ASST CIT 16(3), MUMBAI V. BHAVNI GEMS, MUMBAI

ITA 3760/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0312 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHISHIR DHAMIJA
• Assessee Lawyers: REEPAL TRALSHAWALA
• Keywords: Depreciation; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO.3760/MUM./2013 ( ASSESSMENT YEAR :2009 - 10) ACIT 16(3) MATRU MANDIR, 2 ND FLOOR, R.NO.260, TARDEOI RD., MUMBAI 400007 . APPELLANT V/S BHAVNI GEMS 101 PRASAD CHAMBERS, OPERA HOUSE, MUMBAI 400004 PAN AAAFB2302G . RESPONDENT ASSESSEE BY : SHRI. REEPAL TRALSHAWALA REVENUE BY : SHRI. SHISHIR DHAMIJA DATE OF HEARING - 14.06 .2017 DATE OF ORDER 14 .0 6 .2017 O R D E R THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27 - 02 - 2013 PASSED BY LD CIT(A) - 27, MUMBAI AND IT RELATES TO THE ITA NO.3760/MUM./2013 BHAVNI GEMS 2 ASSESSMENT YEAR 2009 - 10. THE REVENUE IS AGGRIEVED BY THE DECISION RENDERED BY LD CIT(A) ON THE FOLLOWING ISSUES: - ( A ) DISALLOWANCE OF MARK TO MARKET LOSS ( B ) DISALLOWANCE OF ADDITIONAL DEPRECIATION. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF CUT AND POLISHED DIAMONDS. TH E FIRST ISSUE RELATES TO THE DISALLOWANCE OF MARK TO MARKET LOSS OF FOREIGN EXCHANGE CONTRACTS RELATING TO EXPORT RECEIVABLES AND PAYABLES. THE ASSESSEE REVALUED ALL EXPORT RECEIVABLES & PAYABLES AS ON 31.3.2009 AND ACCORDINGLY CLAIMED THE LOSS ARISING ON SUCH REVALUATION AS DEDUCTION . THE AO DISALLOWED THE SAME BY HOLDING THE LOSS CLAIM ED BY THE ASSESSEE WA S NOTIONAL LOSS. THE LD CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P LTD (312 ITR 254) AND ALSO DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.2855/MUM/2010 RELATING TO AY 2006 - 07. 3. SINCE THE LD CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THE HONBLE SUPREME COURT, WE DO NOT FI ND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE ON THE REASONING THAT THE ASSESSEE DID NOT CARRY ON ANY MANUFACTURING ACTIVITY , I.E., CUTTING AND POLISHING OF DIAMONDS WAS NOT CONSIDERED AS MANUFACTURING ACTIVITY BY THE AO . THE LD CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SHEETAL DIAMONDS P LTD VS. ITO (ITA NOS. 6687 TO 6689/MUM/2003 DATED 23 - 03 - 2011) , WHEREIN THE TRIBUNAL ITA NO.3760/MUM./2013 BHAVNI GEMS 3 CONSIDERED VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT AND HELD THAT THE ACTIVITY OF CUTTING AND POLISHING OF DIAMONDS FALLS IN THE CATEGORY OF MANUFACTURE. 5. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO - ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NO.3635 & 3636/MUM/2015 RELATING TO AY 2010 - 11 AND 2011 - 12, WHEREIN THE TRIBUNAL HELD THAT THE CUTTING AND POLISHING OF DIAMONDS WAS MANUFACTURING A CTIVITY. IN THIS REGARD, THE CO - ORDINATE BENCH FOLLOWED THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF FLAWLESS DIAMOND (I) LTD (2014)(45 TAXMANN.COM 67) AND SHEETAL DIAMONDS LTD (SUPRA). THE LD D.R PLACED RELIANCE ON THE DECISION RENDERED BY THE T RIBUNAL IN THE ASSESSEES OWN CASE RELATING TO AY 2008 - 09, WHEREIN THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE. HOWEVER, WE NOTICE THE DECISION RENDERED IN THE ASSESSEES OWN CASE FOR AY 2008 - 09 WAS CONSIDERED BY THE TRIBUNAL IN AY 2010 - 11 AND 2011 - 12 AND THE SAME ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING SUBSEQUENT DECISIONS OF THE TRIBUNAL. ACCORDINGLY WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN FOLLOWING THE LATER DECISIONS OF THE TRIBUNAL, AS THE SAME HAVE BEEN RENDERED BY DU LY CONSIDERING VARIOUS DECISIONS OF HONBLE SUPREME COURT. ACCORDINGLY WE UPHOLD THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE ALSO. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .06.2017 S D/ - SD/ - AMARJIT SINGH B.R BASKARAN JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.3760/MUM./2013 BHAVNI GEMS 4 MUMBAI, DATED: 14 .06.2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI