Aspinwall Geotech Limited, Cochin V. DCIT, Ernakulam

ITA 385/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68944 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIK K JOHN
• Assessee Lawyers: P R KRIHNAKUMAR
• Keywords: Capital asset; Business income; Depreciation; Capital receipt
• Section: 147

Judgement Text

1 ITA NO. 385/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 385/COCH/2013 (ASSESSMENT YEAR 2005-06) ASPINWALL GEOTECH LTD VS DY.CIT, CIR.1(2), RANG E-1 926/A1-A5, DEVANKULANGARA ERNAKULAM EDAPPALLY, KOCHI 682 024 PAN : AAABCA9689D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.R. KRIHNAKUMAR RESPONDENT BY : SHRIK.K. JOHN DATE OF HEARING : 29-08-2013 DATE OF PRONOUNCEMENT : 30-08-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-II, KOCHI DATED 08-03-2013 AND PERTAINS TO A SSESSMENT YEAR 2005- 06. 2. SHRI P.R. KRISHNAKUMAR, THE LD.REPRESENTATIVE FO R THE ASSESSEE SUBMITTED THAT THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT FOR THE PURPOSE OF ASSESSING THE INSURANCE CLAIM TO THE EXT ENT OF RS.62,69,378 AND OTHER INCOME TO THE EXTENT OF RS.1,75,344. THE LD.REPRESENTATIVE 2 ITA NO. 385/COCH/2013 SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INC OME DISCLOSING INCOME FROM BUSINESS AND CLAIMED SET OFF OF BROUGHT FORWAR D LOSSES FOR THE EARLIER YEARS. THE ASSESSING OFFICER FOUND THAT THE ASSESS EE WRONGLY SHOWN THE INSURANCE CLAIM AS BUSINESS INCOME. THEREFORE, THE ASSESSMENT WAS REOPENED. IN THE RE-ASSESSMENT PROCEEDINGS, THE AS SESSEE CLAIMED THAT IF THE INSURANCE CLAIM IS TREATED AS CAPITAL RECEIPT, THEN THERE IS A CAPITAL LOSS TO THE EXTENT OF RS.2,86,99,168 WHICH HAS TO BE CAR RIED FORWARD AS CAPITAL LOSS TO THE SUBSEQUENT ASSESSMENT YEARS. ACCORDING TO THE LD.REPRESENTATIVE, THIS CLAIM OF THE ASSESSEE WAS R EJECTED AS A NEW CLAIM ON THE GROUND THAT IN THE ORIGINAL RETURN THIS CLAI M WAS NOT MADE. ACCORDING TO THE LD.RPERESENTATIVE, WHEN THE ASSESS MENT WAS REOPENED FOR THE PURPOSE OF CONSIDERING THE INSURANCE CLAIM RECE IVED BY THE ASSESSEE, THE ASSESSE IS ENTITLED TO MAKE ALL RELATED CLAIMS PERTAINING TO THE INSURANCE CLAIM IN THE RE-ASSESSMENT PROCEEDINGS. THEREFORE, THIS IS NOT A NEW CLAIM. 3. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBMI TTED THAT IN THE ORIGINAL RETURN OF INCOME THE ASSESSEE HAS NOT MADE ANY CLAIM THAT WHAT WAS RECEIVED WAS A CAPITAL RECEIPT, THEREFORE, SUCH A CLAIM CANNOT BE ENTERTAINED IN RE-ASSESSMENT PROCEEDINGS AS, ACCORD ING TO THE LD.DR, IT IS A NEW CLAIM. IF FOR ANY REASON, THE TRIBUNAL FINDS THAT IT IS NOT A NEW CLAIM, 3 ITA NO. 385/COCH/2013 THEN THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION AND TO ASCERTAIN THE CORRECT VALUE OF THE ASSET. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSESSMENT WAS REOPENED ONLY ON THE GROUND THAT THE ASSESSEE DISCL OSED RECEIPT OF INSURANCE CLAIM AS BUSINESS RECEIPT. THE DEPARTMEN T WAS OF THE OPINION THAT IT HAS TO BE ASSESSED AS INCOME FROM OTHER SO URCES. IN THE RE- ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THAT T HERE WAS A FIRE ACCIDENT AND THE MACHINERIES GOT DAMAGED. THEREFOR E, THEY COULD NOT OPERATE THE MACHINERIES. ACCORDING TO THE LD.REPRE SENTATIVE FOR THE ASSESSEE, MACHINERIES WORTH RS.2,40,16,597 GOT DAMA GED AND THE VALUE OF THE MACHINERY WAS REDUCED TO RS.1,17,700. THUS, THE REDUCTION OF THE VALUE OF THE MACHINERY DUE TO FIRE ACCIDENT IS RS.2 ,22,19,597. IT IS NOT IN DISPUTE THAT THE MACHINERY IS A CAPITAL ASSET OF TH E ASSESSEE FOR THE PURPOSE OF BUSINESS. THEREFORE, WHATEVER INSURANCE CLAIM RECEIVED FOR DAMAGE OCCURRED TO THE CAPITAL ASSET HAS TO BE CONS IDERED AS A CAPITAL RECEIPT AS RIGHTLY CLAIMED BY THE ASSESSEE IN THE R E-ASSESSMENT PROCEEDINGS. THIS CAPITAL RECEIPT HAS TO BE REDUCE D FROM THE BLOCK OF ASSET FOR THE PURPOSE OF ASCERTAINING THE WRITTEN D OWN VALUE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE INSURANCE CLA IM RECEIVED BY THE ASSESSEE WILL GO TO REDUCE THE COST OF BLOCK OF ASS ETS. IT IS NOT KNOWN 4 ITA NO. 385/COCH/2013 WHETHER THE ASSESSEE HAS CLAIMED ANY DEPRECIATION I N THE EARLIER ASSESSMENT YEARS OR NOT. THE COST OF THE BLOCK OF ASSETS IS ALSO NOT CLEAR FROM THE ORDERS OF THE AUTHORITIES BELOW. THE CLAI M OF THE ASSESSEE WAS REJECTED ONLY ON THE GROUND THAT THE CLAIM WAS NOT MADE IN THE ORIGINAL RETURN. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE VERY PURPOSE OF RE-ASSESSMENT PROCEEDINGS INITIATED U/S 147 OF THE ACT WAS TO CONSIDER THE INSURANCE CLAIM OF THE ASSESSEE, THEREFORE, THE ASS ESSEE CAN VERY WELL MAKE CLAIMS PERTAINING TO THE COST OF THAT ASSET AG AINST WHICH THE INSURANCE CLAIM WAS RECEIVED. THEREFORE, THE CLAIM OF THE ASSESSEE IS NOT A NEW CLAIM. THIS CLAIM PERTAINS TO THE INSURANCE CLAIM RECEIVED BY THE ASSESSEE WHICH WAS SUBJECT MATTER OF RE-ASSESSMENT PROCEEDINGS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN REJECTING THE CLAI M OF THE ASSESSEE ON THE GROUND THAT IT IS A NEW CLAIM. HENCE, THE ASSESSIN G OFFICER HAS TO CONSIDER THE VALUE OF THE BLOCK OF ASSET AND DEPRECIATION, I F ANY, GRANTED EARLIER AND THEN WORK OUT THE DEPRECIATION AFRESH AFTER CONSIDE RING THE TOTALITY OF THE CIRCUMSTANCES. ACCORDINGLY, THE ORDERS OF LOWER AU THORITIES ARE SET ASIDE AND THE ISSUE IS REMANDED TO THE FILE OF THE ASSESS ING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE CLAIM OF THE AS SESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5 ITA NO. 385/COCH/2013 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH AUGUST, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 30 TH AUGUST, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH