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 21-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Depreciation; Set aside
• Section: 147; 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No.349/Mum/2021 (ननधधारण वर्ा / Assessment Years: 2013-14) Jabil Circuit India Pvt. Ltd. Arena House, 3 rd Floor, Plot No.103 Road, No.12, Opp. Tulip Telecom Marol MIDC, Andheri (E), Mumbai- 400093. बनधम/ Vs. PCIT-3 Room No.612, 6 th Floor, Aayakar Bhavan, Maharashi Karve Road, Mumbai-400020. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AACCP7114K (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 09/03/2022 घोषणा की तारीख /Date of Pronouncement: 26/04/2022 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 18.01.2021 passed by the Principal Commissioner of Income Tax-03, Mumbai [hereinafter referred to as the “PCIT”] relevant to the A.Y.2013-14 in which the Principal Commissioner of Income Tax-03 has invoked the provisions u/s 263 of the I.T. Act, 1961. 2. The assessee has raised the following grounds of appeal: - “Ground 1: General ground The learned CIT erred in initiating the revision proceedings under section 263 of the Act against the assessment order passed by the Assessing Officer under section 143(3) of the Act and in directing the Assessing Officer to pass fresh order without appreciating the merits of the case. Grounds challenging the validity of revision proceedings Assessee by: Shri Nitesh Joshi Revenue by: Shri Achal Sharma (DR) ITA No.349/Mum/2021 A.Y. 2013-14 2 2. Ground 2: Challenging the initiation of revision proceedings in the absence of any „error‟ in the assessment order The learned CIT erred in invoking the revision proceedings under section 263 of the Act without appreciating the fact that the Appellant made a detailed submission on allowability of depreciation on discontinued business during the course of the assessment proceedings. Hence, the assessment order cannot be regarded as „erroneous‟ for the purpose of initiating the proceedings under the said section. Ground 3: Not appreciating the submissions made by the Appellant and concluding that the assessment order is erroneous and prejudicial to the interest of the revenue The learned CIT erred in not appreciating the submission made by the Appellant challenging the initiation of revision proceedings under section 263 of the Act and holding that the assessment order is erroneous and prejudicial to the interest of the revenue. The Appellant prays that the order of the learned CIT be quashed for wrongly assuming jurisdiction under section 263 of the Act. Ground challenging the merits of the case: 4. Ground 4: Incorrect disallowance of depreciation in respect of the assets at the discontinued unit of the Appellant‟s business The learned CIT erred in disallowing depreciation pertaining to the Appellant's unit at Chennai on the ground that the Appellant had not undertaken business operations at such unit during the year, thus disregarding the concept of block of assets (once the assets have been added to the block of assets, they cannot be removed from the same for tax purposes) and without appreciating the fact that the overall business operations of the Appellant continued. ITA No.349/Mum/2021 A.Y. 2013-14 3 Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may thus be granted. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.” 3. The brief facts of the case are that the assessment of the assessee was completed on 30.11.2017 u/s 143(3) r.w.s. 144C(1) r.w.s. 92CA(3) of the Act assessing total income to the tune of Rs.1,75,76,19,553/- as against the returned income of Rs.1,38,44,07,440/-. Proposal dated 18.02.2019 speaks that no disallowance was made in respect of the claim of depreciation to the tune of Rs.6,23,00,475/- pertaining to the closed unit located at Chennai while passing the assessment order u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C(1) of the Act. Accordingly, the order seems erroneous and