Indian Research Manifestation Labs, Ahmedabad V. The Dy.CIT.,Circle-4, Ahmedabad

ITA 391/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0305 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-08-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Period of limitation; Condonation of delay
• Section: 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.391/AHD/2008 A. Y.: 2004-05 INDIAN RESEARCH MANIFESTATION LABS PVT. LTD., IRM HOUSE, OFF. C. G. ROAD, NAVRANGPURA, AHMEDABAD VS THE D. C. I. T., CIRCLE-4, NAVJEEVANI TRUST BUILDING, NR. NAVJEEVAN POST OFFICE, OFF. ASHRAM ROAD, AHMEDABAD 380 014 PA NO. AAACI 1367 M (APPELLANT) (RESPONDENT) ITA NO.510/AHD/2008 A. Y.: 2004-05 THE A. C. I. T., CIRCLE-4, NAVJEEVANI TRUST BUILDING, NR. NAVJEEVAN POST OFFICE, OFF. ASHRAM ROAD, AHMEDABAD 380 014 VS INDIAN RESEARCH MANIFESTATION LABS PVT. LTD., IRM HOUSE, OFF. C. G. ROAD, NAVRANGPURA, AHMEDABAD PA NO. AAACI 1367 M (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. SOPARKAR, AR DEPARTMENT BY SHRI R. K. DHANESTA, DR O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST ORDER OF THE CIT(A)-VIII, AHMEDABAD DATED 0 5-11-2007 FOR ASSESSMENT YEAR 2004-05. 2. THE APPEAL OF THE ASSESSEE IS TIME BARRED BY 28 (TWENTY EIGHT) DAYS. THE ASSESSEE RECEIVED THE IMPUGNED ORDER ON 08-11-2 007 BUT THE APPEAL IS FILED ON 04-02-2008. IT IS STATED IN THE APPLICA TION FOR CONDONATION OF DELAY AND AFFIDAVIT THAT ON RECEIPT OF THE ORDER OF THE LEARNED CIT(A) ON 08-11-2007 BY SHRI GHANSHYAM GUPTA, AGM (TAXATION), HE HAS RESIGNED FROM THE SERVICE OF THE COMPANY AND WAS RELIEVED ON 17-11-2007. DUE TO ITA NO.391 AND 510/AHD/2008 INDIAN RESEARCH MANIFESTATION LABS PVT. LTD. 2 INADVERTENT MISTAKE, THE MATTER COULD NOT BE TAKEN UP FOR FILING OF THE APPEAL. THE LEARNED DR DID NOT DISPUTE THE CLAIM OF THE ASSESSEE. CONSIDERATION THE EXPLANATION OF THE ASSESSEE, WE F IND THAT THE ASSESSEE HAS SUFFICIENT CAUSE IN NOT FILING THE APPEAL WITHI N THE PERIOD OF LIMITATION. THE DELAY IN FILING THE APPEAL BY THE A SSESSEE IS, THEREFORE, CONDONED. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THE ADDITIONAL GROUND OF APPEAL. THE SAME IS DISMISSED AS WITHDRAWN. ITA NO.391/AHD/2008 (ASSESSEES APPEAL) 4. IT STATED IN THE GROUNDS OF APPEAL THAT THE LEAR NED CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE AO WITH REGARD TO THE COMPUTATION OF BOOK PROFIT U/S 115 JB OF THE IT ACT BECAUSE THE AO WHIL E COMPUTING THE BOOK PROFIT U/S 115 JB OF THE IT ACT HAS NOT DEDUCTED TH E PRIOR PERIOD EXPENSES OF RS.12,48,203/-. THE ASSESSEE PRAYED THA T PRIOR PERIOD EXPENSES SHOULD BE DEDUCTED FROM THE COMPUTATION OF BOOK PROFIT U/S 115 JB OF THE IT ACT. THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) THAT WHILE CALCULATING THE PROFIT U/S 115 JB OF THE IT ACT, THE AO SHOULD HAVE DEDUCTED THE PRIOR PERIOD EXPENSES OF RS.12,48 ,203/- FROM THE BOOK PROFIT OF RS.1,79,39,623/-. THE LEARNED CIT(A) HOWE VER, CONFIRMED THE ORDER OF THE AO BY OBSERVING THAT AS PER SECTION 11 5J OF THE IT ACT, BOOK PROFIT AS IN THE PROFIT & LOSS ACCOUNT HAS TO BE TA KEN AND BELOW THE LINE ADJUSTMENTS ARE NOT TO BE DEDUCTED. THE APPEAL OF T HE ASSESSEE WAS ACCORDINGLY DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE IS NOW COVERED BY THE ORDER OF THE ITAT AHMEDABAD B BENCH IN THE CASE ITA NO.391 AND 510/AHD/2008 INDIAN RESEARCH MANIFESTATION LABS PVT. LTD. 3 OF UNITED PHOSPHOROUS LTD. VS DCIT IN ITA NO.5361 /AHD/1996 DATED 30-04-2003 IN WHICH IT WAS HELD IN PARA 3 AS UNDER: 3. THE NEXT DISPUTE IS WITH REGARD TO DEDUCTION IN RESPECT OF PRIOR PERIOD ADJUSTMENT WHILE COMPUTING BOOK PROFIT U/S. 115J OF THE ACT. AFTER HEARING THE PARTIES, WE FIND THAT THE MATTER STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SUPR EME COURT IN