WIMCO LTD, MUMBAI V. DCIT CIR 2(3), MUMBAI

ITA 3815/MUM/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9954 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 27-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: K K VED
• Keywords: Depreciation; Additional depreciation
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI MANOJ KUMAR AG G ARWAL, HON'BLE ACCOUNTANT MEMBER ITA NO . 3815/MUM/2012 (A.Y: 2007 - 08 ) & ITA NO. 5574/MUM/2014 (A.Y: 2008 - 09 ) M/S. WIMCO LTD. INDIAN MERCANTILE CHAMBERS KAMANI MARG, BALLARD ESTATE MUMBAI 400 028 PAN NO: AAACW 3082 B V . THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(3) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. VED REVENUE BY : SHRI V. VIDHYADHAR DATE OF HEARING : 15.03.2018 DATE OF PRONOUNCEMENT : 16 .03.2018 O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LD.CIT(A) FOR THE ASSE SSMENT YEAR 2007 - 08 & 2008 - 09. 2. IN SO FAR AS THE APPEAL FOR THE ASSESSMENT YEAR 2007 - 08 IS CONCERNED, THE FIRST ISSUE IN THE GROUNDS OF APPEAL OF THE ASSESSEE IS IN RESPECT OF SHORT GRANTING OF DE DUCTION U/S. 35DDA OF THE ACT. 2 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. 3. AT THE OUTSET , LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT ON SIMILAR ISSUE FOR THE ASSESSMENT YEAR 2006 - 07 THE TRIBUNAL VIDE ITS ORDER DATED 30.01.2018 HAS RESTORED THE APPEAL TO THE FILE OF THE LD.CIT(A) FOR ADJUDICATION . IT IS ALSO SUBMITTED BEFORE US THAT SIMILAR DISALLOWANCE WAS MADE IN THE ASSESSMENT YEAR 2004 - 05 BY REOPENING THE ASSESSMENT. HOWEVER, FOR THE ASSESSMENT YEAR 2005 - 06 THE ASSESSING OFFICER ALLOWED TH E CLAIM FOR DEDUCTION U/S. 35DDA OF THE ACT. 4. ON A QUERY FROM THE BENCH AS TO WHETHER T H E APPEAL CAN BE RESTORED TO THE FILE OF THE LD.CIT(A) THE LD. DR HAS EXPRESSED NO OBJECTION. 5. IN VIEW OF THE FACT THAT THE SIMILAR ISSUE IS PENDING BEFORE THE LD.CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07 FOR ADJUDICATION, WE RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT(A) WHO SHALL CONSIDER THE ISSUE AND DECIDE AFRESH IN ACCORDANCE WITH LAW . 6. GROUND NO.2 RAISED BY THE ASSESSEE IS, IN RESPECT OF ERRONEOUS DIRECTION S GIVEN BY THE LD.CIT(A) IN RESPECT OF THE PAYMENT MADE TO EMPLOYEES ON INDIVIDUAL NEGOTIATIONS UN DER SEPARATE SCHEME NOT FORMING PART OF VOLUNTARY RETIREMENT SCHEME [IN SHORT VRS] . 7. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS GROUND BECOMES INFRUCTUOUS AS THE ASSESSING OFFICER HAS ALREADY 3 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. REOPENED THE ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 U/S. 147 OF THE ACT AND DISALLOWED SUCH EXPENSES AND SINCE THE SAID EXPENSES WERE ALREADY DISALLOWED BY REOPENING THE ASSESSMENT THE DIRECTIONS ARE ERRONEOUS. 8. ON HEARING THE RIVAL CONTENTIONS AND ON PERUSAL OF THE RECORD BEFORE US , W E OBSERVE FROM THE ASSESSMENT ORDER PASSED ON 24.03.2014 U/S.143(3) R.W.S. 147 OF THE ACT FOR THE ASSESSMENT YEAR 2004 - 05 , THE ASSESSING OFFICER DISALLOWED .32,95,324/ - BEING 1/5 TH OF EXPENSES OF .1,69,10,939/ - CLAIMED AS DEDUCTION U/S. 35DDA OF THE ACT AND THESE EXPENSES REPRESENT THE PAYMENTS MADE TO THE EMPLOYEES ON THEIR SEPARATION FROM THE COMPANY AND NOT FORMING PART OF VRS. THEREFORE, SINCE THE ASSESSING OFFICER HA D ALREADY DISALLOWED EXPENSES BY REOPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05, THERE IS NO NEED FOR REOPENING AND EXAMINING THE ISSUES AGAIN HENCE TO THAT EXTENT WE REVERSE THE FINDINGS OF THE LD.CIT(A). 9. COMING TO THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 , THE FIRST GROUND IS AGAIN IN RESPECT OF SHORT G RANTING OF DEDUCTION U/S. 35DDA OF THE ACT. SINCE THIS ISSUE WAS ALREADY RESTORED TO THE FILE OF THE LD.CIT(A) IN THE ASSESSMENT YEAR S 2006 - 07 & 2007 - 08, THIS YEAR ALSO WE RESTORE 4 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. THIS ISSUE TO THE FILE OF THE LD.CIT(A) WHO SHALL DECIDE IN ACCORDANCE WITH LAW. 10. THE SECOND GROUND OF APPEAL IS IN RESPECT OF DISALLOWANCE OF DEPRECIATION ON FIXED A SSETS. 11. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO FURNISH COPIES OF INVOICES, BILLS, VOUCHERS ETC., IN RESPECT OF THE ADDITION S TO FIXED ASSETS. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE BILLS, VOUCHERS BEFORE COMPLETION OF THE ASSESSMENT AND THEREFORE THE ASSESSING OFFICER DENIED THE DEPRECIATION ON FIXED ASSETS AND DISALLOWED . 2,53,81,562/ - . BEFORE THE LD.CIT(A) THE ASSESSE E PRODUCED THE BILLS, VOUCHERS ETC ., IN RESPECT OF VARIOUS ASSETS AND THE LD.CIT(A) CONSIDERING THE SAME PARTLY ALLOWED THE DEPRECIATION . AS THE ASSESSEE COULD NOT PRODUCE THE BILLS , VOUCHERS EVEN BEFORE HIM ON CERTAIN ASSETS DEPRECIATION TO AN EXTENT OF . 62,95,593/ - WAS DISALLOWED . 12. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT , T HE ASSESSEE COULD NOT PRODUCE THE BILLS, VOUCHERS AS THE ASSESSEE COULD NOT RECEIVE SUCH BILLS, VOUCHERS FROM ITS UNIT IN MADRAS AND ULTIMATELY THE UNIT WAS C LOSED . IT WAS THE SUBMISSION THAT AS THERE WAS NO ADVERSE REMARKS BY THE AUDITORS IN THE TAX AUDIT REPORT THE DEPRECIATION BE ALLOWED. 5 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. 13. THE LD. DR STRONGLY OBJECTED AND SUBMITTED THAT IN THE ABSENCE OF VOUCHERS AND BILLS , ASSESSEE DID NOT PROVE THAT IT HAD IN FACT PURCHASE D THE ASSETS AND PUT TO USE AND HENCE THE DEPRECIATION WAS RIGHTLY DENIED BY THE ASSESSING OFFICER/LD.CIT(A). 14. ON HEARING BOTH THE PARTIES AND PURSING THE ORDERS OF THE AUTHORITIES BELOW , WE ARE NOT INCLINED TO ACCEPT THE SUBMISSIONS OF TH E LD. COUNSEL FOR THE ASSESSEE. THE BASIC DOCUMENTS LIKE BILLS, VOUCHERS IN RESPECT OF THE FIXED ASSETS WERE NOT PRODUCED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD.CIT(A) TO PROVE THAT THE ASSESSEE HA D IN FACT ACQUIRED ASSETS . IN THE ABSENCE OF SUCH DOCUMENTARY EVIDENCE , THE DEPRECIATION TO AN EXTENT OF .62,95,593/ - CANNOT BE ALLOWED, AND THE LD.CIT(A) HAS RIGHTLY RESTRICTED THE DEPRE CIATION ON THE ASSETS FOR WHICH THE BILLS AND VOUCHERS WERE PRODUCED BEFORE HIM. THUS, THIS GROUND OF ASSESSE E IS REJECTED. 15. GROUND NO.3 I S IN RESPECT OF NOT ALLOWING ADDITIONAL DEPRECIATIO N U/S. 32(1)( IIA) OF THE ACT ON FIXED ASSETS. 16. THIS CLAIM OF THE ASSESSEE WAS MADE FOR THE FIRST TIME BEFORE THE LD.CIT(A) AND THE LD.CIT(A) REJECTED THE CLAIM OF THE ASSESSEE OBSERVING 6 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. THAT THIS ISSUE DOES NOT ARISE OUT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 17. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITION AL DEPRECIATION IS A LEGAL CLAIM AND SINCE IT WAS MADE BEFORE THE LD.CIT(A) HE SHOU LD HAVE CONSIDERED THE SAME IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. PRUTHVI BROKERS AND SHAREHOLDERS (P.) LTD. [349 ITR 336] WHEREIN IT WAS HELD THAT A FRESH CLAIM CAN BE MADE BEFORE APPELLATE AUTHORITY . 18. LD.D R SUBMITTED THAT SINCE THERE WAS NO CLAIM BEFORE THE ASSESSING OFFICER THE SAME MAY BE REJECTED. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE LD. COUNSEL FOR THE ASSES SEE CONTENDING THAT ADDITIONAL DEPRECIATION WAS COMPUTED U/S. 32(1)(IIA ) OF THE ACT AND IT WAS ATTACHED TO THE TAX AUDIT REPORT AS ANNEXURE 1. IT WAS CONTENDED THAT ADDITIONAL DEPRECATION WAS CLAIMED BY THE ASSESSEE WHILE PREPARING AND FILING ITS RETURN FOR THE YEAR. HOWEVER, ON ACCOUNT OF AN INADVERTENT ERROR THE ADDITIONAL DEPRECIATION WAS LEFT OUT TO BE CLAIMED IN THE STATEMENT SHOWING COMPUTATION OF THE TOT AL INCOME. THE SUBMISSIONS OF THE ASSESSEE WERE NOT APPRECIATED BY 7 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. THE LD.CIT(A) AND NOT ENTERTAINED THE CLAIM OBSERVING THAT THIS ISSUE DOES NOT ARISE FROM ASSESSMENT ORDER. IN THE CASE OF CIT V. PRUTHVI BROKERS AND SHAREHOLDERS (P.) LTD. (SUPRA) THE HO N'BLE JURISDICTIONAL HIGH COURT HELD THAT ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THEREFORE, S INCE THE ASSESSEE MADE THIS CLA I M FOR ADDITIONAL DEPRECIATION BEFORE THE LD.CIT(A) , HE SHOULD HAVE ENTERTAINED OR REJECTED THE CLAIM OF THE ASSESSEE. IN THE CIRCUMSTANCES, WE RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT(A) WHO SHALL EXAMINE THE CLAIM AND DECIDE IN ACCORDANCE WITH LAW. 20. GROUND NO.4 IS WITH RESPECT TO SET - OFF OF BROUGHT FORWARD BUSINESS LOSS ES. 21. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND IS ONLY A CONSEQUENTIAL TO THE ISSUES PENDING BEFORE THE LD.CIT(A) FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. HE FURTHER SUBMITTED THAT A DIRECTION MAY BE GIVEN TO THE ASSESSING OFFICER TO ALL OW SET - OFF OF THE LOSSES CONSEQUENT TO THE ISSUES DECIDED IN THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 BY THE APPELLATE AUTHORITIES. 8 ITA NO.3815/MUM/2012 (A.Y: 2007 - 08) ITA NO.5574/MUM/2014 (A.Y: 2008 - 09) M/S. WIMCO LTD. 22. WE FIND THAT THIS GROUND IS ONLY A CONSEQUENTIAL IN NATURE AND THE ASSESSING OFFICER SHALL PASS APPROPRIATE ORDERS BASED ON THE ISSUE S DECIDED IN THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. IF T HE ASSESSEE IS ELIGIBLE TO CARRY FORWARD THE LOSS ES FROM THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 THE SAME MAY BE CONSIDERED AND APPROPRIATE ORDER MAY BE PASSED IN ACCORDANCE WITH LAW FOR THE ASSESSMENT YEAR 2008 - 09. 23. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRON OUNCED IN THE OPEN COURT ON 16 TH MARCH , 2018 . SD/ - SD/ - ( MANOJ KUMAR AG G ARWAL ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 16 / 03/2018 GIRIDHAR , SPS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASST. REGISTRAR) ITAT, MUM