prejudicial to the interest of the revenue. Show cause notice dated 07.11.2019 u/s 263 of the Act was issued. Thereafter, the notice dated 17.12.2020 was also issued on following grounds: - “*...2. For the F.Y:2012-13 relevant to the assessment year under consideration, the assess, had claimed depreciation as well as expenses for the unit located in Special Economic Zone, Chennai. assessee had stopped business activities at Special Economic Zone, Chennai Unit since 01.04.2009 and thereafter, assessee has not carried out any business activities from discontinued Chennai Unit. During the assessment proceedings for AY 2013-14, assessee dig not furnish the details of the depreciation as per |. T. Act, 1961 pertaining to discontinued SEZ, Chennai unit. However, the details of the expenses pertaining to discontinued SEZ, Chennai unit was given in ITA No.349/Mum/2021 A.Y. 2013-14 4 the audited financial statements and accordingly, the AO disallowed only expenses Pertaining to discontinued SEZ, Chennai unit. 3. On the issues of expenses and depreciation claimed by the assessee in respect of discontinued SEZ, Chennai unit, audit raised objection or 2011-12 and the remedial action with respect to the Same has been taken u/s. 147 of the Act. For the A.Y. 2012-13, firstly the Hon'ble DRP, Mumbai confirmed the addition of expenses and depreciation claimed by the assessee in respect of discontinued SEZ, Chennai unit and subsequently, the Hon'ble ITAT, Mumbai has also decided the issue in favour of the Revenue. 4. For the year under consideration, the details of the depreciation as per I.T. Act are not on record. However, during the reassessment proceedings for AY 2011-12, details of depreciation pertaining to Chennai SEZ unit IT Act were furnished by the assessee. SEZ unit as per IT Act on 01.04.2011, correct depreciation pertaining to Chennai SEZ unit for AY 2013-14 is worked out at Rs. 6,23,00,475/-. Working of the same is as under: Particulars Rate Opening WDV as on 1.4.2011 Depreciation for AY 2012-13 Closing WDV as on 31.3.2012 Depreciation for AY 2013-14 Closing WDV as on 31.3.2013 Building 10% 42,70,98,731 4,27,09,873 38,43,88,858 3,84,38,885 34,59,49,973 Plant & machinery 150% 18,08,81,260 2,71,32,189 15,37,49,071 2,30,62,360 13,06,86,711 Furniture & fixture 10% 88,80,382 8,88,082 79,92,300 7,99,230 71,93,070 Total 61,68,60,372 7,07,30,144 54,61,30,229 6,23,00,475 48,38,29,754 5. It is clear from the above table that depreciation as per IT At on Chennai SEZ unit works out to be Rs.6,23,00,475/- which was to be disallowed for the A.Y.2013-14. However, during the assessment proceeding, depreciation as per IT Act on Chennai SEZ was not disallowed.” 4 After the reply of the assessee, the CIT(A) has invoked the revisional power u/s 263 of the Act but the assessee was not satisfied, therefore, the assessee has filed the present appeal before us. ITA No.349/Mum/2021 A.Y. 2013-14 5 ISSUE No.5 5. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. The PCIT has invoked the revisional power u/s 263 of the Act in view of the following grounds: - ““*...2. For the F.Y:2012-13 relevant to the assessment year under consideration, the assess, had claimed depreciation as well as expenses for the unit located in Special Economic Zone, Chennai. assessee had stopped business activities at Special Economic Zone, Chennai Unit since 01.04.2009 and thereafter, assessee has not carried out any business activities from discontinued Chennai Unit. During the assessment proceedings for AY 2013-14, assessee dig not furnish the details of the depreciation as per |. T. Act, 1961 pertaining to discontinued SEZ, Chennai unit. However, the details of the expenses pertaining to discontinued SEZ, Chennai unit was given in the audited financial statements and accordingly, the AO disallowed only expenses Pertaining to discontinued SEZ, Chennai unit. 3. On the issues of expenses and depreciation claimed by the assessee in respect of discontinued SEZ, Chennai unit, audit raised objection or 2011-12 and the remedial action with respect to the Same has been taken u/s. 147 of the Act. For the A.Y. 2012-13, firstly the Hon'ble DRP, Mumbai confirmed the addition of expenses and depreciation claimed by the assessee in respect of discontinued SEZ, Chennai unit and subsequently, the Hon'ble ITAT, Mumbai has also decided the issue in favour of the Revenue. 4. For the year under consideration, the details of the depreciation as per I.T. Act are not on record. However, during the reassessment proceedings for AY 2011-12, details of depreciation pertaining to Chennai SEZ unit IT Act were furnished by the assessee. SEZ unit as per IT Act on 01.04.2011, correct depreciation pertaining to Chennai ITA No.349/Mum/2021 A.Y. 2013-14 6 SEZ unit for AY 2013-14 is worked out at Rs. 6,23,00,475/-. Working of the same is as under: Particulars Rate Opening WDV as on 1.4.2011 Depreciation for AY 2012-13 Closing WDV as on 31.3.2012 Depreciation for AY 2013-14 Closing WDV as on 31.3.2013 Building 10% 42,70,98,731 4,27,09,873 38,43,88,858 3,84,38,885 34,59,49,973 Plant & machinery 150% 18,08,81,260 2,71,32,189 15,37,49,071 2,30,62,360 13,06,86,711 Furniture & fixture 10% 88,80,382 8,88,082 79,92,300 7,99,230 71,93,070 Total 61,68,60,372 7,07,30,144 54,61,30,229 6,23,00,475 48,38,29,754 5. It is clear from the above table that depreciation as per IT At on Chennai SEZ unit works out to be Rs.6,23,00,475/- which was to be disallowed for the A.Y.2013-14. However, during the assessment proceeding, depreciation as per IT Act on Chennai SEZ was not disallowed.” 6. The Ld. Representative of the assessee has argued that the disallowance of expenses as well as depreciation has already been adjudicated by Hon’ble ITAT in the assessee’s own case for the A.Y. 2012- 13 & 2013-14 in ITA. No.2200/Mum/2017 & 867/Mum/2018 decided on 19.11.2018, therefore, in view of the said circumstances, invoking the revisional power u/s 263 of the Act is not justifiable, hence, is liable to be set aside. In support of this contention, the Ld. Representative of the assessee has placed reliance upon the decision in the case of CIT(Exemption) Vs. Slum Rehabilitation Authority (2019) 107 taxmann.com 18, Ranka Jewellers Vs. ACIT (2010) 190 Taxman. 265, CIT Vs. K. Sera Sera Productions Ltd. (374 ITR 503), CIT VS. Shashi Theatre P. Ltd. 114 taxman 274, CIT Vs. Mehsana Co. Op Milk Producers Union Ltd. 130 taxman 235, Haryana Paper Distributors P. Ltd. Vs. PCIT (2018) 95 taxmann.com 152, Fortaleza Developers Vs. CIT (2013) 30 taxmann.com 411, Nirma Chemicals Works Pvt. Ltd. Vs. CIT 309 ITR 67, Sonal Garments Vs. JCIT 95 ITD 363, Fabindia Overseas Pvt. Ltd. Vs. DCIT 10 taxmann.com 70, Subhash Chander ITA No.349/Mum/2021 A.Y. 2013-14 7 Kathuria Vs. DCIT 51 SOT 58 & Marico Industries Ltd. Vs. ACIT 27 SOT 73. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The PCIT has invoked the revisional power u/s 263 of the Act by virtue of order dated 18.01.2021 for the A.Y.2013-14. As mentioned above, the PCIT has invoked the revisional power with regard to the issue of depreciation as well as expenses for the unit located in Special Economic Zone at Chennai. The detail has already been mentioned above for ready reference. This issue is in appeal before the Hon’ble ITAT in ITA. No. 2200/Mum/2017 & 867/Mum/2018 for the A.Y. 2012-13 & 2013-14 decided on 19.11.2018. The relevant issue has been decided by the Hon’ble ITAT in para no. 40 & 41 which are hereby reproduced as under: - “40. Upon careful consideration, we note that the authorities below are quite correct in holding that it is undisputed fact that no business operation have been/are being carried out from the Chennai premises for the last many years. The DRP has noted that the assessee has admitted to the fact that the activities of the Chennai unit stand discontinued since 2009. Furthermore, from the letter to The Development Commissioner, Chennai produced before us by the ld. Counsel of the assessee, it is further fortified that the operation of the business unit has not only been discontinued; rather, the assessee is in the process of disposing of the capital goods imported by them for the initial period. The assessee is leasing out part of premises and offering the income therefrom as income from house property. The assessee itself has disallowed expenses of Rs.1,39,92,000/- pertaining to repair and maintenance and claims the balance expenditure of Rs.3,14,07,000/-. Hence, we find ourselves in agreement with the finding of the DRP that this is a clear case that it is not a temporary discontinuation of the ITA No.349/Mum/2021 A.Y. 2013-14 8 business, rather, the business has been completely stopped at this unit. In these circumstances, when there is a complete stoppage of the business and the assessee is offering income from leasing from the unit as income from house property, there is no question of allowance of expenses or depreciation in this regard. In our considered opinion, the orders of the authorities below do not have any infirmity in this regard. 41. As regards the case laws referred by the ld. Counsel of the assessee, we find that the authorities below have rightly distinguished the same as not applicable on the facts of the case, where there is a complete stoppage of business, the assessee is offering income from the unit as income from house property itself disallowing part of expenditure not furnishing details of depreciation expenditure and accepting that it is disposing of the capital goods imported by them. Hence, it is not a case of closure of a unit simpliciter, rather, a change in the nature of the income from business to house property for the unit. Similarly, it is not just a case of part of machinery in a block, rather, closer of the whole unit and discontinuation of the operation of the unit as income generating unit. Hence, the case laws referred by the ld. Counsel of the assessee are not applicable. Accordingly, this order of the A.O. is affirmed.” 7. The assessment order for invoking the power u/s 263 of the Act i.e. 2013-14 is the same which has been decided by Hon’ble ITAT vide order dated 19.11.2018. Since the issue has already been adjudicated by Hon’ble ITAT by virtue of order dated 19.11.2018, therefore, invoking the revisional power u/s 263 of the Act nowhere seems justifiable. In this regard, we find support of the decision in the case of CIT(Exemption) Vs. Slum Rehabilitation Authority (2019) 107 taxmann.com 18, Ranka Jewellers Vs. ACIT (2010) 190 Taxman. 265, CIT Vs. K. Sera Sera Productions Ltd. (374 ITR 503), CIT VS. Shashi Theatre P. Ltd. 114 taxman 274, ITA No.349/Mum/2021 A.Y. 2013-14 9 CIT Vs. Mehsana Co. Op Milk Producers Union Ltd. 130 taxman 235, Haryana Paper Distributors P. Ltd. Vs. PCIT (2018) 95 taxmann.com 152, Fortaleza Developers Vs. CIT (2013) 30 taxmann.com 411, Nirma Chemicals Works Pvt. Ltd. Vs. CIT 309 ITR 67, Sonal Garments Vs. JCIT 95 ITD 363, Fabindia Overseas Pvt. Ltd. Vs. DCIT 10 taxmann.com 70, Subhash Chander Kathuria Vs. DCIT 51 SOT 58 & Marico Industries Ltd. Vs. ACIT 27 SOT 73. Taking into account of all the facts and circumstances, we set aside the order passed by Hon’ble PCIT dated 30.11.2017 in question. Accordingly, we decide issue no.5 in favour of the assessee against the revenue. ISSUEU Nos. 1, 2, 3, 4 & 6 9. Since the issue no. 5 has been decided in favour of the assesse, therefore, deciding the issue nos 1, 2, 3, 4 & 6 would only be academic in nature, hence, nowhere required for specific adjudication. 10. In the result, the appeal of the assessee is hereby allowed. Order pronounced in the open court on this 26/04/2022 Sd/- Sd/- (AMARJIT SINGH) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 26/04/2022 Vijay Pal Singh, (Sr. PS) ITA No.349/Mum/2021 A.Y. 2013-14 10 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधनुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनधकरण, मुंबई / ITAT, Mumbai