THE CASE OF APOLLO TYRES 256 ITR 273 WHERE IN IT WAS HELD THAT NO ADJUSTMENT IN THE PROFIT SHOWN AS PER THE PROFIT SHOWN AS PER PROFIT AND LOSS ACCOUNT CAN BE MADE WHILE WORKING OUT THE INCOME OF THE ASSESSEE U /S. 115J OF THE ACT. WE, ACCORDINGLY, DIRECT THE ASSESS ING OFFICER NOT TO DISALLOW THE PRIOR PERIOD ADJUSTMENT AMOUNTING TO RS.3,87,865/- WHILE COMPUTING THE BOOK PROFIT U/S. 115J OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UP ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KHAI TAN CHEMICALS AND FERTILIZERS LTD. 307 ITR 150 IN WHICH IT WAS HELD A S UNDER: HELD, DISMISSING THE APPEAL, THAT BECAUSE OF THE PRESCRIBED ACCOUNTING STANDARD WHICH HAD TO BE FOLLOWED BY THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 115JA (2) READ WITH SECTION 211 OF THE 1956 ACT, THE ASSESSEE WAS REQUIRED TO SHOW THE PRIOR PERIOD ITEMS/EXTRAORDINARY ITEMS SEPARATELY SO THAT THEIR IMPACT ON THE CURRENT PROFIT OR LOSS COULD BE PERCE IVED. THE FACT THAT THE ASSESSEE ADOPTED THE ALTERNATIVE APPROACH OF SHOWING SUCH ITEMS IN THE STATEMENT OF PROFIT AND LOSS AFTER DETERMINATION OF CURRENT NET PROFIT OR LOSS, DID NOT MEAN THAT THESE ITEMS WERE NOT TO BE TAKEN INTO ACCOUNT IN COMPUTING THE NET PROFIT AS ENVISAGED IN SECTION 115JA. THUS, WHAT THE ASSESSEE HAD DONE WAS ONLY TO INDICATE THE PRIOR PERIOD ITEMS/EXTRAORDINARY ITEMS SEPARATELY. THIS DID NOT MEAN THAT THE FIGURE OF NET PROFIT WAS TO BE ARRIVE D AT THE DE HORS THESE ITEMS. THUS, THE TRIBUNAL WAS COR RECT THAT THE NET PROFIT FOR THE PURPOSES OF SECTION 115 JA WAS TO BE COMPUTED ONLY AFTER DEDUCTING THE PRIOR PERIOD EXPENSES/EXTRAORDINARY ITEMS. ITA NO.391 AND 510/AHD/2008 INDIAN RESEARCH MANIFESTATION LABS PVT. LTD. 4 6. THE LEARNED DR ON THE OTHER HAND, RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE ORDER OF THE ITAT AHMEDABAD BENCH IN THE CASE OF UNITED PHOSPHORUS LT D. (SUPRA) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF KHAITAN CHEMICALS AND FERTILIZERS LTD. (SUPRA). WE ACCORDIN GLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE AO N OT TO DISALLOW PRIOR PERIOD EXPENSES OF RS.12,48,203/- WHILE COMPUTING T HE BOOK PROFIT U/S 115JB OF THE IT ACT. AS A RESULT, THIS GROUND OF AP PEAL OF THE ASSESSEE IS ALLOWED. ITA NO.510/AHD/2008 (DEPARTMENTAL APPEAL ) 8. THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWIN G EFFECTIVE GROUND: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEPRECIATI ON AT THE ENHANCED RATE OF 60% ON EQUIPMENTS LIKE ROUTERS, MO DEMS ETC. WHICH ARE A PART OF COMPUTER NET WORK OR COMPUTER S YSTEM AND CANNOT BE TAKEN TO BE COVERED BY THE TERM COMP UTERS INCLUDING COMPUTER SOFTWARE USED IN APPENDIX I O F INCOME- TAX RULES PROVIDING FOR DEPRECIATION RATES. 9. THE LEARNED CIT(A) FOLLOWING HIS APPELLATE ORDER IN ASSESSMENT YEAR 2003-04 ALLOWED THE APPEAL OF THE ASSESSEE AND DELE TED THE ADDITION. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) FOR ASSESSMENT YEAR 2003-04 HAS BEEN CONFIRM ED BY THE TRIBUNAL IN THE CASE OF THE SAME ASSESSEE IN ITA NO.4230/AHD /2007 AND VIDE ORDER DATED 29-05-2009 THE DEPARTMENTAL APPEAL ON T HE IDENTICAL GROUND HAS BEEN DISMISSED. THE LEARNED DR CONCEDED THAT TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBU NAL (SUPRA). CONSIDERING THE ABOVE, WE FIND THAT THE DEPARTMENTA L APPEAL HAS NO MERIT. THE SAME IS ACCORDINGLY DISMISSED BEING COVE RED BY THE EARLIER ITA NO.391 AND 510/AHD/2008 INDIAN RESEARCH MANIFESTATION LABS PVT. LTD. 5 ORDER OF THE TRIBUNAL IN THE CASE OF THE SAME ASSES SEE AS REFERRED ABOVE. THE DEPARTMENTAL APPEAL IS ACCORDINGLY DISMISSED. 10. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED ON 13-08-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-08-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD